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.     

Determinants of R&D in an LDC: The Indian engineering industry

R&D behaviour of LDC industrial firms is an unexplored subject. Data on the largest engineering firms in India are analysed to test the hypothesis that technological effort in LDCs is primarily directed at assimilating and adapting foreign technologies.     

The level of R&D spending in the variety-based endogenous growth model

We show that equilibrium endogenous growth may be excessive in the variety-based endogenous growth modelà la5 . This result is obtained by relaxing the assumption on the constant elasticity of the demand function for intermediate goods.     

Internal R&D effort,external imported technology and economic value added: empirical study of Taiwan's electronic industry

Technology innovation is a significant resource in the contemporary knowledge-based economy. The main sources of technology innovation are internal R&D effort and external imported technology. Two primary traditional production factors are physical capital and labour. The theoretical basis for this study is an evolutionary Cobb–Douglas production function explaining the effects of four resources (internal R&D effort, imported technology, physical capital and labour) on a firm's sales and economic value added (EVA). Time-series cross-section panel data from 219 Taiwan electronic manufacturers between 1990 and 2003 were employed for fixed effect model. Major empirical findings were observed in this study: first, Internal R&D effort can positively affect a firm's sales and EVA. Conversely, imported technology is found to have had no significant effect on sales and EVA. Second, although both physical capital and labour affect a firm's sales more than the effects of internal R&D and external imported technology, internal R&D effort contributes to a firm's EVA beyond the effects of imported technology, physical capital and labour. Third, External imported technology has neither a complementary nor a substitutive relationship with internal R&D effort.     

The effect of outward investment to China on domestic R&D: a two-hurdle model with endogenous ODI

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.     

The contribution of the publicly‐funded R&D capital to productivity growth and an application to the Greek food and beverages industry

This paper follows the dual‐cost function methodology and develops a theoretical specification that assesses the contribution of public R&D capital to the productivity growth. The empirical application focuses on the Greek food and beverages industry. For this purpose it employs a micro‐aggregated annual data set over the period 1976–2002. The regression analysis shows that publicly‐funded R&D capital is a productive input as 8.7% and 7.3% of the total factor productivity growth in the food industry and in the beverages industry respectively is attributed to the publicly‐funded R&D capital. The relationship between publicly‐funded R&D and privately‐purchased inputs is also examined.     

A dual economy model of endogenous growth with R&D and market structure

This paper develops a dual economy endogenous growth model to consider the effects of market structure and innovation on the rate of growth of an economy. There is an innovative goods sector where firms consistently invest in research and development to produce new products within a framework of monopolistic competition. Firms in the traditional goods sector produce a homogenous good, compete in a form of oligopoly (quantity competition), and seek to reduce their production costs. It is shown that growth is increasing in the market power that firms in the innovative goods sector obtain but decreasing in the equilibrium number of firms in the traditional goods sector.     

Duplication externalities in an endogenous growth model with physical capital,human capital,and R&D

This paper devises an endogenous growth model with physical capital, human capital and product variety. Differently to previous works, innovation is subject to externalities associated to the duplication of research effort, as well as to R&D spillovers. We provide conditions for the existence of a unique feasible steady-state equilibrium with positive long-run growth. For appropriate parameter values, the transitional dynamics of the model is represented by a two-dimensional stable manifold. Numerical simulations show that the incorporation of duplication externalities significantly increases the ability of the model to fit the observed data.     

Environmental regulations,induced R&D,and productivity: Evidence from Taiwan's manufacturing industries

This paper examines whether stringent environmental regulations induce more R&D and promote further productivity in Taiwan. Using an industry-level panel dataset for the 1997–2003 period, empirical results show that pollution abatement fees, a proxy for environmental regulations, is positively related to R&D expenditure, implying that stronger environment protection induces more R&D. On the other hand, pollution abatement capital expenditures do not have a statistically significant influence on R&D. Further evaluation of the influence of induced R&D by environment regulations on industrial productivity shows a significant positive association between them. This finding supports the Porter hypothesis that more stringent environmental regulations may enhance rather than lower industrial competitiveness.     

