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Heterogeneity in the Internationalization of R&D: Implications for Anomalies in Finance and Macroeconomics

Patrick Grüning

No 16, Bank of Lithuania Occasional Paper Series from Bank of Lithuania

Abstract: Empirical evidence suggests that investments in research and development (R&D) by older and larger firms are more spread out internationally than R&D investments by younger and smaller firms. In this paper, I explore the quantitative implications of this type of heterogeneity by assuming that incumbents, i.e. current monopolists engaging in incremental innovation, have a higher degree of internationalization in their R&D technologies than entrants, i.e. new firms engaging in radical innovation, in a two-country endogenous growth general equilibrium model. In particular, this assumption allows the model to break the perfect correlation between incumbents' and entrants' innovation probabilities and to match the empirical counterpart exactly.

Keywords: Heterogeneous innovation; Technology spillover; Endogenous growth; Creative destruction; International finance (search for similar items in EconPapers)
JEL-codes: E22 F31 G12 O30 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-ent, nep-mac and nep-sbm
Date: 2017-10-20
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Working Paper: Heterogeneity in the Internationalization of R&D: Implications for anomalies in finance and macroeconomics (2017) Downloads
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