Knowledge Transfers from Multinational Plants in Ireland

Abstract

For regions or nations which historically have had low levels of domestic R&D investment - such as Ireland, North and South - inward investment represents a potentially important source of inward knowledge transfer. Using data from large multinational plants throughout Ireland, this paper examines the geography of knowledge within Irish manufacturing, focusing particularly on knowledge gaps and knowledge-transfer activity. The analysis suggests three main empirical results. First, no significant knowledge gaps exist between the Irish plants of multinational enterprises (MNEs) and international best practice. Second, larger knowledge gaps exist between MNE plants and their best local suppliers, suggesting the potential for local learning in the supply chain. Average knowledge gaps to suppliers also tend to be larger in the North. Third, there is no clear evidence that knowledge-transfer activity is more intensive where knowledge gaps are widest. In particular, developmental interaction between MNE plants and suppliers tends to be more common in the South. Our results suggest the potential benefit of policy measures both to increase knowledge-transfer activity along the supply chain and also to increase knowledge-transfer activity between companies which are not trading partners.