Reference : Foreign direct investment with endogenous technology choice
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Business & economic sciences : Special economic topics (health, labor, transportation…)
Foreign direct investment with endogenous technology choice
Dawid, Herbert mailto [Bielefeld University > Business Administration and Economics and Institute of Mathematical Economics]
Zou, Benteng mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
[en] Foreign direct investment, technology spillovers, optimal control
[en] In this paper, we analyze optimal foreign direct investment of a firm which
operates in a duopolistic market. We characterize a technology spillover threshold
and show that for an intensity of spillovers below this threshold, there is a unique
locally asymptotic stable steady state with a positive capital stock in the developing
country. Furthermore, we characterize how optimal foreign investment patterns
and the investor’s value function depend on the level of technology transferred
and characterize the optimal level to be used for the foreign direct investment.

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