Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203956 
Year of Publication: 
2012
Series/Report no.: 
wiiw Working Paper No. 91
Publisher: 
The Vienna Institute for International Economic Studies (wiiw), Vienna
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.
Subjects: 
internationalization of R&D
multinational firms
gravity model
JEL: 
F23
O32
L6
Document Type: 
Working Paper

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