 The effect of outward investment to China on domestic R&D: a two-hurdle model with endogenous ODIHui-Lin Lin, Ryh-song Yeh and Ching-Fan Chung Applied Economics, 2009, vol. 41, issue 9, 1191-1198 Abstract: Outward direct investment (ODI) and domestic R&D are interrelated, but empirical evidence is affected by the nature of a firm's data, which are heavily censored. Firm data contain a firm's yes/no decision to invest in China, yes/no decision of R&D, and the decision of R&D intensity. We thus adopt a two-hurdle model and allow the China investment decision to be endogenous in an R&D model in order to examine the effect of ODI in China on domestic R&D investment in Taiwan's electronics industry. In the model, a two-equation simultaneous subsystem is formed, in which three regression equations are specified: a decision of R&D intensity, and a yes/no decision of location to conduct R&D together with a yes/no decision to invest in China Our results indicate that China investment and R&D intensity are positively related such that ODI in China helps to raise significantly a firm's R&D intensity as compared to the estimate if the endogeneity of China investment and the nature of data were not properly accounted. Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:41:y:2009:i:9:p:1191-1198 Ordering information: This journal article can be ordered from DOI: 10.1080/00036840601019224 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
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