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FDI Inflows to Sweden Consequences for Innovation and Renewal

  • Johansson, Börje

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Lööf, Hans

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

FDI inflows have expanded rapidly during the past decade. This paper analyses if such inflows do introduce new characteristics of the innovation systems at national and regional levels. The paper studies two phenomena. First, what novelties are brought into the host region (country) when FDI inflows occur? Second, what are the consequences for the innovation intensity, technology transfer and economic performance of firms in a regional (national) economy that experiences FDI inflows? These issues are assessed by examining the characteristics of foreign multinationals and comparing them with the characteristics of multinational, uninational and non-affiliate firms, respectively. The analyses control for location, examine regional impacts, and are based on CIS data (Community Innovation Survey III). The paper contributes to earlier studies in two important ways. First, it compares FDI firms with three other distinct types of corporate structure. Second, it combines results from both parametric and non-parametric estimations. The results indicate that FDI inflows in an unambiguous way renew the local economy when acquiring or replacing domestic multi-unit firms (uninationals). Compared to other types of corporate structure, FDI firms do not seem to improve innovation characteristics of the local economy.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 36.

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Length: 32 pages
Date of creation: 12 Aug 2005
Date of revision:
Handle: RePEc:hhs:cesisp:0036
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/
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  1. Cantwell, John & Janne, Odile, 1999. "Technological globalisation and innovative centres: the role of corporate technological leadership and locational hierarchy1," Research Policy, Elsevier, vol. 28(2-3), pages 119-144, March.
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  3. Narula, Rajneesh, 2002. "Innovation systems and 'inertia' in R&D location: Norwegian firms and the role of systemic lock-in," Research Policy, Elsevier, vol. 31(5), pages 795-816, July.
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  7. Börje Johansson & John Quigley, 2003. "Agglomeration and networks in spatial economies," Papers in Regional Science, Springer, vol. 83(1), pages 165-176, October.
  8. Aitken, B. & Harrison, A. & Lipsey, R.E., 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States," Papers 95-21, Columbia - Graduate School of Business.
  9. Antràs, Pol & Helpman, Elhanan, 2004. "Global Sourcing," CEPR Discussion Papers 4170, C.E.P.R. Discussion Papers.
  10. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 155-74, February.
  11. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  12. Robert E. Baldwin & Robert E. Lipsey & J. David Richards, 1998. "Geography and Ownership as Bases for Economic Accounting," NBER Books, National Bureau of Economic Research, Inc, number bald98-1, June.
  13. Börje Johansson & Hans Lööf & Amy Rade Olsson, 2005. "Firm location, Corporate Structure, R&D Investment, Innovation and Productivity," ERSA conference papers ersa05p108, European Regional Science Association.
  14. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
  15. Jeffrey Smith, 2000. "A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies," UWO Department of Economics Working Papers 20006, University of Western Ontario, Department of Economics.
  16. Johansson, Börje, 2004. "Parsing the Menagerie of Agglomeration and Network Externalities," Working Paper Series in Economics and Institutions of Innovation 2, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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