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Multinational Enterprises and Globalization of R&D: A Study of U.S-based Firms

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  • Prema-chandra Athukorala

    ()

  • Archanun Kohpaiboon

    ()

Abstract

This paper examines patterns and determinants of overseas R&D expenditure of US-based manufacturing MNEs using a new panel dataset over the period 1990-2001. It is found that inter-country differences in R&D intensity of operation of US MNE affiliates are fundamentally determined by the domestic market size, overall R&D capability and cost of hiring R&D personnel. The impact of domestic market orientation of affiliates on R&D propensity varies among countries depending on their stage of global economic integration. Intellectual property protection seems to matter largely for mature economies with complementary endowments. There is no evidence to suggest that financial incentives have a significant impact on inter-country differences in R&D intensity when controlled for other relevant variables. Nor is there a statistically significant relationship between the size of the capital stock of MNEs and R&D intensity of their operation across countries. Overall, our findings serve as a caution against paying too much attention by host country governments on turning MNEs affiliates into technology creators as part of their foreign direct investment policy.

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File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2006/wp-econ-2006-06.pdf
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Bibliographic Info

Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2006-06.

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Length: 38 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:pas:papers:2006-06

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Keywords: R&D; multinational enterprises; foreign direct investment;

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Cited by:
  1. Russell Thomson, 2009. "Tax Policy and the Globalisation of R&D," Melbourne Institute Working Paper Series wp2009n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Davide Castellani & Giulio Giangaspero & Antonello Zanfei, 2013. "Heterogeneity and distance. Some propositions on how differences across regions, firms and functions affect the role of distance in FDI location decisions," Working Papers 1308, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.

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