DOMESTIC RESEARCH-AND-DEVELOPMENT IN THE PRESENCE OF MULTINATIONAL-ENTERPRISES

The impact of multinational presence on domestic firms' innovative efforts is explored in a game-theoretic model focusing on the strategic dimension of R&D. Relative demand-cost margins, as well as product substitutability crucially determine the effect that multinational firms have on domestic R&D. Empirical results for a subset of Belgian manufacturing suggest a negative effect of the presence of multinational firms on the innovative efforts of domestic firms, especially if their products are less differentiated. © 1990.