The innovative performance of foreign-owned enterprises in small open economies

This paper compares the innovative performance of foreign-owned and domestically owned enterprises in five European countries. We look at innovation inputs, outputs, and examine how strong foreign-owned enterprises are embedded in the innovations systems of their host countries. We find that foreign ownership is associated with similar levels of innovation input, but higher levels of innovation output and higher labour productivity compared to domestic ownership. In four of the five countries, affiliates of foreign multinationals show a similar or even a higher propensity to co-operate with domestic partners than domestically owned enterprises.

The effects of stronger intellectual property rights on technology transfer: evidence from Japanese firm-level data

This paper presents the theoretical framework and empirical analysis of the effect of stronger Intellectual Property Rights (IPRs) on technology transfer from parent firm to its subsidiaries in foreign countries. The results of empirical testing, based on the firm-level panel data of Japanese MNCs’ foreign subsidiaries, show that the stronger protection of IPRs has a positive effect on the promotion of intra-firm technology transfer after controlling for market specific factors in the host countries as well as parent-subsidiary firm specific factors. They are consistent with our theoretical prediction and the results of the previous studies based on US firm-level data.

Unilateral CDM—can developing countries finance generation of greenhouse gas emission credits on their own?

The Clean Development Mechanism (CDM) was originally seen as an instrument with a bi- or multilateral character where an entity or fund from an industrialised country invests in a project in a developing country. The sluggish implementation of incentives for industrialised country companies to embark on CDM projects and low carbon prices led to a preference for just buying Certified Emission Reductions (CERs) instead of investing in projects. Thus a third option has gained prominence—the unilateral option where the project development is planned and financed within the developing country. We propose that a project should be called “pure unilateral” if it involves no foreign direct investment (FDI), only has the approval of the Designated National Authority (DNA) of the host country and sells its CERs after certification directly to an industrialised country. Unilateral projects can become attractive if the host country risk premium for foreign investors is high despite a high human, institutional and infrastructural capacity and domestic capital availability. Moreover, transaction costs can be reduced compared to foreign investments that have to overcome bureaucratic hurdles. On the other hand, technology transfer is likely to be lower, capacity building has to be undertaken by the host country and all risks have to be carried by host country entities. The potential to carry out unilateral CDM projects strongly varies among host countries. Whereas several countries from Asia and Latin America can design and implement projects autonomously, most of the Sub-Saharan countries rely on foreign support. International donors of capacity building grants should increasingly address those countries that are not presently focused on by foreign investors and support them in the design of local projects.

Technological diversity,scientific excellence and the location of inventive activities abroad: the case of nanotechnology

Our contribution to the expanding literature on the globalization of research and innovation is to investigate the extent to which sector-specific developments in an emerging technology (such as increasing interdisciplinarity and complexity) affect inventive activities developed abroad. We look at how technological diversity and scientific excellence of host countries in the field of nanotechnology affect the development of inventive activities by US multinational companies (MNCs). We identify the most active US-based MNCs in nanotechnology-related patenting and examine location decisions of these companies and their international subsidiaries. Econometric results confirm our hypothesis that the technological breadth of host countries positively influences the expected number of inventions developed abroad by US MNCs. Science capabilities of countries also have a positive impact on the decision to invent abroad, while the influence of market specific factors is less clear. We interpret these results as suggesting that host country science capabilities are important to attract innovative activities by MNCs, but as the interdisciplinary and convergent nature of nanotechnology evolves, access to a broadly diversified knowledge base becomes important in increasing the relative attractiveness of host locations.

Researching the use of force: the background to the international project

This article provides the background to an international project on use of force by the police that was carried out in seven countries. Force is often considered to be the defining characteristic of policing and much research has been conducted on the determinants, prevalence and control of the use of force, particularly in the United States. However, little work has looked at police officers’ own views on the use of force, in particular the way in which they justify it. Using a hypothetical encounter developed for this project, researchers in each country conducted focus groups with police officers in which they were encouraged to talk about the use of force. The results show interesting similarities and differences across countries and demonstrate the value of using this kind of research focus and methodology.

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Innovation-related data in bureau of economic analysis international economic surveys

This paper describes innovation-related data available from international economic surveys conducted by the U.S. Bureau of Economic Analysis. These data are collected in conjunction with the international transactions accounts of the United States and in surveys of the operations of multinational companies (MNCs). The paper focuses on five innovation-related series: receipts and payments of royalties and license fees; exports and imports of research, development, and testing services; sales of services by foreign affiliates classified in the research and development services industry; MNC R&D spending; and MNC R&D employment.

