How do Multinationals Impact China's Technology? The Role of Quid Pro Quo Policy and Technology Spillovers

Ma, Xiao and Zhang, Yiran (2024): How do Multinationals Impact China's Technology? The Role of Quid Pro Quo Policy and Technology Spillovers.

Abstract

Multinationals play a crucial role in international knowledge diffusion. Using comprehensive patent data, we document: (1) multinational affiliates and their foreign parent firms comprise a significant portion of patents filed with China’s patent office; and (2) there are subsequent transfers and spillovers of these technologies to domestic firms. Guided by this evidence, we develop a model of multinational production featuring cross-country idea flows, transfers, and spillovers. Quantitatively, we find that without multinational production and knowledge spillovers, the idea stock owned by China would drop by 27%. Furthermore, due to the externalities of multinationals through technology transfers and spillovers, subsidizing multinationals will at most increase real income by 8% in China.

• Item Type: MPRA Paper
• Language: English
• Keywords: multinational activities; technology transfers; knowledge spillovers
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

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