Optimizing international technology diffusion: A middle-income country's perspective

The paper develops a North–Middle–South model to formulate a middle economy that plays catch-up via imitative R&D to acquire newer technologies from a higher-wage innovative forerunner, while playing “reverse catch-up” via outbound FDI to transfer older technologies to a lower-wage follower. A critical policy dilemma facing the middle economy is how to balance its R&D-driven technology inflows against its FDI-driven technology outflows. Numerical simulations are used for dynamic welfare analysis. This paper finds that tightening FDI permits the middle economy to keep a lower saving rate without weakening its ability to acquire newer technologies in the long run.     

R&D and foreign direct investment with asymmetric spillovers

This paper analyzes how firms’ R&D investment decisions are affected by asymmetries in knowledge transmission, considering different sources of asymmetry such as unequal know-how management capabilities and spillovers localization within an international oligopoly. We show that a better ability to manage knowledge flows incentivizes the firm to invest more in R&D. By introducing geographically bounded spillovers, we also find that one-way foreign direct investment (FDI) stimulates the multinational enterprise to raise its own R&D and that an FDI equilibrium is more likely to occur. Finally, spillovers localization leading to two-way FDI is welfare improving when compared with non-localized spillovers.     

The Impact of Foreign Direct Investment on Home and Host Countries with Endogenous R&D

The paper analyzes the impact of FDI on home and host countries, when firms compete both in the choice of international strategy and in R&D. A two-country, two-firm model is used. The problem is structured as a three-stage game in which firms must decide: the mode of foreign expansion; how much to invest in R&D; how much to sell in each market. It is shown that in high-technology sectors a policy of attracting inward FDI may increase welfare in both the home and host countries. The effect on host-country welfare is found to be more beneficial if technological spillovers are national, instead of international, in scope.     

Intellectual property rights and skills accumulation: A product-cycle model of FDI and outsourcing

This study investigates the effects of stronger intellectual property rights (IPR) protection in the South on innovation, skills accumulation, wage inequality, and patterns of production based on a North–South general-equilibrium model with foreign direct investment (FDI) and international outsourcing. We find that stronger Southern IPR protection raises the extent of outsourcing and reduces the extent of FDI. This increases the proportion of unskilled Southerners and mitigates Southern wage inequality. In the North, stronger Southern IPR protection raises the proportion of skilled Northerners and wage inequality. The effects of international specialization, R&D cost, and Northern population are also examined.     

Regional economic divide and the role of technological spillovers in Italy. Evidence from microdata

This paper assesses the impact of Research and Development (R&D) efforts on production in the North and Centre-South of Italy by using a panel of 1,203 manufacturing firms over the period 1998–2003. The estimations are based on a nonlinear translog production function augmented by a measure of R&D spillovers. This measure combines the geographical distance between firms, the technological similarity within each pair of firms and the technical efficiency of each firm. The estimation method takes into account the endogeneity of regressors and the potential sample selection issue regarding firms’ decisions to invest in R&D. The two main results are as follows. Internal and external R&D have a lower impact in the Centre-South of Italy than in the rest of the country and they are weak substitutes whatever the area.     

Does R&D spending boost tangible investment? An analysis on European firms

This article investigates the relationship between firm’s R&D intensity, expressed as R&D expenditure over sales, and investment intensity in tangible assets. It is commonly acknowledged that R&D requires additional physical investment to be implemented. R&D increases a firm’s productivity and return to tangible investments, thus, providing to the firm incentives to bear high tangible capital costs and to invest more. This represents a crucial issue for a firm’s growth, particularly considering the strong interaction between physical capital accumulation and technological progress. The analysis is based on a large sample of manufacturing firms across seven European countries in the period 2007–2009. Since the sub-sample of firms performing R&D might not be random, there may potentially be an endogeneity issue. The analysis also considers that firms may decide to spend on R&D and investment in physical capital simultaneously. The questions of both endogeneity and simultaneity are dealt with by employing an instrumental variable two-step procedure. We find a positive and significant impact of R&D intensity on firms’ tangible investment intensity. The econometric results highlight the importance of financial factors, particularly with respect to firms’ internal resources. Exposure to international trade has a negative impact on investment, possibly depending on the time-span of the sample used.

Abbreviations: Technological Innovation and R&D; Investment Capital; Industry Studies; Firm Behavior; Empirical Analysis     

International R&D Spillovers: Trade,FDI, and Information Technology as Spillover Channels*

With the rapid pace of economic integration, the productivity of a country depends not only on domestic R&D, but also on foreign R&D through technology diffusion across countries. The advancement of information technology (IT) has made the international transmission of knowledge faster and more efficient, providing an important channel for international R&D spillovers. This paper investigates three channels of international R&D spillovers: trade, FDI, and information technology. Applying panel cointegration and dynamic OLS analysis to the data for 21 OECD countries plus Israel during the period from 1981 to 1998, we find that bilateral trade remains an important conduit for international R&D spillovers. Although bilateral FDI is found to be positively related to international R&D spillovers, their impact on productivity growth is relatively small. We also find that the development of information technology has played a more important role in international R&D spillovers and productivity growth in recent years.     

