Title: “Fencing Off Silicon Valley”
The treatment of foreign investors is a contentious topic in U.S. entrepreneurship policy. We model a setting where foreign corporate investments in Silicon Valley may allow U.S. entrepreneurs to pursue technologies that they could not otherwise, but may also lead to knowledge spillovers. We show that despite the benefits from such inbound investments for U.S. firms, it may be optimal for the U.S. government to raise their costs to deter investments. Using as comprehensive as possible a sample of investments by foreign corporate investors in U.S. startups, we find evidence consistent with the presence of knowledge spillovers to foreign investors.
Presenter: Yulia Zhestkova (University of Chicago)
Coauthors: Ufuk Akcigit (University of Chicago), Sina Ates (Board of Governors of the Federal Reserve System), Josh Lerner (Harvard Business School) and Richard Townsend (University of California Sa Diego)
Discussant: Juanita Gonzalez-Uribe (The London School of Economics and Political Science)