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The Impact of Foreign Direct Investment on Home and Host Countries with Endogenous R&D

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  • Sanna-Randaccio, Francesca

Abstract

he paper analyzes the impact of FDI on home and host countries, when firms compete both in the choice of international strategy and in R&D. A two-country, two-firm model is used. The problem is structured as a three-stage game in which firms must decide: the mode of foreign expansion; how much to invest in R&D; how much to sell in each market. It is shown that in high-technology sectors a policy of attracting inward FDI may increase welfare in both the home and host countries. The effect on host-country welfare is found to be more beneficial if technological spillovers are national, instead of international, in scope. Copyright 2002 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 10 (2002)
Issue (Month): 2 (May)
Pages: 278-98

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Handle: RePEc:bla:reviec:v:10:y:2002:i:2:p:278-98

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Cited by:
  1. Fotopoulos, Georgios & Louri-Dendrinou, Eleni, 2002. "Corporate Growth and FDI: Are Multinationals Stimulating Local Industrial Development?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3128, C.E.P.R. Discussion Papers.
  2. Giovanna Segre, 2000. "Foreign Direct Investment and Trade in the EU: Are They Complementary or Substitute in Business Cycles Fluctuations?," CERIS Working Paper, Institute for Economic Research on Firms and Growth - Moncalieri (TO) 200007, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
  3. Olimpia State & Gabriela Tigu & Claudia - Elena Tuclea, 2008. "Etude De Marché Sur La Culture Des Organisations De L’Industrie Touristique," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  4. Jozef Konings, 2009. "The Effect of Direct Foreign Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies," Working Papers id:2335, eSocialSciences.
  5. Krzysztof Wach & Iveta Ubrežiová & Elena Horská, 2008. "Foreign Trade In Poland And Slovakia In The Process Of European Economic Integration," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  6. Esmaeel Ezat, 2008. "The Impact Of Foreign Direct Investment (Fdi) On Domestic Firm'S Product And Service Quality In Czech Republic," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  7. Marius Gavriletea, 2008. "The Effects Of Terrorism On The Insurance Sector," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  8. Huang, Can & Qu, Zhe & Zhang, Mingqian & Zhao, Yanyun, 2007. "R&D offshoring and technology learning in emerging economies: Firm-level evidence from the ICT industry," MERIT Working Papers 023, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  9. Jannett Highfill & Michael McAsey, 2013. "Welfare Measures in Dynamic Firm R&D Games," International Advances in Economic Research, Springer, Springer, vol. 19(4), pages 439-449, November.
  10. Pehr-Johan Norbäck, 2011. "Subsidizing Away Exports? A Note on R&D-policy Towards Multinational Firms," Journal of Industry, Competition and Trade, Springer, Springer, vol. 11(1), pages 25-42, March.
  11. Jannett Highfill & Michael McAsey, 2013. "Dynamic Firm R&D Games: Manufacturing Costs and Reliability Paths," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 1-14, February.
  12. Jozef Konings, 1999. "The Effect of Direct Foreign Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 8699, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  13. Simona Iammarino & Francesca Sanna-Randaccio & Maria Savona, 2007. "The perception of obstacles to innovation. Multinational and domestic firms in Italy," Working Papers of BETA 2007-12, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  14. Fabrizio Erbetta & Luca Agnello, 2001. "The martingales: theoretical and empirical characteristics," CERIS Working Paper, Institute for Economic Research on Firms and Growth - Moncalieri (TO) 200107, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
  15. Carmen Maria Gut, 2008. "Participation To Professional Training Courses Of The Employees Belonging To Companies From The Romanian Manufacturing Industry," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  16. Nikola Knego, 2008. "Students And Entrepreneurship: An Example," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  17. Qu, Zhe & Huang, Can & Zhang, Mingqian & Zhao, Yanyun, 2013. "R&D offshoring, technology learning and R&D efforts of host country firms in emerging economies," Research Policy, Elsevier, Elsevier, vol. 42(2), pages 502-516.
  18. Jozef Konings, 2000. "The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies," William Davidson Institute Working Papers Series 344, William Davidson Institute at the University of Michigan.
  19. Jos J. Van Der Werf, 2008. "Would-Be Problem Improvers In Action: Tackling Ambiguity In Organizational Issues," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  20. Henrique Manuel Pimentel Reis & Maria Teresa Gomes Valente Da Costa, 2008. "ECONOMIC DEVELOPMENT AND SOCIAL RESPONSIBILITY The Portuguese Food Banks," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.
  21. Irena Szarowská, 2008. "Financing Of Public Services Through Public Private Partnership Projects," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business, Babes-Bolyai University, Faculty of Business.

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