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Technology Gap, Reverse Technology Spillover and Domestic Innovation Performance in Outward Foreign Direct Investment: Evidence from China

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Open access
Authors
Hong, J.
Zhou, C.
Wang, R.
Wu, Y.
Marinova, Dora
Date
2019
Type
Journal Article

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Hong, J. and Zhou, C. and Wang, R. and Wu, Y. and Marinova, D. 2019. Technology Gap, Reverse Technology Spillover and Domestic Innovation Performance in Outward Foreign Direct Investment: Evidence from China. China and World Economy. 27 (2).
Source Title
China and World Economy
DOI
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Faculty
Faculty of Humanities
School
School of Design and the Built Environment
Remarks

This is the peer reviewed version of the following article: Hong, J., Zhou, C., Wu, Y., Wang, R. and Marinova, D. (2019), Technology Gap, Reverse Technology Spillover and Domestic Innovation Performance in Outward Foreign Direct Investment: Evidence from China. China & World Economy, 27: 1-23 which has been published in final form at https://doi.org/10.1111/cwe.12272. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

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Abstract

This research adds to the literature studying the effects of outward foreign direct investment (OFDI) on domestic innovation performance and the moderating effect of a technology gap between host and home countries. New definitions of observed technology gap and expected technology gap are proposed. An observed technology gap captures the existing differences in technology level between establishments, regions or countries. An expected technology gap is an indication of the effort of imitating and learning from technology leaders. The corresponding measures and effects of observed and expected technology gaps on OFDI-induced reverse technology spillover are analyzed. OFDI in developed countries promotes innovation performance. However, OFDI in emerging markets hampers innovation performance. It is also found that regions with a wider observed technology gap and a narrower expected technology gap can benefit more from OFDI.