2011

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

Reprint No. 2011:16

Author(s): Pehr-Johan NorbäckYear: 2011 Title: Journal of Industry, Competition and Trade Volume (No.): 11 (1) Pages: 25–42
Online article (restrictions may apply)


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.


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.

Pehr-Johan Norbäck

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Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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