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Determinants of International Activity: Evidence from the Chemical Industry

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  • Fosfuri, Andrea

Abstract

This Paper empirically investigates two important determinants of international activity through wholly owned operations, joint-ventures and licensing, namely country risk and IPRs protection. Using a comprehensive database on investments in chemical plants during the period 1981-96, we show that higher levels of country risk are associated with less activity into recipient economies. The analysis also suggests that international activity with smaller resource commitment tends to be preferred in countries with higher levels of risk, and that multinational investment is more responsive to changes in risk conditions than indigenous investment. After controlling for several country characteristics, we do not find IPRs protection playing a significant role in fostering international activity or conditioning its mode.

Suggested Citation

  • Fosfuri, Andrea, 2004. "Determinants of International Activity: Evidence from the Chemical Industry," CEPR Discussion Papers 4601, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4601
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    Citations

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    Cited by:

    1. Etienne Pfister & Bruno Deffains, 2005. "Patent Protection, Strategic FDI and Location Choices: Empirical Evidence from French Subsidiaries' Location Choices in Emerging Economies," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(3), pages 329-346.
    2. Lu, Chin-Shan & Yang, Ching-Chiao, 2007. "An evaluation of the investment environment in international logistics zones: A Taiwanese manufacturer's perspective," International Journal of Production Economics, Elsevier, vol. 107(1), pages 279-300, May.
    3. Bronwyn H. Hall, 2014. "Does patent protection help or hinder technology transfer?," Chapters,in: Intellectual Property for Economic Development, chapter 2, pages 11-32 Edward Elgar Publishing.
    4. Arijit Mukherjee & Soma Mukherjee, 2008. "Excess-Entry Theorem: The Implications Of Licensing," Manchester School, University of Manchester, vol. 76(6), pages 675-689, December.
    5. Ashish Arora & Marco Ceccagnoli, 2006. "Patent Protection, Complementary Assets, and Firms' Incentives for Technology Licensing," Management Science, INFORMS, vol. 52(2), pages 293-308, February.
    6. Arora, Ashish & Gambardella, Alfonso, 2010. "The Market for Technology," Handbook of the Economics of Innovation, Elsevier.

    More about this item

    Keywords

    chemical industry; country risk; foreign direct investment; IPRs protection; technology licensing;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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