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Multinational Enterprises and Globalization of R&D: A Study of U.S-based Firms

Prema-chandra Athukorala and Archanun Kohpaiboon

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper examines patterns and determinants of overseas R&D expenditure of US-based manufacturing MNEs using a new panel dataset over the period 1990-2001. It is found that inter-country differences in R&D intensity of operation of US MNE affiliates are fundamentally determined by the domestic market size, overall R&D capability and cost of hiring R&D personnel. The impact of domestic market orientation of affiliates on R&D propensity varies among countries depending on their stage of global economic integration. Intellectual property protection seems to matter largely for mature economies with complementary endowments. There is no evidence to suggest that financial incentives have a significant impact on inter-country differences in R&D intensity when controlled for other relevant variables. Nor is there a statistically significant relationship between the size of the capital stock of MNEs and R&D intensity of their operation across countries. Overall, our findings serve as a caution against paying too much attention by host country governments on turning MNEs affiliates into technology creators as part of their foreign direct investment policy.

Keywords: R&D; multinational enterprises; foreign direct investment (search for similar items in EconPapers)
JEL-codes: F21 O19 O31 O32 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006
New Economics Papers: this item is included in nep-bec and nep-ino
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Citations: View citations in EconPapers (3)

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