Technology Transfer and Spillovers in International Joint Ventures

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.