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| Author: | Gersbach, H. Schmutzler, A. |
| Title: | Foreign direct investment and R&D-offshoring |
| Journal: | Oxford Economic Papers
2011 : JAN, VOL 63:1 p. 134-157 |
| Index terms: | multinational companies international economics foreign investment R&D models |
| Freeterms: | FDI |
| Language: | eng |
| Abstract: | A two-country model of Foreign Direct Investment (FDI) and R&D-offshoring is analyzed here. In the basic model, two firms, each originally situated in only one of the two countries, first determine whether to build a plant abroad. After that, they decide whether to relocate R&D activities offshore. Finally, they go in for product-market competition. In this model, FDI liberalization results to a relocation of R&D activities if intrafirm communication is developed well enough, external spillovers are considerable, competition is moderate and foreign markets are not too small. Surprisingly, such a relocation of R&D activities commonly increases domestic welfare. |
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