Patterns of Innovation among Multinational Firms

Abstract

This chapter chronicles the spread of innovation-intensive forms of foreign investment. It is primarily descriptive, and provides the empirical context for the econometric tests in subsequent chapters. The multifaceted concept of innovation is investigated in detail in this chapter. Historical patterns of multinational innovation are presented, followed by more recent empirical trends. The evolving sectoral distribution of FDI in developing countries is examined, as are the potential implications for innovative activities. The chapter extensively details patterns of multinational innovation, through firm surveys and aggregated country level data. Additionally, the extent of innovation spillovers and linkages with economic actors in host countries is considered. Among the core findings in this chapter are that innovation is becoming more common in developing countries, innovation is concentrated in specific regions, and service sector investment represents an increasing share of investment in emerging economies. Firms in some sectors are also more likely to embed in host economies than firms in other sectors.