Trade-related R&D Spillovers in Vietnamese Manufacturing

ABSTRACT

This study aims to examine how Vietnamese manufacturing could benefit from R&D investment locally and from OECD countries through trade during a period marked with major trade liberalisations. Using the industry-level data during 2000–2009, it finds that the foreign R&D has accounted for the most part of the R&D spillovers in the sector, with a larger proportion earning from the other foreign industries’ R&D. The domestic industries’ own R&D has improved the sector’s total factor productivity, but in a relatively smaller magnitude compared to the foreign sources. In examining the localised effects of R&D spillovers in Vietnamese manufacturing, the results reiterate the important roles of trade-embedded foreign R&D spillovers from Japan, the US, South Korea, and Germany in the sector’s total factor productivity growth. These findings altogether give support to foreign technology diffusion as a major conduit for growth prospects in Vietnamese manufactures.     

International Cooperation on Climate-friendly Technologies

We examine international cooperation on technological development as an alternative to international cooperation on emission reductions. We show that without any R&D cooperation, R&D in each country should be increased beyond the non-cooperative level if (i) the technology level in one country is positively affected by R&D in other countries, (ii) the domestic carbon tax is lower than the Pigovian level, or (iii) the domestic carbon tax is set directly through an international tax agreement. We also show that a second-best technology agreement has higher R&D, higher emissions, or both compared with the first-best-outcome. The second-best subsidy always exceeds the subsidy under no international R&D cooperation. Further, when the price of carbon is the same in the second-best technology agreement and in the case without R&D cooperation, welfare is highest, R&D is highest and emissions are lowest in the second-best R&D agreement.     

Multinationals,R&D and Endogenous Productivity Asymmetries

We analyze the influence of endogenous productivity asymmetries between firms, in terms of competitiveness and size, on multinational activity. In the model, productivity depends on cost-reducing R&D (research and development). We show that when firms differ on commitment power in R&D, the R&D leader, independently of being a multinational or a domestic firm, tends to invest more in R&D than the R&D follower. Because of these productivity advantages, the R&D leader can more easily become multinational. Therefore, in addition to the proximity-concentration trade-off, we identify another FDI (foreign direct investment) determinant: technological competition.     

Technology sourcing versus technology exploitation: an analysis of US foreign direct investment flows

The traditional paradigm of foreign direct investment (FDI) suggests that FDI is undertaken principally to exploit some firm-specific advantage in a foreign country which provides a locational advantage to the investor. However, recent theoretical work suggests a model of FDI in which the motivation is not to exploit existing technological advantages in a foreign country, but to access such technology and transfer it from the host economy to the investing multinational corporation via spillover effects. This paper tests the technology sourcing versus technology exploiting hypotheses for a panel of sectoral FDI flows between the United States and major OECD nations over a 15 year period. The research makes use of Patel and Vega’s (Research Policy, 28, 145–55, 1999) taxonomy of sectors which are likely a priori to exhibit technology sourcing and exploiting behaviour respectively. While there is evidence that FDI flows into the United States are attracted to R&D intensive sectors, very little support is found for the technology sourcing hypothesis either for inward or outward FDI flows. The results suggest that, in aggregate, firm-specific ‘ownership’ effects remain powerful determinants of FDI flows.     

The pattern of international patenting and technology diffusion

The article focuses on the impact of R&D expenditure on labour productivity using international patent applications as a technology diffusion indicator. Considering the relationship between research and productivity, the pattern of international patenting reflects the channel between the source and the destination of transferred technology. Accounting for nonstationarity and cointegration, I find that patent-related foreign R&D spillovers are present for a panel of 18 OECD countries. Moreover, nonG7 OECD countries benefit more from foreign rather than domestic R&D activities. Estimates also show that there is no significant spillover effect from bilateral trade, but confirm the impact of FDI on domestic labour productivity.     

The interdependence between FDI and R&D: an application of an endogenous switching model to Taiwan's electronics industry

Foreign direct investment (FDI) and research & development (R&D) are mutually dependent and should be treated as endogenous variables in empirical studies. An endogenous switching regression model is used to examine the mutual effect of FDI and R&D in Taiwan's electronics industry. The empirical results show that FDI and R&D are positively related and do reinforce each other. Unbiased coefficients are obtained as they are compared to those estimates if FDI and R&D are treated as exogenous variables. The results have a strong public policy implication for Taiwan's foreign direct investment and can be further used to estimate the difference in R&D expenditures between FDI and non-FDI firms.     

