IDEAS home Printed from https://ideas.repec.org/p/eec/wpaper/1904.html
   My bibliography  Save this paper

Moving ideas across borders: Migrant inventors, patents and FDI

Author

Listed:
  • Ana Cuadros

    (Jaume I University (Spain).)

  • Jordi Paniagua

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

  • Antonio Navas

    (University of Sheffield (United Kingdom).)

Abstract

The purpose of this paper is to gain insights into the exact mechanisms through which migration enhances the innovative performance of multinational firms and fosters Foreign Direct Investment (FDI). We develop a formal model showing that migrants may help firms to increase the perceived quality of their products at the host country of investment. This can be done by patent an invention that permits the customization of products in order to meet foreign quality standards. We focus on a very specific type of migrants: Those who cross borders and patent an invention (migrant inventors). The structural estimation of our model using high-dimensional PPML 2SLS confirms our theoretical priors at both the intensive and the extensive margins. A placebo test reveals that non-inventor migrants are not a good instrument to capture the effect of patents on FDI. Additionally, a structural PPML gravity estimation shows that both patents and migrants inventors fosters Greenfield FDI, with a larger impact on the intensive margin. Our estimations also reveal certain sectoral heterogeneity.

Suggested Citation

  • Ana Cuadros & Jordi Paniagua & Antonio Navas, 2019. "Moving ideas across borders: Migrant inventors, patents and FDI," Working Papers 1904, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1904
    as

    Download full text from publisher

    File URL: ftp://147.156.210.157/RePEc/pdf/eec_1904.pdf
    File Function: First version, 2019
    Download Restriction: no

