July 30, 2020, Paper, "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. In this paper, we study 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 ﬁrms are required to set up joint ventures with domestic ﬁrms in return for market access. Using a unique dataset of detailed quality measures of vehicle performance, we show that aﬃliated joint ventures and domestic ﬁrms share a greater similarity in quality strength compared to non-aﬃliated pairs. The results suggest that quid pro quo spurs additional knowledge spillover to aﬃliated domestic ﬁrms, in addition to any industry-wide spillover as a result of the presence of foreign ﬁrms. The identiﬁcation relies on withinproduct quality variation across diﬀerent dimensions, and the results are robust to a variety of speciﬁcations. We rule out endogenous joint venture network formation, overlapping customer base, or direct technology transfer via market transactions as alternative explanations. Analyses leveraging additional micro datasets on part suppliers and worker ﬂows among ﬁrms demonstrate that supplier network and labor mobility are important channels in mediating knowledge spillover. On the other hand, while ownership aﬃliation facilitates learning, such a requirement is not a prerequisite for knowledge spillover. Counterfactual exercises show that the role of quid pro quo."