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R&D and Foreign Sales in Multinationals: A Simultaneous Relationship?

Author

Listed:
  • Fors, Gunnar

    (Research Institute of Industrial Economics (IFN))

  • Svensson , Roger

    () (Research Institute of Industrial Economics (IFN))

Abstract

This paper analyzes the simultaneous relationship between R&D and foreign sales in Swedish multinational enterprises in the manufacturing sector. We argue that this two-way relationship should especially apply to multinationals based in small open economies due to the firms' high dependence on foreign markets. The only previous study addressing this issue used data on multinationals originating from the United States, a country with a large domestic market, and it did not find evidence of the hypothesized simultaneous relationship. Our empirical results suggest a positive and significant effect in both directions.

Suggested Citation

  • Fors, Gunnar & Svensson , Roger, 1996. "R&D and Foreign Sales in Multinationals: A Simultaneous Relationship?," Working Paper Series 457, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0457
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    References listed on IDEAS

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    1. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
    2. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    3. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
    4. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-321, May.
    5. Cohen, Wesley M & Levin, Richard C & Mowery, David C, 1987. "Firm Size and R&D Intensity: A Re-examination," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 543-565, June.
    6. Hirschey, Mark, 1981. "R&D intensity and multinational involvement," Economics Letters, Elsevier, vol. 7(1), pages 87-93.
    7. Kravis, Irving B & Lipsey, Robert E, 1992. "Sources of Competitiveness of the United States and of Its Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 193-201, May.
    8. Nelson, Forrest & Olson, Lawrence, 1978. "Specification and Estimation of a Simultaneous-Equation Model with Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 695-709, October.
    9. Greenhalgh, Christine, 1990. "Innovation and Trade Performance in the United Kingdom," Economic Journal, Royal Economic Society, vol. 100(400), pages 105-118, Supplemen.
    10. Amemiya, Takeshi, 1979. "The Estimation of a Simultaneous-Equation Tobit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 169-181, February.
    11. Wesley M. Cohen & Richard C. Levin & David C. Mowery, 1987. "Firm Size and R&D Intensity: A Re-Examination," NBER Working Papers 2205, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    R&D; Foreign Sales; Multinational Enterprises;

    JEL classification:

    • 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

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