I develop a duopoly model of competition between platforms, incorporating users with heterogeneous preferences over both the platforms' characteristics and the presence of other users. Hence platforms are concerned with both the number and composition of users. The model yields novel representations of heterogeneity, size effects, and composition effects. I use these representations to decompose the relationship between the price and the size and composition of a platform. Prices need not be monotonic in the size of the installed base and profitability can similarly vary inversely. I identify conditions under which prices are increasing, decreasing, or unchanging in platform size. Given that users care about composition, nonpricing strategies to cultivate platform composition emerge when platforms cannot sufficiently leverage price discrimination. Composition effects and cultivation reframe the dominant-firm fringe-firm paradigm and explain the presence of multiproduct firms in platform markets, such as online dating.
{"title":"Composition Effects in Platforms with Population Heterogeneity","authors":"Michael Sacks","doi":"10.2139/ssrn.3461023","DOIUrl":"https://doi.org/10.2139/ssrn.3461023","url":null,"abstract":"I develop a duopoly model of competition between platforms, incorporating users with heterogeneous preferences over both the platforms' characteristics and the presence of other users. Hence platforms are concerned with both the number and composition of users. The model yields novel representations of heterogeneity, size effects, and composition effects. I use these representations to decompose the relationship between the price and the size and composition of a platform. Prices need not be monotonic in the size of the installed base and profitability can similarly vary inversely. I identify conditions under which prices are increasing, decreasing, or unchanging in platform size. Given that users care about composition, nonpricing strategies to cultivate platform composition emerge when platforms cannot sufficiently leverage price discrimination. Composition effects and cultivation reframe the dominant-firm fringe-firm paradigm and explain the presence of multiproduct firms in platform markets, such as online dating.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"39 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81071942","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Intellectual mobility is seen as a specific form of professional mobility, reflecting the unity of scientific knowledge development and changes in social conditions. External and internal professional mobility of scientific personnel (geography, duration of stay abroad, mechanisms and purposes of departure) between organizations, sectors, regions and countries is an adequate means of transfer of knowledge and technology, ahead of the development of scientific and production cooperation. In this case, by academic mobility of scientific personnel we mean a change of place of work for scientists without changing their scientific sphere of activity, their temporary transfer for the purpose of participation in research projects and networks. Professional development and retraining is an integral form of existence of scientists, reflecting their internal development needs (including the desire to solve their financial problems). The social experience gained has always had a strong impact on the further development of their professional and research careers. Professional mobility causes quantitative and qualitative changes - there is a transformation of science, a measure of the saturation of human resources in a particular scientific direction.
{"title":"New in the Professional Mobility of Kazakhstan Scientists as an Element of Scientific Activity and a Way to Survive","authors":"L. Spankulova","doi":"10.2139/ssrn.3481109","DOIUrl":"https://doi.org/10.2139/ssrn.3481109","url":null,"abstract":"Intellectual mobility is seen as a specific form of professional mobility, reflecting the unity of scientific knowledge development and changes in social conditions. External and internal professional mobility of scientific personnel (geography, duration of stay abroad, mechanisms and purposes of departure) between organizations, sectors, regions and countries is an adequate means of transfer of knowledge and technology, ahead of the development of scientific and production cooperation. In this case, by academic mobility of scientific personnel we mean a change of place of work for scientists without changing their scientific sphere of activity, their temporary transfer for the purpose of participation in research projects and networks. Professional development and retraining is an integral form of existence of scientists, reflecting their internal development needs (including the desire to solve their financial problems). The social experience gained has always had a strong impact on the further development of their professional and research careers. Professional mobility causes quantitative and qualitative changes - there is a transformation of science, a measure of the saturation of human resources in a particular scientific direction.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"105 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75953333","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The modern economic theory gives diffusion of innovation and full-scale innovation activity a special stimulating role as one of the additional sources of economic growth in the region. In her monograph "Diffusion of European innovations in Russia" E.V. Alekseeva writes "...The transfer and diffusion of the most important innovations from one country to another is a working paradigm of the theory of modernization..." [Alexeyeva, 2007]. Within the framework of this work, diffusion of innovations is defined as the import and distribution of innovations in the society with direct contact of participants of interaction between the spheres of science, education and innovations. Or indirectly through various means of information transfer". The essence of the diffusion of innovation lies in the diffusion of the innovative product into the consumption environment due to the unsaturated nature of the product, as is the case, for example, with the spread of molecules of one gas into a volume with a lower concentration, up to the equalization of concentrations. Previously, the problems were considered by other authors for the case of quantitative assessment of the impact of costs on R&D and technological innovation, their flows in space on the economic growth of the regions of Russia, the leading countries of the European Union. In addition to the classical objectives of economic growth, many scientists have recently focused their attention on empirical modelling of regional growth based on innovation. The theory of diffusion of innovation and knowledge flows is important in itself as a section of the general theory of the relationship between economic growth and innovation activity and as a section of modern economic theory with numerous applications in mechanics, physics, biology, geography and other natural science disciplines. The theory of diffusion of innovations and knowledge flows aims to explain the speed and breadth of various product and process innovations in society. The urgent task of the transition from a resource-based economy to industrial development is to increase innovation activity. The active and special decisive role in this can be played by the flow of knowledge between the regions - as the general economic conditions of economic growth in Kazakhstan.
