Skip to main content
SpringerLink
Log in

Inward Investment, Technology Transfer and Innovation: Direct Evidence from China

  • Chapter
International Business and Institutions after the Financial Crisis

Part of the book series: The Academy of International Business ((AIB))

  • 413 Accesses

Abstract

This chapter contributes to the understanding of technology transfer between inward investors and the host country economy at the micro level. The focus here is on the innovation of host country firms directly, rather than through the indirect lens of productivity.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Aghion, P., Bloom, N., Blundell, R., Griffith, R. and Howitt, R (2005) Competition and innovation: an inverted-u relationship. The Quarterly Journal of Economics, 120(2): 701–28.

    Google Scholar 

  • Aghion, P. and Howitt, P. (1992) A model of growth through creative destruction. Econometrica, 60(2): 323–51.

    Article  Google Scholar 

  • Aitken, B.J. and Harrison, A.E. (1999) Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. The American Economic Review, 89(3): 605–18.

    Article  Google Scholar 

  • Arrow, K.J. (1962) Economic welfare and the allocation of resources for invention, in R.R. Nelson (ed.) The Rate and Direction of Inventive Activity. Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Barrios, S. and Stróbl, E. (2002) Foreign direct investment and productivity spillovers: evidence from the Spanish experience. Weltwirtschaftliches Archiv, 138(3): 459–81.

    Article  Google Scholar 

  • Blalock, G. and Gertler, P.J. (2008) Welfare gains from foreign direct investment through technology transfer to local suppliers, journal of International Economics, 74(2): 402–21.

    Article  Google Scholar 

  • Blalock, G. and Simon, D.H. (2009) Do all firms benefit equally from downstream FDI? The moderating effect of local suppliers’ capabilities on productivity gains. Journal of International Business Studies, 40(7): 1095–112.

    Article  Google Scholar 

  • Blomström, M., Globerman, S. and Kokko, A. (1999) The determinants of host country spillovers from foreign direct investment: a review and synthesis of the literature. Working paper no. 76, September, The European Institute of Japanese Studies.

    Google Scholar 

  • Blomström, M. and Kokko, A. (1998) Multinational corporations and spillovers. Journal of Economic Surveys, 12(2): 1–31.

    Google Scholar 

  • Caves, R.E. (1974) Multinational Firms, competition, and productivity in host-country markets. Economica, New Series, 41(162): 176–93.

    Google Scholar 

  • De Backer, K. and Sleuwaegen, L. (2003) Does foreign direct investment crowd out domestic entrepreneurship? Review of Industrial Organization, 22(1): 67–84.

    Article  Google Scholar 

  • Driffield, N. and Love, J.H. (2007) Linking FDI motivation and host economy productivity effects: conceptual and empirical analysis, journal of International Business Studies, 38(7): 460–73.

    Article  Google Scholar 

  • Driffield, N., Munday M. and Roberts, A. (2002) Foreign direct investment, transactions linkages, and the performance of the domestic sector. International Journal of the Economics of Business, 9(3): 335–51.

    Article  Google Scholar 

  • Driffield, N. and Taylor, K. (2005) Are foreign firms more technologically intensive? UK establishment evidence from the ARD. Scottish Journal of Political Economy, 52(1): 38–53.

    Article  Google Scholar 

  • Dunning, J.H. (1979) Explaining changing patterns of international production: in defence of the eclectic theory. Oxford Bulletin of Economics and Statistics, 41(1): 269–95.

    Google Scholar 

  • Eberhardt, M., Helmers, C. and Yu, Z. (2012) Is the dragon learning to fly? The Chinese patent explosion at home and abroad. Available at: http://www.chelmers.com/projects/dragon.pdf [accessed 1/5/2013].

  • Ernst, H. (2001) Patent applications and subsequent changes of performance: evidence from time-series cross-section analyses on the firm level. Research Policy, 30(1): 143–57.

    Article  Google Scholar 

  • Figueiredo, P.N., Cohen, M. and Gomes, S. (2013) Firms’ innovation capability-building paths and the nature of changes in learning mechanisms: multiple case-study evidence from an emerging economy. No. 007 United Nations University, Maastricht

    Google Scholar 

  • Economic and Social Research and Training Centre on Innovation and Technology. Filatotchev, I., Liu, X., Lu, J. and Wright, M. (2011) Knowledge spillovers through human mobility across national borders: evidence from Zhongguancun Science Park in China. Research Policy, 40(3): 453–62.

