International R&D Spillovers and the Absorptive Capacity of Multinationals
This paper studies R&D spillovers as a motive for firms to go multinational. The establishment of a foreign subsidiary may increase a firm’s ability to learn from foreign R&D activity since R&D spillovers between firms are moderated by geographical distance. As opposed to earlier studies on this subject, we also model the concept of absorptive capacity where spillovers are endogenised as a function of the firms’ own R&D investments. We employ a three-stage Cournot duopoly model to identify under what conditions a firm chooses to service a foreign market through exports or localised production (going multinational). With exogenous R&D investments, the absorptive capacity effect contributes to increase the gains from going multinational when the firm is a technology leader in terms of R&D. If R&D investments are endogenous, only medium-sized absorptive capacity effects will result in firms going multinational. Also, higher spillover rates do not necessarily drive down R&D and profits for the multinational firm. This stands in contrast to models that ignore the aspect of absorptive capacity.
Learning, Networks and Sunk Costs in International trade: Evidence form Norwegian Seafood Exports
Based on new survey data for 81 Norwegian seafood exporters, the report examines the composition and magnitude of different types of trade costs, ranging from tariffs and transport costs to other sales costs. The results suggest that there are economies of scale in the exporting activity, due to fixed costs of market entry, learning through experience, and externalities between firms so that one exporter benefits from the others via learning or joint marketing effects. Seafood exports strongly rely on personal networks, and firms incur costs in order to establish these networks. On the whole, however, fixed sales costs for seafood exports are small, due to these products being relatively homogeneous. In spite of this, such costs matter for the choice of markets and the magnitude of trade. The report analyses how costs vary across products, firms and markets. For seafood exports, traditional trade barriers such as tariffs and transport costs are more important than the sunk costs. Transport costs do not increase proportionally with geographical distance, mainly since this is not the case for sea transports.
Bokanmeldelse: Globalisering, næringslokalisering og økonomisk politikk
Political Priorities and Economic Interests in Russian-Latvian Relations
The paper focuses on interaction of political and economic aspects in Russian-Latvian relations. During the most of the 1990´s, the relationship was dominated by the «conflict manifestation,» which could be witnessed during the protracted Russian troop withdrawal and mutually irreconcilable positioning over NATO expansion and status of Russian-speaking population. However, in the context of EU enlargement and «economisation» of Russian foreign policy, economic factors may play an increasingly important role in Russian-Latvian relations. It is possible to discover a complex web of links and economic interdependence between economic actors in both Russia and Latvia. This especially refers to transit as Latvian ports remain among the major routes of Russian exports, primarily oil, to Western Europe. Yet, certain interests of particular economic groups in Russia as well as economic and political priorities of Russian government generally, in the region and domestically will have influence, not necessarily favourable, on further development of this economic interdependence.
Meet Me Halfway but don't Rush : Absorptive capacity and strategic R&D investment revisited
In this paper, we analyse how R&D investment decisions are affected by R&D spillovers between firms, taking into consideration that more R&D investment improves the ability to learn from competing firms - the so-called absorptive capacity effect of R&D. The model in this paper is an extension of d’Aspremont and Jacquemin (1988), where they show that exogenous R&D spillovers reduce the incentive to invest in R&D when firms compete in a Cournot duopoly. Our model treats R&D spillovers as endogenous, being a function of absorptive capacity effects. Contrary to earlier studies, we show that absorptive capacity effects do not necessarily drive up the incentive to invest in R&D. This only happens when the market size is small or the absorptive capacity effect is weak. Otherwise firms will actually chose to cut down on R&D. Furthermore, absorptive capacity effects also increase the critical rate of spillovers that determines whether participating in research joint ventures leads to lower or higher R&D investment. Finally, we show that strong learning effects of own R&D are not necessarily good for welfare. Moreover, if the market size is large, welfare will be at its highest when the learning effect is small.
Firms' export decisions - fixed trade costs and the size of the export market
This article presents two models of international trade under monopolistic competition. In increasing returns sectors firms face fixed, in addition to variable, trade costs, therefore both exporters and non-exporters may coexist. While nonexporters benefit from access to large domestic markets, exporters benefit from access to large foreign markets. Consequently, a small country has a higher share of exporting firms than a large one. In contrast to standard models, increasing returns sectors turn out more open in small countries than in large ones, and small countries may be net exporters of such commodities, despite the disadvantage of a smaller home market.
