Foreign Subsidiaries in the East German Innovation System – Evidence from Manufacturing Industries
AbstractThis paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro data- base” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed.
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Bibliographic InfoPaper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 4.
Date of creation: Jun 2008
Date of revision:
east germany; regional innovation system; foreign direct investment;
Other versions of this item:
- Jutta Günther & Johannes Stephan & Björn Jindra, 2008. "Foreign Subsidiaries in the East German Innovation System - Evidence from Manufacturing Industries," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 59(Supplemen), pages 137-172.
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- F20 - International Economics - - International Factor Movements and International Business - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-07 (All new papers)
- NEP-CSE-2008-06-07 (Economics of Strategic Management)
- NEP-INO-2008-06-07 (Innovation)
- NEP-IPR-2008-06-07 (Intellectual Property Rights)
- NEP-KNM-2008-06-07 (Knowledge Management & Knowledge Economy)
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