The two ways of FDI R&D spillovers: evidence from the French manufacturing industry

Using French firm-level panel data, this study investigates R&D spillovers from inward foreign direct investment (FDI) with respect to both horizontal and vertical linkages (backward and forward). Using a Crepon, Duguet and Mairesse (CDM) model, we estimate an R&D-augmented Cobb–Douglas production function to assess the impact of R&D spillovers on firm performance. The results emphasize that international spillovers (from foreign affiliates to local firms) have a greater effect on firm performance than reverse spillovers (from local firms to foreign affiliates) and are more likely to be backward than forward. Moreover, the effect of backward spillovers depends on a firm’s absorptive capacity and is amplified in the case of outsourcing relationships.     

Foreign direct investment and technical progress in Spanish manufacturing

This article analyses the effects of Foreign Direct Investment (FDI) on technical progress in Spanish manufacturing. Particularly, we study how FDI's contributions vary depending on the economic structure of the industry. The results show that most FDI goes to capital-intensive sectors, especially when those sectors are also Research and Development (R&D)-intensive. Our estimates of the Solow residual show that the positive effect of contemporaneous and lagged FDI on manufacturing productivity is only attributable to capital and R&D intensive industries in what seems to be related to a dynamic capabilities explanation or to complementarities with R&D expenditures.     

中国与印度利用FDI的科技创新效果比较研究

利用FDI过程中研发国际化对东道国创新体系的结构与绩效也产生了较为明显的影响,而研发国际化的技术外溢取决于研发的类型与东道国的经济、科技等背景。通过中印两国在利用FDI促进本国科技创新方面的比较发现：中国利用FDI资源特别是在外资研发机构及其研发支出方面明显强于印度;中国在吸收FDI技术溢出的研发投入、硬件条件等方面较明显优于印度;中国是开放度很高的＂外资带动＂型的创新路径,而印度更偏向于＂自主创新＂型的发展模式;制约中国自主创新还存在一些亟待破解的深层障碍。     

International Transmission of Technology and Trade: The Role of Cross-country Heterogeneity

In the framework where the channel of international transmission of technology is trade in intermediate inputs, this paper investigates the role of heterogeneities across countries. In particular, this paper analyzes how cross-country differences in production structure, national innovative capacity, and absorptive capacity affect the scope and magnitude of international R&D spillovers on productivity. The study is based on the industry-level data set that covers eight OECD countries from 1970 to 1995. It finds that accounting for cross-country differences in each of production structure (using country-specific input–output relations) and national innovative capacity (using patents granted per R&D investment) yields significantly different spillover effects than previous studies. This suggests that the effect of international R&D spillovers depends on both production structure and the pattern of international trade. Further, it finds the absorptive capacity of a country is positively related to spillovers.     

Is R&D always growth-enhancing? Empirical evidence from the EU countries

This study provides empirical evidence regarding the effects of R&D on economic growth in a panel of 28 European Union (EU) countries over the period 1997–2014. In particular, we investigate whether the impact of business and government R&D stocks on economic growth depends on the country’s distance to the world technology frontier. The main findings are that in the EU (i) there is positive, statistically significant business R&D stock–economic growth nexus in countries that are relatively close to the frontier and (ii) no statistically significant relationship was found to exist between government R&D stock and economic growth. From the policy perspective, the results suggest that designing proper national policies that allow switching from investment-based to innovation-based strategies at appropriate moments may be far more important than a simple call for increase in R&D expenditures and setting common numerical targets for all EU-member states.     

How does leverage affect R&D intensity and how does R&D intensity impact on firm value in South Korea?

We examine how leverage affects corporate research and development (R&D) intensity, as well as examine the impact of R&D on firm value in South Korea, a country in which corporate-funded R&D intensity is one of the highest in the world. Among our main results, we find that growth opportunities have a positive effect on R&D intensity, while leverage has a negative effect on R&D intensity. When leverage is at an extremely high level, the relationship between growth opportunities and R&D intensity turns from positive to negative. Using instrumental variables, we find that R&D generates an increase in firm value.     

FDI、人力资本积累与经济增长

本文在一个两国内生增长模型中研究了发达国家FDI产业选择与发展中国家经济增长和技术进步问题。本文分析表明,发达国家FDI产业的选择依赖于发展中国家的技术能力和竞争能力,发展中国家技术能力和竞争能力越强,发达国家则倾向于将更多更先进的产业转移到发展中国家;FDI能否给发展中国家带来技术进步和经济增长依赖于发展中国家的人力资本积累,只有辅之以较快速度的人力资本积累,FDI才能给发展中国家带来技术进步和经济增长。因此,普及和改善教育、提高国民的人力资本水平应该成为发展中国家提高自身技术能力、吸引FDI、促进技术进步和经济增长的核心政策。