Mode of Foreign Entry, Technology Transfer, and Foreign Direct Investment Policy

Mode of Foreign Entry, Technology Transfer, and Foreign Direct Investment Policy

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Mode of Foreign Entry, Technology Transfer, and Foreign Direct Investment Policy

When technology transfer is costly, a foreign firm and host country government may differ in their preferences over direct entry and acquisition. Government intervention could help induce the socially preferred choice. Foreign direct investment can take place through the direct entry of foreign firms or the acquisition of existing domestic firms.

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