    Article  Google Scholar 

  • Fosfuri, A., Motta, M. and Rond, T. (2001) Foreign direct investment and spillovers through workers’ mobility. Journal of International Economics, 53(1): 205–22.

    Article  Google Scholar 

  • Garcia, F., Jin, B. and Salomon, R. (2013) Does inward foreign direct investment improve the innovative performance of local firms? Research Policy, 42(1): 231–44.

    Article  Google Scholar 

  • Gorg, H. and Greenaway, D. (2004) Much ado about nothing? Do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2): 171–97.

    Google Scholar 

  • Gorg, H. and Stróbl, E. (2005) Spillovers from foreign firms through worker mobility: an empirical investigation. The Scandinavian Journal of Economics, 107(4): 693–709.

    Article  Google Scholar 

  • Gow, H.R. and Swinnen, J.F.M. (1998) Up-and downstream restructuring, foreign direct investment, and hold-up problems in agricultural transition. European Review of Agricultural Economics, 25(3): 331–50.

    Article  Google Scholar 

  • Grossman, G.M. and Helpman, E. (1991) Trade, knowledge spillovers, and growth. European Economic Review, 35(2-3): 517–26.

    Google Scholar 

  • Grossman, G.M. and Helpman, E. (1994) Endogenous innovation in the theory of growth. The Journal of Economic Perspectives, 8(1): 23–44.

    Article  Google Scholar 

  • Hallin, S. and Lind, CH. (2012) Revisiting the external impact of MNCs: an empirical study of the mechanisms behind knowledge spillovers from MNC subsidiaries. International Business Review, 21(2): 167–79.

    Article  Google Scholar 

  • Hanson, G.H. (2001) Should countries promote foreign direct investment? G-24 Discussion Paper Series, United Nations Conference on Trade and Development.

    Google Scholar 

  • Havránek, H. and Irsova, Z. (2011) Estimating vertical spillovers from FDI: why results vary and what the true effect is. Journal of International Economics, 85(2): 234–44.

    Article  Google Scholar 

  • Hu, A.G. and Jefferson, G.H. (2009) A great wall of patents: what is behind China’s recent patent explosion? Journal of Development Economics, 90(1): 57–68.

    Article  Google Scholar 

  • Irsova, Z. and Havránek, D. (2013) Determinants of horizontal spillovers from FDI: evidence from a large meta-analysis. World Development, 42: 1–15.

    Article  Google Scholar 

  • Javorcik, B.S. (2004) Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. The American Economic Review, 94(3): 605–27.

    Article  Google Scholar 

  • Javorcik, A., Keller, W. and Tybout, J. (2008) Openness and industrial response in a Wal-Mart world: a case study of Mexican soaps, detergents and surfactant producers. The World Economy, 31(12): 1558–80.

    Article  Google Scholar 

  • Jenkins, R. (1990) Comparing foreign subsidiaries and local firms in LDCs: theoretical issues and empirical evidence. The Journal of Development Studies, 26: 205–28.

    Article  Google Scholar 

  • Konings, J. (2001) The effects of foreign direct investment on domestic firms evidence from firm-level panel data in emerging economies. Economics of Transaction, 9(3): 619–33.

    Article  Google Scholar 

  • Lall, S. (1980) Vertical inter-firm linkages in LDCs: an empirical study. Oxford Bulletin of Economics and Statistics, 42(3): 203–26.

    Article  Google Scholar 

  • Levin, R.C, Cohen, W.M. and Mowery, D.C. (1985) R&D appr opri ability, opportunity, and market structure: new evidence on some Schumpeterian hypotheses. The American Economic Review, 75(2): 20–4.

    Google Scholar 

  • Li, J., Chen, D. and Shapiro, D.M. (2010) Product innovations in emerging economies: the role of foreign knowledge access channels and internal efforts in Chinese firms. Management and Organization Review, 6(2): 243–66.

    Article  Google Scholar 

  • Li, X. (2011) Sources of external technology, absorptive capacity, and innovation capability in Chinese state-owned high-tech enterprises. World Development, 39(7): 1240–8.

    Google Scholar 

  • Lim, L.Y.C, and Fong, P.E. (1982) Vertical linkages and multinational enterprises in developing countries. World Development, 10(7): 585–95.

