Innovation catalysts: how multinationals reshape the global geography of innovation

Crescenzi, Riccardo ORCID: 0000-0003-0465-9796, Dyevre, Arnaud and Neffke, Frank (2022) Innovation catalysts: how multinationals reshape the global geography of innovation. Economic Geography, 98 (3). 199 - 227. ISSN 0013-0095

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Abstract

We study whether and when research and development (R&D) activities by foreign multinationals facilitate the formation and growth of new innovation clusters. Combining information on nearly four decades’ worth of patents with socioeconomic data for regions that cover virtually the entire globe, we use matched difference-in-differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: over a five-year period, foreign research activities help a region climb fourteen centiles in the global innovation ranks. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers with local firms abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with lower levels of economic development than less advanced firms, yet with comparable public-sector research capacity. These findings suggest that technologically leading multinationals face comparatively unfavorable trade-offs between the costs and benefits of local spillovers, underscoring the importance of taking the strategic choices that firms face into account when analyzing innovation clusters.

Item Type:	Article
Official URL:	https://www.tandfonline.com/toc/recg20/current
Additional Information:	© 2021 The Authors
Divisions:	Geography & Environment Economics
Subjects:	H Social Sciences > HC Economic History and Conditions G Geography. Anthropology. Recreation > G Geography (General) H Social Sciences > HD Industries. Land use. Labor
JEL classification:	O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O32 - Management of Technological Innovation and R&D O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
Date Deposited:	12 Nov 2021 12:48
Last Modified:	16 Nov 2024 06:39
URI:	http://eprints.lse.ac.uk/id/eprint/112597

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