R&D Investment, FDI and Technology-Sourcing Firms

Adopting a micro-level perspective to study the relationships between R&D investment and technology-sourcing FDI is an emerging research field in international economics and development economics. Based on relevant theories, we build a two stage game of technology-sourcing firms in which firms, customers, government participate. Comparing with traditional technology-exploitation FDI, technology-sourcing FDI could achieve better economic efficiency and social welfare under certain conditions. In conclusion, we make policy implication: it is rational for government to foster some firms to conduct technology-sourcing FDI which has a strong effect on domestic economy.