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From learning to partnership : multinational research and development cooperation in developing countries, Volume 1

Author:	Navaretti, Giorgio Barba; Carraro, Carlo;	Collection Title:	Policy, Research working paper ; no. WPS 1662
Date Stored:	2001/04/21	Document Date:	1996/10/31
Document Type:	Policy Research Working Paper	Language:	English
Major Sector:	(Historic)Economic Policy	Report Number:	WPS1662
Sub Sectors:	Macro/Non-Trade	SubTopics:	Environmental Economics & Policies; Scientific Research & Science Parks; Economic Theory & Research; Science Education; Small and Medium Size Enterprises; Agricultural Knowledge and Information Systems
Volume No:	1

Summary: The authors analyze the determinants of interfirm agreements between industrial and developing countries for research and development (R&D) - that is, between firms with asymmetric endowments of knowledge. They develop a model in which a multinational has two options: a) setting up a subsidiary and competing with a local firm in a duopoly, or b) implementing an agreement and sharing monopoly profits. The two firms, if they chose the agreement, may also cooperate in R&D. The model shows that: a) the choice of cooperating in R&D is influenced by the intertemporal preferences of the developing country firm, the relative efficiency in R&D of the two firms, and the extent of knowledge spillovers; and b) the choice of cooperating R&D increases both the profitability and stability of the agreement. The empirical analysis is based on a data set of international arm's length agreements, part of which involve joint R&D. Testing the two-choice model supports some of the key theoretical results and assumptions. R&D agreements are particularly likely to emerge when firms are operating in knowledge-intensive industries, when the partners have a nonhierarchical contractual relationship, and when technological asymmetries between home and host countries exist but are not too great.


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File Type		Description	File Size (mb)

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	PDF 44 pages	WPS1662	1.55

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