{"title":"Main Principles and Foreign Approaches to the Study of the Relationship between Diffusion of Innovation and Economic Growth","authors":"L. Spankulova","doi":"10.2139/ssrn.3481096","DOIUrl":"https://doi.org/10.2139/ssrn.3481096","url":null,"abstract":"The modern economic theory gives diffusion of innovation and full-scale innovation activity a special stimulating role as one of the additional sources of economic growth in the region. In her monograph \"Diffusion of European innovations in Russia\" E.V. Alekseeva writes \"...The transfer and diffusion of the most important innovations from one country to another is a working paradigm of the theory of modernization...\" [Alexeyeva, 2007]. Within the framework of this work, diffusion of innovations is defined as the import and distribution of innovations in the society with direct contact of participants of interaction between the spheres of science, education and innovations. Or indirectly through various means of information transfer\". The essence of the diffusion of innovation lies in the diffusion of the innovative product into the consumption environment due to the unsaturated nature of the product, as is the case, for example, with the spread of molecules of one gas into a volume with a lower concentration, up to the equalization of concentrations. Previously, the problems were considered by other authors for the case of quantitative assessment of the impact of costs on R&D and technological innovation, their flows in space on the economic growth of the regions of Russia, the leading countries of the European Union. In addition to the classical objectives of economic growth, many scientists have recently focused their attention on empirical modelling of regional growth based on innovation. The theory of diffusion of innovation and knowledge flows is important in itself as a section of the general theory of the relationship between economic growth and innovation activity and as a section of modern economic theory with numerous applications in mechanics, physics, biology, geography and other natural science disciplines. The theory of diffusion of innovations and knowledge flows aims to explain the speed and breadth of various product and process innovations in society. The urgent task of the transition from a resource-based economy to industrial development is to increase innovation activity. The active and special decisive role in this can be played by the flow of knowledge between the regions - as the general economic conditions of economic growth in Kazakhstan.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72826520","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Technology diffusion often plays a critical role in models of trade and economic growth. Most existing empirical tests for international technology spillovers suggest some role for spillovers in explaining productivity growth. It has been relatively difficult, however, to identify separate roles for the direct and indirect channels of knowledge spillovers. The influence of these channels is often confounded owing to the focus on total‐factor productivity (TFP) and R&D spending within a cross‐section or panel data setting. This paper employs an alternative methodology to investigate the role of direct knowledge spillovers. Using citation‐weighted domestic patents, citation‐weighted foreign patents and value added for 14 U.S. manufacturing industries over the period 1977 to 2004 a panel VAR methodology is employed to investigate the dynamic role of direct and indirect knowledge spillovers. Evidence for the role of the direct knowledge spillovers channel is found—an increase in citation‐weighted patents abroad directly increases the measure of domestic citation‐weighted patents, after accounting for the influence of productivity/value added. The role of foreign innovative activity, however, is small relative to the role of U.S. innovative activity in explaining the dynamics of industry value added.
