R&D Investments of Multinational Corporations

Abstract

This paper investigated the influence of country-level factors that have led to shifts in the patterns of international R&D investments made by Multinational Corporations (MNCs), from an exclusive focus on developed countries to a broader scope that also includes developing countries. Differences in a country’s national technological innovation capability, that comprised the country’s capacity for the creation of technology, technology infrastructure and the development of human skills, were the most important factors in attracting R&D investments. Different strategic motivations like home-base exploiting versus home-base augmenting foreign R&D investments are attracted to countries with differing national innovation capabilities. The country’s Intellectual Property Rights (IPR) score was also an important influence on R&D investments. International investor’s experience with the country, as measured by prior FDI inflows, was a critical element in attracting R&D investment inflows.