    References listed on IDEAS

    as
    1. Docquier, Frédéric & Turati, Riccardo & Valette, Jérôme & Vasilakis, Chrysovalantis, 2018. "Birthplace Diversity and Economic Growth: Evidence from the US States in the Post-World War II Period," IZA Discussion Papers 11802, Institute of Labor Economics (IZA).
    2. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    3. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2016. "Birthplace diversity and economic prosperity," Journal of Economic Growth, Springer, vol. 21(2), pages 101-138, June.
    4. Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2017. "The elusive effects of workplace diversity on innovation," Papers in Regional Science, Wiley Blackwell, vol. 96, pages 29-49, March.
    5. Jennifer Hunt & Marjolaine Gauthier-Loiselle, 2010. "How Much Does Immigration Boost Innovation?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 31-56, April.
    6. Javorcik, Beata S. & Özden, Çaglar & Spatareanu, Mariana & Neagu, Cristina, 2011. "Migrant networks and foreign direct investment," Journal of Development Economics, Elsevier, vol. 94(2), pages 231-241, March.
    7. Dany Bahar & Hillel Rapoport, 2018. "Migration, Knowledge Diffusion and the Comparative Advantage of Nations," Economic Journal, Royal Economic Society, vol. 128(612), pages 273-305, July.
    8. C. Fritz Foley & William R. Kerr, 2013. "Ethnic Innovation and U.S. Multinational Firm Activity," Management Science, INFORMS, vol. 59(7), pages 1529-1544, July.
    9. Beverelli, Cosimo & Keck, Alexander & Larch, Mario & Yotov, Yoto, 2018. "Institutions, Trade and Development: A Quantitative Analysis," School of Economics Working Paper Series 2018-3, LeBow College of Business, Drexel University.
    10. Konrad B Buchardi & Thomas Chaney & Tarek A Hassan, 2018. "Migrants, Ancestors and Foreign Investments," Sciences Po publications info:hdl:2441/4j5snkuat19, Sciences Po.
    11. Frédéric Docquier & Riccardo Turati & Jérôme Valette & Chrysovalantis Vasilakis, 2016. "Multiculturalism and Growth: Skill-Specific Evidence from the Post-World War II Period," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2016028, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    12. Wolfgang Keller & Stephen Ross Yeaple, 2013. "The Gravity of Knowledge," American Economic Review, American Economic Association, vol. 103(4), pages 1414-1444, June.
    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. Francesc Ortega & Giovanni Peri, 2016. "Openness and income: The roles of trade and migration," World Scientific Book Chapters, in: The Economics of International Migration, chapter 10, pages 309-329, World Scientific Publishing Co. Pte. Ltd..
    15. Kaiser, Ulrich & Kongsted, Hans Christian & Rønde, Thomas, 2015. "Does the mobility of R&D labor increase innovation?," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 91-105.
    16. Luigi Orsenigo & Valerio Sterzi, 2010. "Comparative Study of the Use of Patents in Different Industries," KITeS Working Papers 033, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised 2010.
    17. Cuadros, Ana & Martín-Montaner, Joan & Paniagua, Jordi, 2019. "Migration and FDI: The role of job skills," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 318-332.
    18. Alfonso Irarrazabal & Andreas Moxnes & Luca David Opromolla, 2015. "The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 777-792, October.
    19. Konrad B Burchardi & Thomas Chaney & Tarek A Hassan, 2019. "Migrants, Ancestors, and Foreign Investments," Review of Economic Studies, Oxford University Press, vol. 86(4), pages 1448-1486.
    20. Mario Larch & Joschka Wanner & Yoto V. Yotov & Thomas Zylkin, 2019. "Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(3), pages 487-510, June.
    21. Luisa Gagliardi, 2015. "Does skilled migration foster innovative performance? Evidence from British local areas," Papers in Regional Science, Wiley Blackwell, vol. 94(4), pages 773-794, November.
    22. Buch, Claudia M. & Kleinert, Jörn & Toubal, Farid, 2003. "Where Enterprises Lead, People Follow? Links between Migration and German FDI," Kiel Working Papers 1190, Kiel Institute for the World Economy (IfW).
    23. Kugler, Maurice & Rapoport, Hillel, 2007. "International labor and capital flows: Complements or substitutes?," Economics Letters, Elsevier, vol. 94(2), pages 155-162, February.
    24. Lazear, Edward P, 1999. "Globalisation and the Market for Team-Mates," Economic Journal, Royal Economic Society, vol. 109(454), pages 15-40, March.
    25. Cuadros, Ana & Martín-Montaner, Joan & Paniagua, Jordi, 2016. "Homeward bound FDI: Are migrants a bridge over troubled finance?," Economic Modelling, Elsevier, vol. 58(C), pages 454-465.
    26. Fally, Thibault, 2015. "Structural gravity and fixed effects," Journal of International Economics, Elsevier, vol. 97(1), pages 76-85.
    27. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2006. "Where enterprises lead, people follow? Links between migration and FDI in Germany," European Economic Review, Elsevier, vol. 50(8), pages 2017-2036, November.
    28. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
    29. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    30. Jordi Paniagua, 2016. "A note on implementing gravity datasets with abundant zeros," Economics Bulletin, AccessEcon, vol. 36(1), pages 268-280.
    31. Atul Nerkar & Srikanth Paruchuri, 2005. "Evolution of R&D Capabilities: The Role of Knowledge Networks Within a Firm," Management Science, INFORMS, vol. 51(5), pages 771-785, May.
    32. Coelli, Federica & Moxnes, Andreas & Ulltveit-Moe, Karen-Helene, 2016. "Better, Faster, Stronger: Global Innovation and Trade Liberalization," CEPR Discussion Papers 11506, C.E.P.R. Discussion Papers.
    33. Ulrich Doraszelski & Jordi Jaumandreu, 2013. "R&D and Productivity: Estimating Endogenous Productivity," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1338-1383.
    34. Rose, Andrew K, 2017. "Currency Wars? Unconventional Monetary Policy Does Not Stimulate Exports," CEPR Discussion Papers 11748, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    migrant inventors; patents; FDI; foreign Direct Investment; migration;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eec:wpaper:1904. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vicente Esteve). General contact details of provider: http://edirc.repec.org/data/dsvales.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.