{"title":"Using Panel VAR to Analyze International Knowledge Spillovers","authors":"N. Hovhannisyan, Norman H. Sedgley","doi":"10.1111/roie.12438","DOIUrl":"https://doi.org/10.1111/roie.12438","url":null,"abstract":"Technology diffusion often plays a critical role in models of trade and economic growth. Most existing empirical tests for international technology spillovers suggest some role for spillovers in explaining productivity growth. It has been relatively difficult, however, to identify separate roles for the direct and indirect channels of knowledge spillovers. The influence of these channels is often confounded owing to the focus on total‐factor productivity (TFP) and R&D spending within a cross‐section or panel data setting. This paper employs an alternative methodology to investigate the role of direct knowledge spillovers. Using citation‐weighted domestic patents, citation‐weighted foreign patents and value added for 14 U.S. manufacturing industries over the period 1977 to 2004 a panel VAR methodology is employed to investigate the dynamic role of direct and indirect knowledge spillovers. Evidence for the role of the direct knowledge spillovers channel is found—an increase in citation‐weighted patents abroad directly increases the measure of domestic citation‐weighted patents, after accounting for the influence of productivity/value added. The role of foreign innovative activity, however, is small relative to the role of U.S. innovative activity in explaining the dynamics of industry value added.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"9 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73075986","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bodo Knoll, Nadine Riedel, Thomas Schwab, Maximilian Todtenhaupt, Johannes Voget
Abstract Existing evidence shows that R&D tax incentives boost countries’ private sector R&D. Given the importance of multinational enterprises (MNEs) for private sector innovation, it is unclear, however, whether firms engage in genuinely new R&D or whether R&D is reallocated across borders. Drawing on data on unconsolidated R&D activity of MNEs in Europe, we provide evidence that responses are dominated by cross-border relocations: More generous tax incentives in one country increase MNEs’ R&D investments in affiliates located there, while lowering R&D investments in affiliates of the same MNE group located in other countries. Globally, firms hardly raise their R&D activities when tax incentives become more generous.
{"title":"Cross-Border Effects of R&D Tax Incentives","authors":"Bodo Knoll, Nadine Riedel, Thomas Schwab, Maximilian Todtenhaupt, Johannes Voget","doi":"10.2139/ssrn.3484384","DOIUrl":"https://doi.org/10.2139/ssrn.3484384","url":null,"abstract":"Abstract Existing evidence shows that R&D tax incentives boost countries’ private sector R&D. Given the importance of multinational enterprises (MNEs) for private sector innovation, it is unclear, however, whether firms engage in genuinely new R&D or whether R&D is reallocated across borders. Drawing on data on unconsolidated R&D activity of MNEs in Europe, we provide evidence that responses are dominated by cross-border relocations: More generous tax incentives in one country increase MNEs’ R&D investments in affiliates located there, while lowering R&D investments in affiliates of the same MNE group located in other countries. Globally, firms hardly raise their R&D activities when tax incentives become more generous.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"30 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74974907","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we introduce the Input Rank as a measure to study the organization of global supply networks at the firm level. We model the case of a firm that needs assessing the technological relevance of each direct and indirect supplier on a network-like production function with labor and intermediate inputs. In our framework, an input is technologically more relevant if a shock on that upstream market can hit harder the marginal costs of a downstream buyer, considering the topology of the supply structure. A higher labor intensity at each stage buffers the transmission of upstream shocks in the network. In addition, we provide for the possibility that producers have limited knowledge of inputs in the supply network, hence they can underestimate the relevance of more distant inputs. After applications, the Input Rank returns a matrix of technological centralities that order any direct or indirect input for a representative firm in any output industry. We compute the Input Rank on U.S. and world input-output tables. Finally, we test how it correlates with choices of vertical integration made by 20,489 U.S. parent companies controlling 154,836 affiliates worldwide. We find that a higher Input Rank is positively associated with higher odds that that input is vertically integrated, relatively more when final demand is elastic. A supplier's Input Rank remains a significant predictor of a firm's decision to integrate even after controlling for the relative positions on upstreamness(downstreamness) segments.
