Quid Pro Quo, Knowledge Spillover, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry

Abstract While there is a vast body of research on the benefits of FDI in developing countries, whether and how the form of FDI matters have received limited attention. This paper studies the impact of FDI via quid pro quo (technology for market access) on facilitating knowledge spillover and quality upgrading. Our context is the Chinese automobile industry, where foreign automakers are required to set up joint ventures (the “quid”) with domestic automakers in return for market access (the “quo”).

• Ross School of Business
• Department of Economics
• International Policy Center
• Jie Bai