Effects of Foreign Direct Investment on Intellectual Property, Patents and R&D

Korhan Arun and Durmuş Yıldırım

MPRA Paper from University Library of Munich, Germany

Abstract: As innovative firms have considerable competitive advantage; more foreign direct investment (FDI) research has been related to the innovation. The primary aim of this study is to explore how intra-regional economies interact with host countries’ innovative performance, and how they are affected by FDI. Azerbaijan, Georgia and Turkey, located in the South Caucasus region, are selected as examples. Numbers of patent applications, R&D expenditure (% of GDP), and intellectual property payments are chosen as factors indicative of innovation. While this research tries to explore whether these three countries, connected by large trades, can act as a clustered group; Panel cointegration and Panel OLS models are used for analysis. The results show that FDI is an important variable affecting the level of innovation in the panel analysis. Nevertheless, individual relationships with FDI vary, and cointegration analysis shows heterogeneity. That is, foreign direct investment could play a central role in increasing the level of innovation for Azerbaijan and Georgia, but it is not an important determinant of Turkey's economic innovation level. Countries should realize that when their economies are becoming stronger, FDI is not a useful tool for escalating innovation, rather they should be in clusters that can leverage innovation.

Keywords: Foreign Direct Investment (FDI); Innovation; Panel Data Analysis; Panel OLS; Azerbaijan; Turkey; Georgia (search for similar items in EconPapers)
JEL-codes: F21 O32 O34 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-cse, nep-cwa, nep-ino, nep-int, nep-ipr, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Queen Mary Journal of Intellectual Property 2.7(2017): pp. 226-241

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:80470

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