Government strategies to attract R&D-intensive FDI

Abstract

Competition among countries and regions to attract the R&D activities of multinational enterprises has increased substantially during the last years, but the strategies used by governments in this competition remain largely unexplored. This paper proposes a taxonomy of the main policy instruments available to stimulate inward R&D-intensive FDI and presents the results of a comparative case-study of two European countries: Spain and Ireland. The main conclusion is that an efficient promotion of R&D-intensive FDI calls for a closer coordination between innovation policy and inward investment promotion, which are two policy areas that have traditionally operated rather independently from each other. In addition, inward investment agencies targeting R&D-intensive FDI are advised to reconfigure the scope of services they provide by placing more emphasis on after-care, since R&D-intensive FDI tends to be evolutionary rather than greenfield.Keywords: R&D, FDI, multinational enterprises. ResumenLa competición entre países y regiones por atraer las actividades de I+D de las empresas multinacionales ha aumentado sustancialmente durante los últimos años, pero no hay suficientes estudios sobre las estrategias utilizadas por los gobiernos en esta competición. Este artículo propone una taxonomía de los principales instrumentos políticos para estimular la IED intensiva en I+D y presenta los resultados de un estudio de caso comparativo de dos países europeos: España e Irlanda. La principal conclusión es que una promoción eficiente de la IED intensiva en I+D requiere una mayor coordinación entre las políticas de innovación y las políticas de atracción de la IED, que tradicionalmente han funcionado de forma independiente. Otra recomendación que emana de este estudio es que las agencias de promoción de inversiones que deseen priorizar la IED intensiva en I+D deberían reconfigurar la gama de servicios que prestan para pasar a centrarse en los servicios postinversión (o "after-care"), ya que la IED-intensiva en I+D tiende a ocurrir a través de un proceso evolutivo y no tanto a través de inversiones "greenfield".Palabras clave: I+D; IED; empresas multinacionales. AcknowledgmentsThanks are due to the Institute of International Integration Studies of Trinity College Dublin for hosting me as a visiting researcher while developing this paper, and especially to Frances Ruane who provided invaluable feedback and assistance. I am also grateful to Paloma Sánchez, my PhD supervisor at Universidad Autó-noma de Madrid, for her useful comments to an earlier draft of this paper. Thanks are also due to all the policy makers and business managers that agreed to be interviewed for this research, especially to

Is Canadian intellectual property leaving Canada? A study of nanotechnology patenting

“…The existing literature supports the view that R&D-intensive foreign direct investment constitutes a powerful mechanism of international technology transfer which can enable host locations to develop specialized clusters (Guimon, 2009). Not only can activities of such R&D research centers strengthen the research and innovative capacities of the firms already present in the clusters, they may also attract the entry of new firms that carry out their own research, development and innovation.…”

What Drives International Competitiveness? An Empirical Test in Emerging Indonesian Market

“…This might trigger subsidiary's knowledge management system to provide more influence on local society (Guimon, 2008;Mudambi & Mudambi, 2005). Today, one of the primary reasons for host government to have more foreign direct investments is due to the needs to update local's knowledge.…”

Are the BRIC countries overtaking intermediate countries in the race for international R&D? The case of Spain

“…In the case of R&D, other studies also endorse the idea that MNCs tend to prioritize the availability of scientific manpower over cost reduction (Thursby and Thursby 2006). Likewise, MNCs are attributing a growing importance to the dynamism of the R&D infrastructures, such as the existence of cutting-edge scientific centres and institutions, access to clusters and spillover effects, and the proximity between the business and scientific worlds (Demirbag and Glaister 2010;Guimón 2009). R&D infrastructures comprise a set of factors and agents which favour the generation, exploitation, and diffusion of knowledge (Evangelista et al 2015).…”