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International financial openness and industrial R&D

Author

Listed:
  • Sahar Milani

    (St. Lawrence University)

  • Rebecca Neumann

    (University of Wisconsin - Milwaukee)

Abstract

International financial integration may provide an important channel of financing for research and development (R&D) that ultimately enhances economic growth. Following the analysis of Maskus et al. (2012), we examine the impact of refined measures of international financial openness and capital controls on R&D intensities in 23 manufacturing industries in 22 OECD countries for the period 1995-2009. We interact these country-level financial measures with industry characteristics: external financial dependence and asset tangibility. Our results indicate that the significance of FDI as an international financial development measure is driven primarily by external FDI assets, perhaps indicating that multinational firms are able to access R&D funds from affiliate firms abroad. De jure measures provide corroborating evidence that financial openness may be particularly important for industries with fewer tangible assets. By contrast, the availability of international portfolio debt increases R&D intensities for those industries that rely more on external financing.

Suggested Citation

  • Sahar Milani & Rebecca Neumann, 2018. "International financial openness and industrial R&D," Economics Bulletin, AccessEcon, vol. 38(1), pages 490-500.
    • Handle: RePEc:ebl:ecbull:eb-17-00575
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    References listed on IDEAS

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    Cited by:

    1. Milani, Sahar & Neumann, Rebecca, 2022. "R&D, patents, and financing constraints of the top global innovative firms," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 546-567.
    2. Yuyuan Yu & Muhammad Qayyum, 2023. "Impacts of financial openness on economic complexity: Cross‐country evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1514-1526, April.

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    More about this item

    Keywords

    capital controls; capital openness; FDI; financial integration; R&D;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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