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Journal of Industry, Competition and Trade

Subsidizing Away Exports? A Note on R&D–policy Towards Multinational Firms

Scientific Article in English
Reference
Norbäck, Pehr-Johan (2011). “Subsidizing Away Exports? A Note on R&D–policy Towards Multinational Firms”. Journal of Industry, Competition and Trade 11(1), 25–42. doi.org/10.1007/s10842-009-0061-6

Author
Pehr-Johan Norbäck

In this paper, I investigate whether instead of strengthening home-based production, government R&D-subsidies can induce R&D-intensive firms to locate production abroad. Investigating firm-level data on Swedish MNEs, however, I find no evidence of such relocation. R&D subsidies rather tend to encourage export production at the expense of foreign production. The theory presented suggests that this is consistent with technology transfer costs, which outweigh trade costs for physical goods.

Pehr-Johan Norbäck

+46 (0)8 665 4522
+46 (0)73 574 3379
pehr-johan.norback@ifn.se