The Gravity of Cross-border R&D Expenditure

Bernhard Dachs, Sandra Leitner and Robert Stehrer

No 91, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: While up to the 1990s, R&D was still ‘an important case of non-globalization’ (Patel and Pavitt 1991), the internationalization of business R&D activities has accelerated significantly during the past two decades. R&D activities of foreign affiliates have become one of the most dynamic elements of the process of globalization. Until recently, the main recipients of cross-border R&D expenditure were developed countries, though new players have emerged lately, particularly in Asia. Against that backdrop, the paper applies a recently compiled novel data set on R&D expenditure of foreign-owned firms in the manufacturing sectors of a set of OECD countries and identifies specific home- and host-country characteristics that are conducive or obstructive to cross-border R&D expenditure of foreign affiliates. The results point to the pivotal role of market size and of cultural, physical and technological proximity for R&D efforts of foreign-owned firms. Moreover, the analysis demonstrates that sufficient human capital and strong indigenous technological capabilities in the host country tend to be conducive to R&D activities of foreign affiliates. In contrast, a rich human capital base in the home country is obstructive to the process of R&D internationalization. Geographic distance turns out to be a strong deterrent.

Keywords: internationalization of R&D; multinational firms; gravity model (search for similar items in EconPapers)
JEL-codes: F23 L6 O32 (search for similar items in EconPapers)
Pages: 24 pages including 5 Tables and 4 Figures
Date: 2012-07
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Published as wiiw Working Paper

Downloads: (external link)
https://wiiw.ac.at/the-gravity-of-cross-border-r-d-expenditure-dlp-2762.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wii:wpaper:91

Ordering information: This working paper can be ordered from
https://wiiw.ac.at

Access Statistics for this paper

More papers in wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw Contact information at EDIRC.
Bibliographic data for series maintained by Customer service ().