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Multinational firms, technology and location

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  • Norback, Pehr-Johan

Abstract

This paper analyzes a three-stage optimization problem in which a firm chooses (i) its technology, by deciding on a level of R&D, (ii) whether this technology is to be used in a domestic or in a foreign plant and (iii) the quantity produced and sold on the market. If technology transfer costs are low, "high-tech" or R&D-intensive firms tend to produce abroad. At higher technology transfer costs, high-tech firms tend to export. An empirical analysis using a data set of Swedish multinational firms, confirms the latter prediction.
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Suggested Citation

  • Norback, Pehr-Johan, 2001. "Multinational firms, technology and location," Journal of International Economics, Elsevier, vol. 54(2), pages 449-469, August.
  • Handle: RePEc:eee:inecon:v:54:y:2001:i:2:p:449-469
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    Citations

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    Cited by:

    1. Wolfgang Keller & Stephen Ross Yeaple, 2013. "The Gravity of Knowledge," American Economic Review, American Economic Association, vol. 103(4), pages 1414-1444, June.
    2. Nilsson Hakkala, Katariina & Bertrand, Olivier & Norbäck, Pehr-Johan & Persson, Lars, 2008. "Should RD Champions be Protected from Foreign Takeovers?," Discussion Papers 459, VATT Institute for Economic Research.
    3. Ronald B. Davies & Pehr-Johan Norbäck & Ayça Tekin-Koru, 2009. "The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata," The World Economy, Wiley Blackwell, vol. 32(1), pages 77-110, January.
    4. Desbordes, Rodolphe & Wei, Shang-Jin, 2017. "The effects of financial development on foreign direct investment," Journal of Development Economics, Elsevier, vol. 127(C), pages 153-168.
    5. Mugele, Christian & Schnitzer, Monika, 2008. "Organization of multinational activities and ownership structure," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1274-1289, November.
    6. Stanley B Watt, 2007. "Firm Heterogeneity and Weak Intellectual Property Rights," IMF Working Papers 07/161, International Monetary Fund.
    7. Katariina Nilsson Hakkala & Pehr-Johan Norbäck & Helena Svaleryd, 2008. "Asymmetric Effects of Corruption on FDI: Evidence from Swedish Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 627-642, November.
    8. Henrik Braconier & Pehr-Johan Norback & Dieter Urban, 2002. "Vertical FDI Reviseted," Development Working Papers 167, Centro Studi Luca d'Agliano, University of Milano.
    9. René Belderbos, 2006. "R&D Activities in East Asia by Japanese, European, and US Multinationals," Microeconomics Working Papers 21887, East Asian Bureau of Economic Research.
    10. Chun, Bong Geul, 2012. "Host country's strategic policies and multinational firm's choice of entry mode," Economic Modelling, Elsevier, vol. 29(2), pages 435-443.
    11. Dinopoulos, Elias & Segerstrom, Paul, 2010. "Intellectual property rights, multinational firms and economic growth," Journal of Development Economics, Elsevier, vol. 92(1), pages 13-27, May.
    12. Johdo, Wataru & Hashimoto, Ken-ichi, 2005. "International relocation, the real exchange rate and welfare," Journal of Economic Dynamics and Control, Elsevier, vol. 29(8), pages 1449-1469, August.
    13. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    14. Bárcena Ruiz, Juan Carlos & Garzón San Felipe, María Begoña, 2011. "Relocation and Investment in R&D by Firms," IKERLANAK 2011-52, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    15. Valentin Goev & Vesselin Mintchev & Tsvetomira Tsenova-Knudsen & Venelin Boshnakov, 2002. "Determinants of European Union Enterprises Relocation in Bulgaria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 56-72.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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