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FDI Inflows to Sweden Consequences for Innovation and Renewal

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  • 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)

Abstract

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.

Suggested Citation

  • Johansson, Börje & Lööf, Hans, 2005. "FDI Inflows to Sweden Consequences for Innovation and Renewal," Working Paper Series in Economics and Institutions of Innovation 36, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0036
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    References listed on IDEAS

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    Cited by:

    1. Stiebale, Joel & Reize, Frank, 2011. "The impact of FDI through mergers and acquisitions on innovation in target firms," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 155-167, March.
    2. Stiebale, Joel, 2012. "Cross-Border M&A and Innovative Activity: Firm-Level Evidence," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62027, Verein für Socialpolitik / German Economic Association.
    3. Johansson, Börje & Lööf, Hans, 2006. "Global Location Patterns of R&D Investments," Working Paper Series in Economics and Institutions of Innovation 60, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    4. repec:zbw:rwirep:0161 is not listed on IDEAS
    5. Joel Stiebale, 2010. "The Impact of Foreign Acquisitions on the Investors‘ R&D Activities – Firm-level Evidence," Ruhr Economic Papers 0161, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

    More about this item

    Keywords

    FDI; technology transfer; innovation; regional economy;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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