Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 512: Multinational Firms, Technology and Location

Pehr-Johan Norbäck ()
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Pehr-Johan Norbäck: The Research Institute of Industrial Economics, Postal: Box 5501, SE-114 85 Stockholm, Sweden

Abstract: This paper analyzes a three-stage optimization problem in which a firm chooses (i) its technology, by deciding on a level of R&D, (ii) whether this technology is to be used in a domestic or in a foreign plant and (iii) the quantity produced and sold on the market. If technology transfer costs are low, "high-tech" or R&D-intensive firms tend to produce abroad. At higher technology transfer costs, high-tech firms tend to export. An empirical analysis using a data set of Swedish multinational firms, confirms the latter prediction.

Keywords: Multinational Firms; R&D; Location; Empirical Analyses

JEL-codes: F23; L13; O33

35 pages, First version: March 12, 1999. Revised: June 19, 2000. Earlier revisions: November 2, 2000.

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