Does strong patent protection facilitate international technology transfer? Some evidence from licensing contracts of Japanese firms

This paper examines how patent protection in a technology recipient country affects international technology transfer. A theory suggests that the effect of stronger patent protection on technology transfer is negative if the binding constraint is the imitation profitability and positive if it is the incentive for the licensor to undertake technology transfer. We evaluate these implications by examining the variations of the structure of licensing contracts across countries, based on a newly collected database of licensing contracts by Japanese firms. Our major findings are the following. First, the incidence of know-how licensing, either in the pure or in the bundled form, relative to that of pure patent licensing, declines significantly with the level of foreign patent protection. This indicates a limited role of patents for facilitating know-how licensing. Secondly, the probability and the strength of ownership control by a licensor declines with the level of patent protection, indicating a positive effect of stronger patent protection in expanding the scope of the recipients of technology transfer.

The profitability life-cycle of direct investment: an international panel study

In this paper we test competing hypotheses about the shape of the time-profile of foreign direct investment profitability on a panel of countries. Using partial linearization method we derive the time-profile of the cumulative profitability for the stock of direct investment from aggregate macroeconomic data. By testing the non-linearity hypothesis of the cumulative profitability life-cycle of direct investment we find a cubic curve.

Location choices within global innovation networks: the case of Europe

Rapid growth in internationalization of corporate R&D has spurred considerable interest since the 1990s. Foreign R&D is still mainly driven by the expansion of international production, but technology sourcing has become an increasingly important driver of dispersion. Actually, differences across sectors and companies tend to obscure the mix of motivations behind the development of global innovation networks. This paper distinguishes the various drivers of the international dispersion of corporate R&D in order to elaborate a typology of foreign R&D units, including in emerging countries. This typology is used to discuss the emergence of differentiated global innovation networks and the location choices by type of R&D unit. It is applied to foreign R&D projects in Europe in high and low cost countries between 2002 and 2005. It is then used to discuss the weakening attractiveness of the European Union for R&D activities and the relevant policies that countries can design to attract different types of units.

Technology parks in a developing country: the case of India

Following the economic liberalization of 1991, the government of India established the software technology parks of India (STPI) scheme and opened numerous software parks around the country. These parks have played a critical role in the growth of India’s software sector. In recent years, private software parks have also been established in different parts of India. The government of India is now promoting biotechnology (biotech) parks to encourage growth of this emerging sector. The biotech parks are still in their infancy with a few operating parks. There are several upcoming biotech parks in different Indian states with support from the respective state governments. The government of India continues to play an important role in establishing technology parks. Biotech-Information Technology (Bio-IT) park is the next type of park that the government is planning to promote. This article discusses the institutional history of these technology parks in India.

Government strategies to attract R&D-intensive FDI

Competition among countries to attract the research and development (R&D) activities of multinational enterprises has increased substantially during the last years, but the strategies used by governments in this competition still remain largely unexplored. This paper addresses that gap by proposing a taxonomy of the policy instruments available to stimulate inward R&D-intensive foreign direct investment (FDI) and presenting the results of a comparative case study of two EU countries: Spain and Ireland. The main conclusion is that an efficient promotion of R&D-intensive FDI calls for a closer connection between innovation policy and inward investment promotion, which are two policy areas that have traditionally operated rather separately. In addition, investment promotion 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 purely greenfield.

Singing the same tune? International continuities and discontinuities in how police talk about using force

This article focuses on a research project conducted in six jurisdictions: England, The Netherlands, Germany, Australia, Venezuela, and Brazil. These societies are very different ethnically, socially, politically, economically, historically and have wildly different levels of crime. Their policing arrangements also differ significantly: how they are organised; how their officers are equipped and trained; what routine operating procedures they employ; whether they are armed; and much else besides. Most relevant for this research, they represent policing systems with wildly different levels of police shootings, Police in the two Latin American countries represented here have a justified reputation for the frequency with which they shoot people, whereas at the other extreme the police in England do not routinely carry firearms and rarely shoot anyone. To probe whether these differences are reflected in the way that officers talk about the use of force, police officers in these different jurisdictions were invited to discuss in focus groups a scenario in which police are thwarted in their attempt to arrest two youths (one of whom is a known local criminal) by the youths driving off with the police in pursuit, and concludes with the youths crashing their car and escaping in apparent possession of a gun, It might be expected that focus groups would prove starkly different, and indeed they were, but not in the way that might be expected. There was little difference in affirmation of normative and legal standards regarding the use of force. It was in how officers in different jurisdictions envisaged the circumstances in which the scenario took place that led Latin American officers to anticipate that they would shoot the suspects, whereas officers in the other jurisdictions had little expectation that they would open fire in the conditions as they imagined them to be.

