Domestic and Foreign Business R&D Expenditure: Is There a Crowding Out?

8 Pages Posted: 25 Oct 2013

See all articles by Bernhard Dachs

Bernhard Dachs

AIT Austrian Institute of Technology

Date Written: August 1, 2013

Abstract

In recent years, multinational enterprises have built up considerable research and development (R&D) activities at locations outside their home countries. This trend has raised fears that overseas R&D may substitute similar activities in the home countries. To test this assumption, this paper investigates the relationship between overseas and domestic business R&D expenditure for the manufacturing sector of a number of countries in the period 2003 to 2007. The econometric analysis gives no evidence that overseas R&D expenditure substitutes domestic R&D. Thus, the results do not support the assumption that multinational firms move R&D to locations abroad to reduce their R&D efforts in the home countries.

Keywords: research and development, internationalisation, foreign-owned firms, crowding out, multinational enterprises, foreign direct investment, home country effect

JEL Classification: F230, O330, O310

Suggested Citation

Dachs, Bernhard, Domestic and Foreign Business R&D Expenditure: Is There a Crowding Out? (August 1, 2013). Available at SSRN: https://ssrn.com/abstract=2344633 or http://dx.doi.org/10.2139/ssrn.2344633

Bernhard Dachs (Contact Author)

AIT Austrian Institute of Technology ( email )

Donau-City-Straße 1
Vienna, 1220
Austria

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