Technology Transfer and Spillovers in International Joint Ventures

It is often argued that multinationals are reluctant to transfer
technology due to the fear of spillovers. We show that this need
not be the case if host country policies like taxation are taken
into account. Furthermore, we examine the incentives the
multinational and the host country have to engage in an
international joint venture. We show why a multinational may agree
to enter a joint venture even though this gives rise to spillovers.
Surprisingly, we find that a joint venture is sometimes not in the
interest of a host country, despite the prospect of spillovers.