Technology Spillovers: A Motive for Foreign Direct Investment?

This paper explores the relationship between the R&D activity in a country and the inflow of foreign capital through foreign direct investment and foreign ownership. The idea that firms invest abroad in order to more easily absorb the knowledge and technology of foreign firms is tested empirically using a unique firm level data set covering foreign ownership and R&D in all Norwegian manufacturing firms over the period 1990 to 1996. The study gives no clear support for such a motive behind foreign ownership. On the contrary, the econometric study indicates that foreign investors predominantly try to exploit their technological advantages in the Norwegian market. The results also show that the presence of foreign ownership is more volatile in highly R&D intensive firms. We claim that this is due to the fact that large R&D investment often result in large losses as well as gains, which again attracts or repels foreign owner interests.

Inward FDI in Norway and its policy context

Norwegian inward foreign direct investment (IFDI) has increased rapidly since 2000. A stock of US$30 billion in 2000 grew by almost 300$ 116 billion by 2009, a growth stronger than that of most other OECD member countries. The development of Norwegian IFDI has been rather uneven, with stable periods punctuated by boom years. IFDI in 2008 was lower than in 2007, partly reflecting the cooling down of the world economy as a result of the international financial and economic crisis. The latest available data indicate that IFDI remained in a slump in 2009. The composition of Norwegian IFDI largely follows the structure of Norway's private-sector economy, with a clear dominance of the oil and gas sector. The manufacturing sector is gradually losing its appeal to foreign investors, although more slowly than one would expect considering the reduced importance of this sector in the Norwegian economy

Recent leaps towards free trade : the impact on Norwegian industry and trade patterns

In this study we model effects on Norwegian industry and trade patterns of the recently implemented trade reforms - the WTO-agreement, the EEA-treaty, the OECD ship building reform and the EFTA fishing agreement - through changes in tariffs, NTBs, government procurement and subsidy policy as well as shifts in foreign prices and demand. We employ a highly disaggregated CGE model to simulate the difference between an economy adapted to the mentioned reforms and an economy based on a multilateral maintenance of the pre-reform trade system. Exports and import shares are modelled differently depending on commodity characteristics. Labour supply and national wealth are exogenously determined in order to focus on the gains from reallocations of given resources. The results indicate strong effects on the patterns of industry and trade. Specifically, we observe an increase in the production of services and highly processed goods, and a decrease in the production of raw materials and less processed commodities. Keywords: Trade reform, European economic integration, CGE analysis, Norwa

Transitory adjustment costs and long term welfare effects of an EU-membership: the Norwegian case

We employ a large scale macroeconometric model to study transitory adjustment problems and long term welfare effects of a Norwegian EU-membership. Compared to the present European Economic Area (EEA) treaty, accession would primarily require economic reforms in the fields of agriculture, public finance and trade. When we ignore the yearly net contribution of approximately 1 billion ECU (1 per cent of GDP), integrating the Norwegian economy into EU generates a small welfare gain. The results seem to be strongly affected by a long transition period with under-utilisation of resources. With the costs of the net contribution included, we identify a welfare loss. This is especially so if fiscal policy is adjusted to maintain public and current account balances. To investigate the stability of the results when the estimated wage rate response and trade elasticities are altered, we present two sensitivity tests. None of them give us reason to cast doubt on the qualitative conclusions presented.publishedVersio

Inward and Outward FDI Country Profiles, Second Edition

This second edition contains a series of 77 standardized country profiles dealing with the inward and outward foreign direct investment (FDI) performance of 40 economies. The profiles have been peer-reviewed by a global network of experts. The publication is intended to contribute to the analysis of trends in foreign direct investment and policy issues related to them. More specifically, the individual profiles discuss FDI trends and developments (country-level developments, the corporate players); effects of the recent global crises; and the policy scene. Each profile contains a standard set of tables, including on FDI stocks and flows, sectoral and geographical FDI distributions, the largest M&As and greenfield investments, the principal foreign affiliates (for inward FDI), and the principal multinational enterprises (for outward FDI). The standardized template used to produce the profiles allows cross-country comparisons. The volume is meant to be a reference tool for anyone interested in foreign direct investment

En kunnskapsbasert fornybar energi- og miljønæring

Prosjektet ”En kunnskapsbasert fornybar energi- og miljønæring” inngår som delprosjekt i det store nasjonale forskningsprosjektet ”Et kunnskapsbasert Norge” som gjennomføres ved Handelshøyskolen BI under ledelse av professor Torger Reve. I denne rapporten foretar vi en første fulldekkende kartlegging av det næringsområdet som går under betegnelsen fornybar energi og miljø i Norge. Vi kartlegger bedriftene, deres økonomiske aktivitet, deres internasjonaliseringsfokus, kunnskapsfundamentet og klyngeegenskaper, som kan være med på å forklare nasjonal konkurranseevne og internasjonaliseringspotensial

Foreign Ownership, R&D and Technology Sourcing

This paper explores the relationship between domestic R&D and the inflow of foreign capital through foreign direct investment and foreign ownership. The idea that firms invest in a foreign country in order to more easily absorb the knowledge and technology of foreign firms is tested empirically using a unique firm level data set covering foreign ownership and R&D for all Norwegian firms over the period 1990 to 1996. The study gives no clear evidence supporting the existence of such a motive behind foreign ownership. On the other hand, the econometric study indicates that foreign investors may try to exploit their technological advantages in the Norwegian market. The results also show that the degree of foreign ownership is more volatile when firms are highly R&D intensive. We hypothesize that this is due to the fact that large R&D investments often result in large losses as well as gains to the firms

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

Den nye tall-høvdingen : intervju med Øystein Olsen: ny sjef for Statistisk sentralbyrå

Stillingen som direktør for Statistisksentralbyrå er en av de mest prestisjetunge jobber som gjerne tildeles samfunnsøkonomer i Norge. I den anledning tok redaksjonen i Økonomisk forum kontakt med Øystein Olsen for å invitere til en kort samtale om hans ideer rundt den nye jobben og hans erfaringer fra mange års arbeid i Finansdepartementet