Technological interdependence and knowledge diffusion in the building of national innovative capacity: The role of Taiwan's chemical industry

While the significance and effectiveness of patents in the chemical industry has been demonstrated in many industrialized countries, this study examines the role of the chemical industry and knowledge diffusion in building the innovative capacity of a nation in latecomer country Taiwan. The development of process innovation plays an integral role in the strategic industries of Taiwan, but few attempts have been made to address how the efficiency of process development can be enhanced. As a latecomer, Taiwan has built its national innovative capability on strategic industries such as semiconductors, consumer electronics and flat panel displays. Through patent data analysis, this study demonstrates the significant and indispensable role played by the chemical industry in technological interdependence and knowledge diffusion with other Taiwanese strategic industries. This study suggests that while the public resources of Taiwan are focused on accelerating the development of emerging sectors and technologies, the chemical industry serves as an effective linkage and catalyst in problem-solving.     

Competing-destinations gravity model: an application to the geographic distribution of FDI

The competing-destinations formulation of the gravity model ensues from the fact that unlike the classical version, this approach explicitly acknowledges the interdependence of the flows between a set of alternative locations, i.e. country-recipients are competing for Foreign Direct Investment (FDI). This article examines empirically a range of theoretical hypotheses about the determinants of FDI location in a panel data regression framework. The results of the estimation of a gravity model lend support to the proximity-concentration and internalization hypotheses. Also, the fact that FDI has been found to be decreasing in the competition posed by alternative locations is suggestive of the superiority of the competing-destinations version of the gravity equation over its classical formulation.     

Technology diffusion and global welfare effects: Imitative R&D vs. South-bound FDI

A country in question is positioned in the middle of a global technology race. To shorten its technology gap with the forerunner (North), this middle country must invest in imitative R&D. To exploit cheap labor in the technological laggard (South), it also must invest in South-bound FDI. A dynamic general-equilibrium model of three countries (North, Middle, South) is set up to numerically analyze how the Middle’s refraining South-bound FDI affects international technology diffusion, international wage gaps, and international welfare. The Middle always finds a need to socially optimize investing balance between imitative R&D and South-bound FDI, while the South is instead in favor of as much South-bound FDI as possible. Interestingly, the North may, or may not, align with the Middle’s tightening South-bound FDI, depending on how fast the Northern product innovation can proceed over time. Both transitional dynamics and the steady-state equilibrium are computed.     

LINK BETWEEN DOMESTIC R&D AND INFLOW OF FDI: A GAME-THEORETIC ANALYSIS

Abstract.  The empirical literature has generated mixed correlations between research and development (R&D) undertaken by domestic firms and the inflow of foreign direct investment (FDI) by their multinational rivals. Further, the existing theoretical explanations of such empirical results appear to be inadequate. This study presents an alternative game-theoretic explanation for the observed correlations. The results show that the seemingly contradictory observed mixed correlations can be explained in an encompassing model in terms of the multinationals' competitive and interactive assessment of the efficiency and expenditure consequences that domestic R&D could generate for the undertaking domestic competitors.     

R&D boundaries of the firm: An estimation of the double-hurdle model on commissioned R&D,joint R&D,and licensing in Japan

This paper studies the firm’s decisions on in-house R&D and its procurement from outside through commissioned R&D, joint R&D, and technology acquisitions (i.e., licensing-in). Using the data about 14,000 manufacturing firms in Japan, we estimate a modified double-hurdle model in which the first hurdle determines whether the firm should perform any R&D at all and the second hurdle determines whether (and how much) it should perform each mode of procured R&D. The results generally support the two major theories—the transaction cost theory and the capability theory. The estimated positive effects of firm size, in-house R&D intensity, diversification, and vertical integration support the hypothesis that capability is needed for procured R&D, while the estimated positive effect of the index of appropriability by patents supports the hypothesis that this appropriability reduces transaction costs. In addition, we found that information flow from scientific sources and that from transaction-based sources affect the three modes of procured R&D differently.     

