American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Quid Pro Quo, Knowledge Spillovers, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry
American Economic Review
(pp. 3825–52)
Abstract
This paper studies the impact of quid pro quo (technology for market access) in facilitating knowledge spillovers and quality upgrading in the Chinese automobile industry. The identification strategy exploits within-product quality variation across a rich set of quality dimensions. We find affiliated domestic automakers adopt more similar quality strengths of their joint venture partners, consistent with knowledge spillovers. Additional analysis suggests worker flows and supplier networks mediate knowledge spillovers. Knowledge spillovers due to ownership affiliation under quid pro quo contributed 8.3 percent of the quality improvement experienced by affiliated domestic models from 2001 to 2014, relative to nonaffiliated domestic models.Citation
Bai, Jie, Panle Jia Barwick, Shengmao Cao, and Shanjun Li. 2025. "Quid Pro Quo, Knowledge Spillovers, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry." American Economic Review 115 (11): 3825–52. DOI: 10.1257/aer.20221501Additional Materials
JEL Classification
- F23 Multinational Firms; International Business
- L15 Information and Product Quality; Standardization and Compatibility
- L24 Contracting Out; Joint Ventures; Technology Licensing
- L62 Automobiles; Other Transportation Equipment; Related Parts and Equipment
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- P23 Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population