{"title":"Measuring the Input Rank in Global Supply Networks","authors":"Armando Rungi, Loredana Fattorini, Kenan Huremović","doi":"10.2139/ssrn.3488349","DOIUrl":"https://doi.org/10.2139/ssrn.3488349","url":null,"abstract":"In this paper, we introduce the Input Rank as a measure to study the organization of global supply networks at the firm level. We model the case of a firm that needs assessing the technological relevance of each direct and indirect supplier on a network-like production function with labor and intermediate inputs. In our framework, an input is technologically more relevant if a shock on that upstream market can hit harder the marginal costs of a downstream buyer, considering the topology of the supply structure. A higher labor intensity at each stage buffers the transmission of upstream shocks in the network. In addition, we provide for the possibility that producers have limited knowledge of inputs in the supply network, hence they can underestimate the relevance of more distant inputs. After applications, the Input Rank returns a matrix of technological centralities that order any direct or indirect input for a representative firm in any output industry. We compute the Input Rank on U.S. and world input-output tables. Finally, we test how it correlates with choices of vertical integration made by 20,489 U.S. parent companies controlling 154,836 affiliates worldwide. We find that a higher Input Rank is positively associated with higher odds that that input is vertically integrated, relatively more when final demand is elastic. A supplier's Input Rank remains a significant predictor of a firm's decision to integrate even after controlling for the relative positions on upstreamness(downstreamness) segments.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89609580","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-11DOI: 10.11648/J.AJEIT.20190302.11
Irshad Ullah, Aamna Irshad
To enhance and improve process of education, the work is continuously in progress. Different researchers and educationist are busy to facilitate the learner as well as the teacher. Technology is also on the way of progress to make it user friendly. Despite of the use of technology in every field, the user faces problems while using and updating it. For its efficient use, some guidelines are always required by keeping in view the use and challenges of technology. The study was conducted in the form of documentary analysis that how new technology can be used to help and improve the process of teaching and learning. The objective of the study was to investigate the use of technology in the field of education. The results and discussion shows that with the use of this, the process of teaching and learning will be efficientl and effectives.
{"title":"Usability of Educational Technology: Global Perspective","authors":"Irshad Ullah, Aamna Irshad","doi":"10.11648/J.AJEIT.20190302.11","DOIUrl":"https://doi.org/10.11648/J.AJEIT.20190302.11","url":null,"abstract":"To enhance and improve process of education, the work is continuously in progress. Different researchers and educationist are busy to facilitate the learner as well as the teacher. Technology is also on the way of progress to make it user friendly. Despite of the use of technology in every field, the user faces problems while using and updating it. For its efficient use, some guidelines are always required by keeping in view the use and challenges of technology. The study was conducted in the form of documentary analysis that how new technology can be used to help and improve the process of teaching and learning. The objective of the study was to investigate the use of technology in the field of education. The results and discussion shows that with the use of this, the process of teaching and learning will be efficientl and effectives.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"37 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85292132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
User communities represent a unique organizing structure for the exchange of ideas and knowledge. They are organizations composed primarily of users working collaboratively, voluntarily, and with minimal oversight to freely and openly develop and exchange knowledge around a common artifact. The prevalence of user communities appears to be on the rise, as evidenced by communities across a variety of fields ranging from software to Legos to sports equipment. In this essay, we discuss how firms can benefit from working with user communities––that is, we discuss the opportunities for firms to leverage user communities as a source of open innovation. We theorize the conditions under which user communities will emerge and function, and discuss the benefits that user communities can provide and the challenges they can create for firms, thereby illustrating the relevance and import of user communities to firms and the strategic management literature.