Asymmetric knowledge flows and localization with endogenous R&D: A dynamic analysis

Empirical evidence suggests that technological spillovers also depend on the mode chosen by firms to serve the foreign market, since a closer location increases the degree of knowledge transmission. Therefore multinationals may want to locate subsidiaries near sources of technological innovation and domestic firms may take advantage of this closer location by absorbing more easily technological knowledge. Within this context we analyse the interaction between firms' international strategy and innovative performance by using a dynamic oligopoly model where knowledge flows increase with geographical proximity. Our results illustrate the relationship between firms' innovation and foreign expansion strategy when localized spillovers are considered.     

Productivity in China's high technology industry: Regional heterogeneity and R&D

This paper analyzes the impact of Research and Development (R&D) on the productivity of China's high technology industry. In order to capture important differences in the effect of R&D on output that arise from geographic and socioeconomic differences across three major regions in China, we use a novel semiparametric approach that allows us to model heterogeneities across provinces and time. Using a unique provincial level panel dataset spanning the period 2000–2007, we find that the impact of R&D on output varies substantially in terms of magnitude and significance across different regions. Results show that the eastern region benefits the most from R&D investments, however it benefits the least from technical progress, while the western region benefits the least from R&D investments, but enjoys the highest benefits from technical progress. The central region benefits from R&D investments more than the western region and benefits from technical progress more than the eastern region. Our results suggest that R&D investments would significantly increase output in both the eastern and central regions, however technical progress in the central region may further compound the effects of R&D on output within the region.     

A comparative analysis of the change in R&D efficiency: a case of R&D leaders in the technology industry

This paper measures the cumulative change in research and development (R&D) efficiency of globally leading R&D companies in the technology industry. We use Data Envelopment Analysis /Malmquist index to analyse 49 such companies. The change in R&D efficiency is analysed by decomposing the Malmquist index into ‘catch-up’ and ‘frontier shift’ indices, and by comparing cumulative indices to those at the starting period. Those cumulative indices are obtained at both a firm and an industry level. Results indicate that the overall R&D efficiency of these globally leading R&D companies declined slightly during the period 2007–2013. At a firm level, this study determines in detail how the trend of each firm in R&D activities differs from other companies.     

The effects of consumption externalities in an R&D-based growth model with endogenous skilled and unskilled labor supply

We examine the roles of consumption externalities in a variety-expansion growth model. By assuming that the R&D sector is more skilled labor intensive than the consumption goods sector, we extend the model of Doi and Mino (J Econ Dyn Control 32:3055?C3083, 2008) so that both the skilled and unskilled labor supplies are endogenously determined through the skill acquisition process. We show that some results of Doi and Mino are influenced by our modification. For example, in contrast to Doi and Mino who show that the R&D subsidy can have a negative growth effect in the presence of consumption externalities, we show that the R&D subsidy has unambiguously positive growth effects, regardless of the presence of consumption externalities. Further, it is shown that the presence of consumption externalities influences various aspects of the economy including the wage inequality and the incentive of skill acquisition.     

Firm growth and R&D: Evidence from the Portuguese manufacturing industry

This work studies the effects of R&D activities and investment, both physical and R&D, on the growth of firms by considering a dynamic firm growth model with serial correlation. The main hypotheses maintain that firms with a strong commitment to R&D have a higher growth rate, and investment has a positive effect on firm growth. We investigate such relations with reference to an unbalanced panel data set of Portuguese manufacturing firms over the period of 1990 to 2001. We find that a systematic tendency for smaller firms to grow more quickly is the main reason why firm growth is not entirely stochastic.     

A spatial analysis of R&D: the role of industry proximity

This paper employs individual firm data in order to check the existence of industry-spatial effects alongside other microeconomic determinants of R&D investment. Spatial proximity is defined by a measure of firms’ industry distance based on trade intensity between sectors. The spatial model specified here refers to the combined spatial-autoregressive model with autoregressive disturbances. In modelling the outcome for each location as dependent on a weighted average of the outcomes of other locations, outcomes are determined simultaneously. The results of the spatial estimation suggest that in their R&D decision firms benefit from spillovers originating from neighbouring industries.