MNE R&D and Host Countries: Evidence

Abstract

We have noted in earlier chapters the ways in which local R&D by MNE subsidiaries is perceived as likely to affect host country technical capacity and the economy in general. One view may see local R&D as lessening the technical dependency to which the host country would be vulnerable if MNE affiliates relied entirely on unaltered imported technology. The potential of affiliate R&D to adapt existing technology (SL operations), or even to substitute for imported technology by deriving distinctive local products or processes (LIL operations) may be advocated as mitigating fears of dependency. By contrast certain types of local MNE R&D could be considered as usurping opportunities available to indigenous enterprise and, perhaps, lead to the innovation of the outcomes in ways less beneficial to the host country (some IIL activity). In recognition of the importance of MNE R&D many broadly based studies of host country activity by MNEs have incorporated documentation of affiliate R&D. In this chapter we review a selection of such studies.