{"title":"Why Do User Communities Matter for Strategy?","authors":"Sonali K. Shah, F. Nagle","doi":"10.2139/ssrn.3407610","DOIUrl":"https://doi.org/10.2139/ssrn.3407610","url":null,"abstract":"User communities represent a unique organizing structure for the exchange of ideas and knowledge. They are organizations composed primarily of users working collaboratively, voluntarily, and with minimal oversight to freely and openly develop and exchange knowledge around a common artifact. The prevalence of user communities appears to be on the rise, as evidenced by communities across a variety of fields ranging from software to Legos to sports equipment. In this essay, we discuss how firms can benefit from working with user communities––that is, we discuss the opportunities for firms to leverage user communities as a source of open innovation. We theorize the conditions under which user communities will emerge and function, and discuss the benefits that user communities can provide and the challenges they can create for firms, thereby illustrating the relevance and import of user communities to firms and the strategic management literature.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82994731","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the interplay between the spatial distribution of economic activity and technological progress in the context of general purpose technologies with emphasis on market access. A tractable spatial equilibrium model is developed, in which ex-ante identical cities sort themselves into different technology generations through the interaction between migration, firms’ technology choice, and technological progress. Spatial inequality encourages technological progress, while the reverse causality has inverted-U-shaped effects. The interplay exhibits cross-city divergence and possibly convergence with/without persistent expansion of top cities, where convergence can limit technological progress and diffusion, and thus convergence itself, due to adjustment costs of technology adoption.
{"title":"Market Access, Spatial Inequality, and General Purpose Technologies","authors":"Kohei Nagamachi","doi":"10.2139/ssrn.3317926","DOIUrl":"https://doi.org/10.2139/ssrn.3317926","url":null,"abstract":"We study the interplay between the spatial distribution of economic activity and technological progress in the context of general purpose technologies with emphasis on market access. A tractable spatial equilibrium model is developed, in which ex-ante identical cities sort themselves into different technology generations through the interaction between migration, firms’ technology choice, and technological progress. Spatial inequality encourages technological progress, while the reverse causality has inverted-U-shaped effects. The interplay exhibits cross-city divergence and possibly convergence with/without persistent expansion of top cities, where convergence can limit technological progress and diffusion, and thus convergence itself, due to adjustment costs of technology adoption.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81098989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper constructs a two-stage sequential game model to investigate the spillover effect of inward FDI on improving the efficiency of domestic firms in host countries. Our model shows that, given the optimal joint-venture policy made by foreign firms, the impact of spillover effect of inward FDI is contingent upon the productivity gap between the domestic firms and foreign ones. In particular, we demonstrate that the spillover effect of FDI inward varies negatively with the productivity gap between domestic low-productivity firms and foreign firms and works conversely for high-productivity firms. This result suggests that once the productivity gap widens, the entry of foreign firms will increase the efficiency of high-productivity firms and reduce the efficiency of low-productivity firms. The implication of our theoretical predictions is that once the productivity of domestic firms (high-productivity firms) is close enough to the world productivity frontier, they will incur the positive spillover effect from the entry of foreign firms. In contrast, the domestic firms with low productivity which are more distant from the world productivity frontier will perform worse owing to the entry of foreign firms, thus leading to the negative spillover effect. Using the data from over 570,000 firms in Chinese manufacturing industry in 2011, we advance the understanding of the theoretical model through empirical analysis.
{"title":"Productivity Gap and Inward FDI Spillovers: Theory and Evidence from China","authors":"J. Shen, Hao Wang, S. Lin","doi":"10.2139/ssrn.3353793","DOIUrl":"https://doi.org/10.2139/ssrn.3353793","url":null,"abstract":"This paper constructs a two-stage sequential game model to investigate the spillover effect of inward FDI on improving the efficiency of domestic firms in host countries. Our model shows that, given the optimal joint-venture policy made by foreign firms, the impact of spillover effect of inward FDI is contingent upon the productivity gap between the domestic firms and foreign ones. In particular, we demonstrate that the spillover effect of FDI inward varies negatively with the productivity gap between domestic low-productivity firms and foreign firms and works conversely for high-productivity firms. This result suggests that once the productivity gap widens, the entry of foreign firms will increase the efficiency of high-productivity firms and reduce the efficiency of low-productivity firms. The implication of our theoretical predictions is that once the productivity of domestic firms (high-productivity firms) is close enough to the world productivity frontier, they will incur the positive spillover effect from the entry of foreign firms. In contrast, the domestic firms with low productivity which are more distant from the world productivity frontier will perform worse owing to the entry of foreign firms, thus leading to the negative spillover effect. Using the data from over 570,000 firms in Chinese manufacturing industry in 2011, we advance the understanding of the theoretical model through empirical analysis.","PeriodicalId":11062,"journal":{"name":"Development of Innovation eJournal","volume":"36 6","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72587559","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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