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Issues and Commentaries Issues et commentaires Are Foreign-Controlled Manufacturing Firms Less R&D-Intensive than Canadian- Controlled Firms?

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  • Jianmin Tang
  • Someshwar Rao

Abstract

Using firm-level data, this paper examines the R&D intensity (R&D per unit of output) of foreign-controlled and Canadian-controlled firms based in Canada. The empirical results suggest that foreign-controlled firms, after accounting for the influence of other factors, are less R&D-intensive than Canadian-controlled firms, and this gap has not narrowed during the past ten years. On average, R&D intensity tends to be higher in high-tech and export-oriented firms, compared to low and medium technology and non-exporting firms. However, despite a lower R&D intensity, foreign-controlled firms based in Canada are more productive and pay higher wages than Canadian-controlled firms. These results in turn suggest that foreign-controlled firms benefit heavily from technology and knowledge transfer from their parent companies.

Suggested Citation

  • Jianmin Tang & Someshwar Rao, 2003. "Issues and Commentaries Issues et commentaires Are Foreign-Controlled Manufacturing Firms Less R&D-Intensive than Canadian- Controlled Firms?," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 111-117, March.
    • Handle: RePEc:cpp:issued:v:29:y:2003:i:1:p:111-117
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    References listed on IDEAS

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    1. Dhaliwal, Naginder & Baldwin, John R., 2000. "Labour Productivity Differences Between Domestic and Foreign-controlled Establishments in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 2000118e, Statistics Canada, Analytical Studies Branch.
    2. J. D. Howe & D. G. McFetridge, 1976. "The Determinants of R & D Expenditures," Canadian Journal of Economics, Canadian Economics Association, vol. 9(1), pages 57-71, February.
    3. Steven Globerman & John C. Ries & Ilan Vertinsky, 1994. "The Economic Performance of Foreign Affiliates in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 143-156, February.
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