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Why buy what you can get for free? The effect of foreign direct investment on state patent rates

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  • Ford, Timothy C.
  • Rork, Jonathan C.

Abstract

Research has shown that foreign direct investment (FDI) encourages economic growth at the state level. We also know that knowledge spillovers, measured via patent counts, contribute to economic growth. Using an instrumental variable approach, this paper demonstrates that FDI increases patent rates in US states, thereby providing a link for the mechanism through which FDI impacts growth. Moreover, we find that FDI in neighboring states has just as strong an impact on patent rates, giving further credence to the notion that knowledge can spill across state borders.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 68 (2010)
Issue (Month): 1 (July)
Pages: 72-81

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Handle: RePEc:eee:juecon:v:68:y:2010:i:1:p:72-81

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: State growth Knowledge spillovers Foreign direct investment;

References

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Cited by:
  1. Rogers, Cynthia L. & Wu, Chen, 2012. "Employment by foreign firms in the U.S.: Do state incentives matter?," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 664-680.

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