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Knowledge transfer to emerging markets via consulting projects

In recent years, development agencies (DAs) have focused their activities on consulting projects rather than on financing turnkey projects when assisting emerging markets. The main reason is that the implementation of consulting projects is likely to be connected with an intensive knowledge transfer from developed to emerging markets. Training of local employees and cooperation with local firms are necessary elements to make the transfer effective. The empirical statistics shows training and cooperation to be more frequent in consulting projects financed by DAs as compared to commercial projects. According to theory and experience, training should be included in projects in the least developed host countries, whereas local cooperation should be more frequent, the higher is the development level of the host country. However, DAs do not follow these rules of thumb in a convincing way. A policy implication of the paper is therefore that DAs should better organize and plan the contents of their consulting projects.

The price of non-compliance with the Kyoto Protocol: The remarkable case of Norway

One of the ways to induce compliance is for an international enforcement mechanism to authorize the use of punitive consequences against a non-compliant country. However, such consequences should not cause significant damage to other (compliant) countries. The compliance mechanism of the Kyoto Protocol fails to meet this requirement. The Enforcement Branch of the Compliance Committee is instructed to impose punitive consequences on a non-compliant country that will have considerable adverse welfare effects for compliant countries as well. Using a numerical model, we show that in the case of Norway, the welfare effects can actually be worse if another country is punished than if Norway itself is punished.

A model of unbalanced sectorial growth with application to transition economies

This paper studies the implications of a dynamic general equilibrium model with three production sectors, which are agriculture, industry and services. Due to the assumption of increasing returns, our model has multiple equilibria. There are two stable equilibria: one, in which a country produces only agricultural goods and converges to a steady state, and the other, in which a country operates all three sectors and has positive unbalanced long-run growth with contracting agriculture and expanding industry and services. These predictions agree well with the real-world development experiences of rich and poor countries. In the context of our model, we also investigate the evolution of the sectorial composition in the transition countries and find that such countries move to the rich rather than to the poor world.

A new approach to measuring technology with an application to the shape of the diffusion curves

This paper documents the sources and measures of the cross-country historical adoption technology (CHAT) data set that covers the diffusion of about 115 technologies in over 150 countries over the last 200 years. We use this comprehensive data set to explore the shape of the diffusion curves. Our main finding is that, once the intensive margin is measured, technologies do not diffuse in a logistic way.

Characteristics and prospects for East Asian economic integration: a Korean perspective

In terms of economic regionalism, East Asia lags far behind other major regions. It was only recently that institutionalization of regional economic integration was started among East Asia countries. However, functional economic integration has continuously proceeded among East Asian economies even without a region-wide RTA. This paper analyzes the trends of functional economic integration both in terms of trade and foreign direct investment (FDI) among East Asian economies, and reviews recent developments of economic regionalism in East Asia. It also addresses the prospects for a region-wide FTA in East Asia and draws some policy implications for East Asian countries at this juncture of economic regionalism in East Asia.

Intra-country regulation of share markets: does one size fit all?

A large body of evidence suggests that financial development is greater in countries that impose stricter regulatory requirements on their major stock exchanges, but this leaves open the question of whether or not such regulation should be uniformly applied to all equity trading platforms within a country. On the one hand, regulatory variation permits a wider choice of investment opportunities for investors, lowers the cost of capital for some firms, and enhances price discovery and efficiency. On the other hand, the presence of lightly regulated exchanges can potentially have adverse spillover implications for a country’s other financial markets.

Firm performance and privatization in Ukraine

Investigating the effects of privatization in transition countries is the focus of a large body of current research. Generally, privatization stimulates private sector development, attracts foreign direct investment, fosters competition and contributes to the formation of stock markets. In addition, privatization may improve individual enterprises’ performance. This paper investigates the impact of privatization on Ukrainian firms’ productivity. The empirical research is based on a sample of 466 Ukrainian joint-stock enterprises for the period of 1997–1999. Estimation results indicate that privatization positively influences labor productivity, sales and profitability, but also that these effects diminish over time.

EU accession and the hardening of soft budget constraints: some macro evidence

The hardening of soft budget constraints (SBCs) is a central element in transforming the economies of Central and Eastern Europe into market economies. This paper presents macro evidence on budget hardening of transition economies comparing the performance of EU accession countries relative to non-accession countries. We estimate SBC hardening for 21 transition economies in a partial adjustment model by measuring the reaction of employment to output changes over a 10-year period. The paper finds that accession candidates have reduced excess labour demand substantially relative to non-accession countries.