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Subsidizing Away Exports? A Note on R&D-policy Towards Multinational Firms

  • Pehr-Johan Norbäck

    ()

In this paper, I investigate whether instead of strengthening home-based production, government R&D-subsidies can induce R&D-intensive firms to locate production abroad. Investigating firm-level data on Swedish MNEs, however, I find no evidence of such relocation. R&D subsidies rather tend to en courage export production at the expense of foreign production. The theory presented suggests that this is consistent with technology transfer costs, which outweigh trade costs for physical goods.

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File URL: http://hdl.handle.net/10.1007/s10842-009-0061-6
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Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 11 (2011)
Issue (Month): 1 (March)
Pages: 25-42

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Handle: RePEc:kap:jincot:v:11:y:2011:i:1:p:25-42
Contact details of provider: Web page: http://springerlink.metapress.com/link.asp?id=105724

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  1. James A. Brander, 1995. "Strategic Trade Policy," NBER Working Papers 5020, National Bureau of Economic Research, Inc.
  2. Leahy, Dermot & Neary, J Peter, 2007. "Multilateral Subsidy Games," CEPR Discussion Papers 6479, C.E.P.R. Discussion Papers.
  3. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, June.
  4. Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
  5. Leahy, Dermot & Neary, J Peter, 1996. "International R&D Rivalry and Industrial Strategy without Government Commitment," Review of International Economics, Wiley Blackwell, vol. 4(3), pages 322-38, October.
  6. Flam, Harry, 1994. "EC members fighting about surplus VERs, FDI and Japanese cars," Journal of International Economics, Elsevier, vol. 36(1-2), pages 117-131, February.
  7. Haaland, Jan I. & Kind, Hans Jarle, 2004. "R&D Policies, Trade and Process Innovation," CEPR Discussion Papers 4784, C.E.P.R. Discussion Papers.
  8. Sanna-Randaccio, Francesca, 2002. "The Impact of Foreign Direct Investment on Home and Host Countries with Endogenous R&D," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 278-98, May.
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