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A note on transfer pricing and the R&D intensity of Irish manufacturing

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  • Frank Barry

Abstract

Ireland’s low corporation tax regime has proved especially attractive to foreign multinational companies operating in high-tech sectors. Ireland’s increasing concentration in such sectors has facilitated the country’s rise in the international R&D rankings. On a sector by sector basis however, R&D expenditures in Ireland remain low by international standards. This has led to questions about whether the health of the country’s R&D environment matches the technological orientation of its industry, and about the commitment of the foreign sector to R&D activities in host economies such as Ireland. The present note focuses on the transfer pricing behaviour that tends to arise in a low corporation tax regime, and shows that a simple correction for transfer pricing reveals Ireland to be less of an outlier in terms of sectoral R&D expenditures than the conventional measures suggest.

Suggested Citation

  • Frank Barry, 2002. "A note on transfer pricing and the R&D intensity of Irish manufacturing," Working Papers 200230, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:200230
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    File URL: http://hdl.handle.net/10197/1260
    File Function: First version, 2002
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    References listed on IDEAS

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    1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
    2. Blomstrom, Magnus & Kokko, Ari, 2000. "Outward Investment, Employment, and Wages in Swedish Multinationals," Oxford Review of Economic Policy, Oxford University Press, pages 76-89.
    3. Globerman, Steven & Kokko, Ari & Sjoholm, Fredrik, 2000. "International Technology Diffusion: Evidence from Swedish Patent Data," Kyklos, Wiley Blackwell, vol. 53(1), pages 17-38.
    4. Frank Barry, 2000. "Convergence is not Automatic: Lessons from Ireland for Central and Eastern Europe," The World Economy, Wiley Blackwell, vol. 23(10), pages 1379-1394, October.
    5. repec:hhs:iuiwop:490 is not listed on IDEAS
    6. Rosanne Altshuler & Harry Grubert & T. Scott Newlon, 2000. "Has U.S. Investment Abroad Become More Sensitive to Tax Rates?," NBER Chapters,in: International Taxation and Multinational Activity, pages 9-38 National Bureau of Economic Research, Inc.
    7. James R. Hines & Eric M. Rice, 1994. "Fiscal Paradise: Foreign Tax Havens and American Business," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 149-182.
    8. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 1-78.
    9. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 1-78.
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    Cited by:

    1. Frank Barry & Holger Gorg & Eric Strobl, 2005. "Foreign direct investment and wages in domestic firms in Ireland: Productivity spillovers versus labour-market crowding out," International Journal of the Economics of Business, Taylor & Francis Journals, pages 67-84.

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