    Article  Google Scholar 

  • Liu, X., Lu, J., Filatotchev, I., Buck, T. and Wright, M. (2010) Returnee entrepreneurs, knowledge spillovers and innovation in high-tech firms in emerging economies. Journal of International Business Studies, 41(7): 1183–97.

    Article  Google Scholar 

  • Liu, X. and Zou, H. (2008) The impact of greenfield FDI and mergers and acquisitions on innovation in Chinese high-tech industries. Journal of World Business, 43(3): 352–64.

    Article  Google Scholar 

  • Love, J.H., Roper, S. and Bryson, J.R. (2011) Openness, knowledge, innovation and growth in UK business services. Research Policy, 40(10): 1438–52.

    Article  Google Scholar 

  • Márkusén, J.R. and Venables, A.J. (1999) Foreign direct investment as a catalyst for industrial development. European Economic Review, 43(2): 335–56.

    Article  Google Scholar 

  • Marvel, M.R. and Lumpkin, G.T. (2007) Technology entrepreneurs human capital and its effects on innovation radicalness. Entrepreneur ship Theory and Practice, 31(6): 807–28.

    Article  Google Scholar 

  • Page, J.M. (1980) Technical efficiency and economic performance: some evidence from Ghana. Oxford Economic Papers, New Series, 32(2): 319–39.

    Google Scholar 

  • Rodriguez-Clare, A. (1996) Multinationals, linkages, and economic development. The American Economic Review, 86(4): 852–73.

    Google Scholar 

  • Roper, S., Du, J. and Love, J.H. (2008) Modelling the innovation value chain. Research Policy, 37(6-7): 961–977.

    Google Scholar 

  • Saggi, K. (2002) Trade, foreign direct investment, and international technology transfer: a survey. The World Bank Research Observer, 17(2): 191–235.

    Article  Google Scholar 

  • Schumpeter, J.A. (1943) Capitalism in the postwar world, in S.E. Harris (ed.) Postwar Economic Problems. New York: McGraw-Hill.

    Google Scholar 

  • Shaw, B. (1994) User-supplier links and innovation, in M. Dodgson and R. Rothwell (eds) The Handbook of Industrial Innovation. Cheltenham: Edward Elgar.

    Google Scholar 

  • Smeets, R. (2008) Collecting the pieces of the FDI knowledge spillovers puzzle. The World Bank Research Observer, 23(2): 107–38.

    Article  Google Scholar 

  • Sousa, N. (2001) Multinationals and technology transfer through labour training. Paper presented at CEPR Workshop on Labour Market Effects of European Foreign Investments, Dublin, July.

    Google Scholar 

  • Spencer, J.W. (2008) The impact of multinational enterprise strategy on indigenous enterprises: horizontal spillovers and crowding out in developing countries. Academy of Management Review, 33(2): 341–61.

    Article  Google Scholar 

  • Temouri, Y., Driffield, Y.L. and Higon, D.A. (2008) Analysis of productivity differences among foreign and domestic firms: evidence from Germany. Review of World Economics, 144(1): 32–54.

    Article  Google Scholar 

  • Tishler, A. and Milstein, I. (2009) R&D wars and the effects of innovation on the success and survivability of firms in oligopoly markets. International journal of Industrial Organization, 27(4): 519–31.

    Article  Google Scholar 

  • Wang, H. and Kafouros, M.I. (2009) What factors determine innovation performance in emerging economies? Evidence from China. International Business Review, 18(6): 606–16.

    Article  Google Scholar 

  • Yueh, L. (2009) Patent laws and innovation in China. International Review of Law and Economics, 29(4): 304–13.

    Article  Google Scholar 

Download references

Authors
  1. Meng Song
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Nigel Driffield
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Jun Du
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Economics and Strategy Group, Aston Business School, UK

    Yama Temouri  & Chris Jones  & 

Copyright information

© 2014 Meng Song, Nigel Driffield and Jun Du

About this chapter

Cite this chapter

Song, M., Driffield, N., Du, J. (2014). Inward Investment, Technology Transfer and Innovation: Direct Evidence from China. In: Temouri, Y., Jones, C. (eds) International Business and Institutions after the Financial Crisis. The Academy of International Business. Palgrave Macmillan, London. https://doi.org/10.1057/9781137367204_10

Download citation

Publish with us

Policies and ethics

Search

Navigation