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Tax Policy and the Globalisation of R&D

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Author Info
Russell Thomson ()
Abstract

This paper examines the factors influencing the globalisation of R&D, with a particular focus on the role of tax policy, using panel data for 25 OECD countries over the period 1980- 2005. Two measures of R&D internationalisation are considered - R&D directly financed from abroad and R&D expenditure by foreign affiliates of US MNEs. The econometric analysis, which appropriately control for other determinants of inter-country differences in R&D investment, finds no evidence that host country R&D tax policy is an important determinant of MNE R&D location decisions or in attracting additional cross-border contract R&D. There is evidence that affiliate fixed capital stock and total sales are strong determinants of R&D performed by affiliates of US MNEs. Controlling for these variables, host country attributes seemed to be less important. In the case of cross-border contract R&D, host country expenditure on R&D via institutions of higher education is also found to be important.

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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 2009-03.

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Length: 74 pages
Date of creation: 2009
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Handle: RePEc:pas:papers:2009-03

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Related research
Keywords: Globalisation of R&D; tax policy; foreign direct investment; multinational enterprises;

Find related papers by JEL classification:
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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This page was last updated on 2009-11-30.

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