Recent Advances in Growth Theory. A Comparison of Neoclassical and Evolutionary Perspectives
Research on economic growth has experienced remarkable progress the last decade. The neoclassical perspective has benefited from development of new mathematical methods and new approaches to market structure, economics of scale and spillover effects. At the same time evolutionary theories on economic development have appeared, partly competing but also complementary to neoclassical theorising. In this paper, the development of the two perspectives on economic growth is reviewed and they are compared with each other. Despite evident differences there seems to be convergence between the two traditions. The two perspectives therefore do not belong to different paradigms in the Kuhnian sense and they can hardly be categorised as two isolated research programmes in the sense of Imre Lakatos. Evolutionary and neoclassical growth economics draw inspiration from similar sources, they are overlapping and to some extent complementary. The two traditions also interact with each other.
Foreign Direct Investment in Norway’s Manufacturing Sector
This report investigates the location advantages of the Norwegian manufacturing industry while focusing on economic as well as institutional factors. The economy relies highly on the exploitation of natural resources and only minor parts of its exports are technology based. Norway as a market for consumer goods is not only small in size but is also located at the periphery of Europe. Since the beginning of industrialisation, policies towards foreign direct investment (FDI) have had two targets: The first has been to keep as much of the resource rent as possible within the country and the second, to develop a domestic manufacturing industry. A variety of political tools has been used to achieve these objectives. Although various international agreements aim to reduce preferences for domestic production, several sectors in the Norwegian manufacturing industry remain protected by governmental policy. Norwegian MNEs have internalised former and present L-advantages into firm-specific assets. Domestic interest groups or the state partly control several of these enterprises. Compared to other small European countries, Norway has a relatively low share of FDI in the manufacturing industry. Nonetheless, over the last decades the country has experienced a substantial increase in FDI. This is partly due to investments of foreign affiliates of Norwegian multinational companies, reinvesting in Norway. In 1996, on an average, 18% of the employment in firms with at least 50 employees was located to foreign controlled firms while the corresponding figures in 1980 and 1991 were 8% and 13%. FDI mainly takes the form of mergers and acquisitions and is particularly significant in sectors with an above average R&D intensity and in other market segments with a relatively high producer concentration. The main industrial clusters as well as the production of consumer goods have experienced the major growth of FDI employment in the period 1991–1996. Often, these are also sectors with a high degree of governmental protection.
Corruption. A review of contemporary research
This report is an overview of contemporary research on corruption. The main objectives of the study have been to organise existing knowledge on corruption, discuss the major controversies within and across disciplines and to identify some areas in most need for further research with an emphasis on questions relevant for development policy. The review has been carried out as a joint study by researchers at the Chr. Michelsen Institute (CMI), Bergen, and the Norwegian Institute of International Affairs (NUPI), Oslo. Special thanks to the CMI and NUPI librarians for their assistance. Financial support from the Norwegian Agency for Development Co-operation, (NORAD) and extra time from our institutes are gratefully acknowledged. The survey may be somewhat biased towards economic approaches, reflecting the fact that the writing and editing have primarily been done by the economists Odd-Helge Fjeldstad (CMI) and Jens Chr. Andvig (NUPI). In addition, Tina Søreide (CMI), also an economist, has contributed to chapter 3. Inge Amundsen(CMI), a political scientist, has written chapter 4 and made several contributions to chapters 2 and 10. Tone Sissener (CMI), a social anthropologist, has written chapter 5. The study focuses on academic research. While a survey of the output from public commissions would be useful, they are not systematically covered here. Moreover, to make the survey accessible to a multidisciplinary readership, efforts have been made to present the more abstract and technical research in a non-technical way. In spite of its limitations we hope this survey will be considered useful – and be used – by researchers, students, development practitioners and aid officials.
Forhandlingsmetodikk i WTO : Teoretiske resonnementer
Notatet klarlegger prinsipielle og praktiske forskjeller mellom de forhandlingsmetoder som har vært og kan komme til å bli brukt i WTO forhandlinger. Resonnementene baserer seg på økonomisk teori og forhandlingsteori. Selv om det gjøres betraktninger i forhold til Norges interesser generelt og fisk spesielt, er notatet mer som et rammeverk som dypere empirisk analyse kan baseres på. Arbeidet med artikkel ble utført på NUPI november 1999–januar 2000, som en del av et prosjekt finansiert av Fiskeridepartementet.