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International R&D Spillovers and the Absorptive Capacity of Multinationals

This paper studies R&D spillovers as a motive for firms to go multinational. The establishment of a foreign subsidiary may increase a firm’s ability to learn from foreign R&D activity since R&D spillovers between firms are moderated by geographical distance. As opposed to earlier studies on this subject, we also model the concept of absorptive capacity where spillovers are endogenised as a function of the firms’ own R&D investments. We employ a three-stage Cournot duopoly model to identify under what conditions a firm chooses to service a foreign market through exports or localised production (going multinational). With exogenous R&D investments, the absorptive capacity effect contributes to increase the gains from going multinational when the firm is a technology leader in terms of R&D. If R&D investments are endogenous, only medium-sized absorptive capacity effects will result in firms going multinational. Also, higher spillover rates do not necessarily drive down R&D and profits for the multinational firm. This stands in contrast to models that ignore the aspect of absorptive capacity.

  • International economics
  • International economics
Publications
Publications
Report

Hegemonens hamskifte : Bush, 11. september og amerikansk utenrikspolitikk

  • Security policy
  • North America
  • Security policy
  • North America
Publications
Publications
Report

Components of Naval Nuclear Fuel Transparency

  • Russia and Eurasia
  • North America
  • Energy
  • Russia and Eurasia
  • North America
  • Energy
Publications
  • Russia and Eurasia
  • Governance
Publications
Publications
Report

Learning, Networks and Sunk Costs in International trade: Evidence form Norwegian Seafood Exports

Based on new survey data for 81 Norwegian seafood exporters, the report examines the composition and magnitude of different types of trade costs, ranging from tariffs and transport costs to other sales costs. The results suggest that there are economies of scale in the exporting activity, due to fixed costs of market entry, learning through experience, and externalities between firms so that one exporter benefits from the others via learning or joint marketing effects. Seafood exports strongly rely on personal networks, and firms incur costs in order to establish these networks. On the whole, however, fixed sales costs for seafood exports are small, due to these products being relatively homogeneous. In spite of this, such costs matter for the choice of markets and the magnitude of trade. The report analyses how costs vary across products, firms and markets. For seafood exports, traditional trade barriers such as tariffs and transport costs are more important than the sunk costs. Transport costs do not increase proportionally with geographical distance, mainly since this is not the case for sea transports.

  • Trade
  • Globalisation
  • Europe
  • Trade
  • Globalisation
  • Europe
Publications
Publications
Scientific article

Bokanmeldelse: Globalisering, næringslokalisering og økonomisk politikk

  • Globalisation
  • Globalisation
Publications
Publications
Report

Political Priorities and Economic Interests in Russian-Latvian Relations

The paper focuses on interaction of political and economic aspects in Russian-Latvian relations. During the most of the 1990´s, the relationship was dominated by the «conflict manifestation,» which could be witnessed during the protracted Russian troop withdrawal and mutually irreconcilable positioning over NATO expansion and status of Russian-speaking population. However, in the context of EU enlargement and «economisation» of Russian foreign policy, economic factors may play an increasingly important role in Russian-Latvian relations. It is possible to discover a complex web of links and economic interdependence between economic actors in both Russia and Latvia. This especially refers to transit as Latvian ports remain among the major routes of Russian exports, primarily oil, to Western Europe. Yet, certain interests of particular economic groups in Russia as well as economic and political priorities of Russian government generally, in the region and domestically will have influence, not necessarily favourable, on further development of this economic interdependence.

  • International economics
  • Economic growth
  • Russia and Eurasia
  • International economics
  • Economic growth
  • Russia and Eurasia
Publications
Publications
Report

Meet Me Halfway but don't Rush : Absorptive capacity and strategic R&D investment revisited

In this paper, we analyse how R&D investment decisions are affected by R&D spillovers between firms, taking into consideration that more R&D investment improves the ability to learn from competing firms - the so-called absorptive capacity effect of R&D. The model in this paper is an extension of d’Aspremont and Jacquemin (1988), where they show that exogenous R&D spillovers reduce the incentive to invest in R&D when firms compete in a Cournot duopoly. Our model treats R&D spillovers as endogenous, being a function of absorptive capacity effects. Contrary to earlier studies, we show that absorptive capacity effects do not necessarily drive up the incentive to invest in R&D. This only happens when the market size is small or the absorptive capacity effect is weak. Otherwise firms will actually chose to cut down on R&D. Furthermore, absorptive capacity effects also increase the critical rate of spillovers that determines whether participating in research joint ventures leads to lower or higher R&D investment. Finally, we show that strong learning effects of own R&D are not necessarily good for welfare. Moreover, if the market size is large, welfare will be at its highest when the learning effect is small.

  • Trade
  • Trade
Publications
Publications
Report

The Europeanisation of Norway's Security Identity

In this working paper Pernille Rieker looks into the relationship between the European integration process and changes in Norway’s national security identity. Has the dominant national discourse on security changed since the early 1990s? If so, how are these changes related to the recent acceleration of the European integration process? And to what extent are such European influences on national security identities related to formal membership in the EU? While there is reason to believe that a Europeanisation of national security policies has taken place, the question is whether we may speak of a profound change in identity, or merely an instrumental adaptation to external changes. Several researchers have studied the influence of this participation on national institutions and policies; less attention, however, has been given to the Europeanisation of Norway’s security identity. This paper is an attempt to fill this gap.

  • Security policy
  • Security policy
Publications
Publications
Report

Firms' export decisions - fixed trade costs and the size of the export market

This article presents two models of international trade under monopolistic competition. In increasing returns sectors firms face fixed, in addition to variable, trade costs, therefore both exporters and non-exporters may coexist. While nonexporters benefit from access to large domestic markets, exporters benefit from access to large foreign markets. Consequently, a small country has a higher share of exporting firms than a large one. In contrast to standard models, increasing returns sectors turn out more open in small countries than in large ones, and small countries may be net exporters of such commodities, despite the disadvantage of a smaller home market.

  • Trade
  • Globalisation
  • Trade
  • Globalisation
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