Author(s):	Thomas Müller, Monika Schnitzer
Publication Date:	October 2003
Keyword(s):	foreign direct investment, joint ventures, multinational enterprise, ownership structure, spillovers, transition economies
JEL(s):	D43, F21, F23, L13, O12, P31
Programme Areas:	Industrial Organization, International Trade and Regional Economics, Transition Economics, Institutions and Economic Performance
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=4099

This paper analyzes the effects of a potential spillover on technology transfer of a multinational enterprise and on the host country policy. In particular, we examine how both parties? incentives can be controlled through the ownership structure in an international joint venture. In contrast to existing arguments, we show that spillovers must not always have negative effects on technology transfer and they may be efficiency-improving. Moreover, there are circumstances where a joint venture is mutually beneficial. Surprisingly, however, we find that despite the prospect of spillovers, a joint venture is sometimes not in the interest of a host country.