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Location factors of international R&D activities: an econometric approach


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  • Hugo Erken
  • Marcel Kleijn
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    Research and development (R&D) is important for economic growth. Many countries therefore attempt to raise the investments in R&D. Increasingly important in this context are foreign direct investments in R&D, which on average constitute 24% of total business R&D investments in the EU15 (between 1995 and 2004). This paper focuses on the question: 'Which location factors are decisive for the attractiveness of foreign R&D investments?' The answer to this question is crucial in order to attract new foreign investments in R&D and to keep home-base R&D activities in a country or to expand them. Based on econometric analysis, we show in this paper that, besides the impact of human capital and value added of foreign affiliates, a country's stock of private R&D capital is an important location factor for international R&D activities. The interpretation of this result is twofold. First of all, it indicates that firms locate their R&D abroad to reap the benefits of knowledge-spillover effects. Secondly, we argue that the stock of private R&D capital embodies a so-called 'place-to-be effect'. This effect can be regarded as a signalling effect to firms: if the private R&D capital stock in a country is relatively large, framework conditions for research are in place and the innovative climate is likely to be excellent.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

    Volume (Year): 19 (2010)
    Issue (Month): 3 ()
    Pages: 203-232

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    Handle: RePEc:taf:ecinnt:v:19:y:2010:i:3:p:203-232

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    Keywords: internationalization of R&D; R&D location factors; R&D investment climate; foreign direct investment;


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    Cited by:
    1. Eva Dettmann & Iciar Dominguez Lacasa & Jutta Günther & Björn Jindra, 2013. "Determinants of Foreign Technological Activity in German Regions – A Count Model Analysis of Transnational Patents (1996-2009)," IWH Discussion Papers, Halle Institute for Economic Research 12, Halle Institute for Economic Research.
    2. Commission of Experts for Research and Innovation (EFI), Berlin (ed.), 2013. "Research, innovation and technological performance in Germany - EFI Report 2013," Research, innovation and technological performance in Germany: Report, Expertenkommission Forschung und Innovation (EFI), Expertenkommission Forschung und Innovation (EFI), volume 127, number 2013e.


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