| Abstract
Text: |
To
what extent do firms go abroad to access technology available
in other locations? This paper examines whether and when state
technical capabilities attract foreign investment in manufacturing
from 1987-1993. We find that on average state R&D intensity
does not attract FDI; most investing firms are in lower tech
industries, are disinterested in state technical capabilities,
and therefore locate in low R&D intensity states. In contrast,
we find that firms in research-intensive industries are more
likely to locate in states with high R&D intensity. Foreign
firms in the pharmaceutical industry value state R&D intensity
the most, at a level twice that of firms in the semiconductor
industry, and four times that of electronics firms. Interestingly,
not only firms from technically lagging nations, but also
some firms from technically leading nations are attracted
to R&D intensive states. This suggests that beyond catching-up,
firms use knowledge-seeking investments also to source technical
diversity. JEL
Classifications: F23, R30, L21
Keywords:
FDI, location choice, knowledge seeking, random parameter
logit
COMMENTS
WELCOME.
We acknowledge the helpful comments of Witold Henisz,
Glenn Hoetker, Arturs Kalnins, Andy King, Joanne Oxley,
Tom Pugel, Myles Shaver and seminar participants at the
NYU Multinational Conference on prior drafts. Correspondence
to wcchung@wharton.upenn.edu or 2027 Steinberg-Dietrich
Hall, Philadelphia, PA 19104.
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