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The Gravity of R&D FDIs


  • Davide Castellani

    () (Department of Economics, Finance and Statistics, Università di Perugia)

  • Alfredo Jimenez Palmero

    () (Department of Economics and Business Administration, University of Burgos, Spain)

  • Antonello Zanfei

    () (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")


The negative effect of distance is justified by the existence of transport costs which hamper the international exchange of final and intermediate goods, and by higher uncertainty about local markets. We submit that distance plays a remarkably different role in the case of R&D FDIs since they mainly involve the international transfer, absorption and use of knowledge. Using data on bilateral investment projects in R&D, manufacturing and other business activities between 58 countries, we find that geographic distance does not hinder R&D FDIs as much as in the case of production and other investment activities. Furthermore, once we control for institutional and psychic distance, in particular language and religious differences, the negative effect of geographic distance vanishes.

Suggested Citation

  • Davide Castellani & Alfredo Jimenez Palmero & Antonello Zanfei, 2011. "The Gravity of R&D FDIs," Working Papers 1106, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  • Handle: RePEc:urb:wpaper:11_06

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    References listed on IDEAS

    1. Bruce A. Blonigen & Ronald B. Davies & Keith Head, 2003. "Estimating the Knowledge-Capital Model of the Multinational Enterprise: Comment," American Economic Review, American Economic Association, vol. 93(3), pages 980-994, June.
    2. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
    3. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    4. von Zedtwitz, Maximilian & Gassmann, Oliver, 2002. "Market versus technology drive in R&D internationalization: four different patterns of managing research and development," Research Policy, Elsevier, vol. 31(4), pages 569-588, May.
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    Cited by:

    1. Sara Amoroso & Mafini Dosso & Pietro Moncada-Paterno-Castello, 2015. "The impact of skill endowments and collective bargaining on knowledge-intensive greenfield FDI," JRC Working Papers on Corporate R&D and Innovation 2015-08, Joint Research Centre (Seville site).
    2. Noailly, Joëlle & Ryfisch, David, 2015. "Multinational firms and the internationalization of green R&D: A review of the evidence and policy implications," Energy Policy, Elsevier, vol. 83(C), pages 218-228.

    More about this item


    Multinational Firms; International Business; Technological Change; Choices and Consequences; Diffusion Processes.;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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