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Link Between Domestic R&D And Inflow Of Fdi: A Game‐Theoretic Analysis

Author

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  • Hamid Beladi
  • Fathali Firoozi
  • Catherine Co

Abstract

. The empirical literature has generated mixed correlations between research and development (R&D) undertaken by domestic firms and the inflow of foreign direct investment (FDI) by their multinational rivals. Further, the existing theoretical explanations of such empirical results appear to be inadequate. This study presents an alternative game‐theoretic explanation for the observed correlations. The results show that the seemingly contradictory observed mixed correlations can be explained in an encompassing model in terms of the multinationals’ competitive and interactive assessment of the efficiency and expenditure consequences that domestic R&D could generate for the undertaking domestic competitors.

Suggested Citation

  • Hamid Beladi & Fathali Firoozi & Catherine Co, 2008. "Link Between Domestic R&D And Inflow Of Fdi: A Game‐Theoretic Analysis," Pacific Economic Review, Wiley Blackwell, vol. 13(2), pages 209-222, May.
    • Handle: RePEc:bla:pacecr:v:13:y:2008:i:2:p:209-222
    DOI: 10.1111/j.1468-0106.2008.00397.x
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    References listed on IDEAS

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    Cited by:

    1. Yibai Yang, 2015. "Domestic R&D, Foreign Direct Investment and Welfare," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 908-924, November.
    2. Herbert Dawid & Benteng Zou, 2017. "Foreign Direct Investment with Endogenous Technology Choice," Pacific Economic Review, Wiley Blackwell, vol. 22(1), pages 3-22, February.

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