FDI and Intellectual Property Protection in China: A Game Theory Perspective

Abstract

The large-scale spread of R&D activities by MNCs to investment host countries is a new phenomenon of globalization in the past ten years. For the host country, especially a developing host country such as China, how to promote the spillover effect of TNC research and development institutions on the host country and curb its crowding-out effect is a new topic. This paper analyzes the R&D strategy adopted by transnational corporations in China. We explain the relationship between the strength of intellectual property protection in China and the choice of the organization form of R&D activities by transnational corporations with game theory and proves the relationship between the two with data. Finally, policy implications are proposed for the trend of sole proprietorship of R&D activities of transnational corporations.