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

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  • Hugo Erken
  • Marcel Kleijn

Abstract

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.

Suggested Citation

  • Hugo Erken & Marcel Kleijn, 2010. "Location factors of international R&D activities: an econometric approach," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(3), pages 203-232.
    • Handle: RePEc:taf:ecinnt:v:19:y:2010:i:3:p:203-232
    DOI: 10.1080/10438590802469578
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    References listed on IDEAS

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    1. Karabag, Solmaz Filiz & Tuncay-Celikel, Asli & Berggren, Christian, 2011. "The Limits of R&D Internationalization and the Importance of Local Initiatives: Turkey as a Critical Case," World Development, Elsevier, vol. 39(8), pages 1347-1357, August.
    2. Martin Falk, 2012. "Determinants of Greenfield Investment in Knowledge Intensive Business Services," FIW Research Reports series IV-002, FIW.
    3. Hall, Bronwyn H., 2011. "The internationalization of R&D," MERIT Working Papers 2011-049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Kent Eliasson & Pär Hansson & Markus Lindvert, 2017. "Effects of foreign acquisitions on R&D and high-skill activities," Small Business Economics, Springer, vol. 49(1), pages 163-187, June.
    5. EFI - Commission of Experts for Research and Innovation (ed.), 2013. "Research, innovation and technological performance in Germany - EFI Report 2013," Reports on Research, Innovation and Technological Performance in Germany, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin, volume 127, number 2013e, March.
    6. Gary A.S. Cook & Hans Lööf & Naresh R. Pandit & Börje Johansson, 2012. "The influence of clustering on MNE location and innovation in Great Britain," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), Entrepreneurship, Social Capital and Governance, chapter 3, pages 53-82, Edward Elgar Publishing.
    7. Cozza, Claudio & Franco, Chiara & Perani, Giulio, 2018. "R&D endowments at home driving R&D internationalisation: Evidence from the Italian business R&D survey," Technological Forecasting and Social Change, Elsevier, vol. 134(C), pages 277-289.
    8. Dettmann, Eva & Dominguez Lacasa, Iciar & Günther, Jutta & Jindra, Björn, 2013. "Determinants of Foreign Technological Activity in German Regions – A Count Model Analysis of Transnational Patents (1996-2009)," IWH Discussion Papers 12/2013, Halle Institute for Economic Research (IWH).
    9. Szalavetz Andrea, 2014. "Innovation in Hungary - The Impact of EU Accession and Integration into Global Value Chains," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 42(1), pages 40-59, June.
    10. Laurens, Patricia & Le Bas, Christian & Schoen, Antoine & Villard, Lionel & Larédo, Philippe, 2015. "The rate and motives of the internationalisation of large firm R&D (1994–2005): Towards a turning point?," Research Policy, Elsevier, vol. 44(3), pages 765-776.
    11. repec:wsr:ecbook:2010:i:iv-002 is not listed on IDEAS
    12. Dettmann, Eva & Lacasa, Iciar Dominguez & Guenther, Jutta & Jindra, Bjorn, 2014. "Детерминанты Зарубежной Технологической Активности В Германии - Количественный Анализ Транснациональных Патентов [Determinants of Foreign Technological Activity in German Regions - A Count Model An," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 8(1), pages 34-51.
    13. Eva Dettmann & Iciar Dominguez Lacasa & Jutta Guenther & Bjorn Jindra, 2014. "Determinants of Foreign Technological Activity in German Regions - A Count Model Analysis of Transnational Patents," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 8(1), pages 34-51.

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