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Local country attributes and the emergence of high tech clusters

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  • Miki Malul
  • Amir Shoham

Abstract

The aim of this study is to explore the effect of a country’s attributes on the decision of firms to be active globally. We first built a theoretical model, which shows that an initial difference in the business environment may dampen the desire of firms located in countries with a relatively weak business environment to seek a higher level of R&D. The decision not to pursue higher levels of R&D leads, in turn, to lower output and lower scope of activity of global firms in these countries. Moreover, firms with relatively high level of management skills will choose to migrate from a relatively weak country to one with a stronger business environment, creating a brain drain that will further impoverish the weak country. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Miki Malul & Amir Shoham, 2015. "Local country attributes and the emergence of high tech clusters," International Economics and Economic Policy, Springer, vol. 12(4), pages 497-507, October.
    • Handle: RePEc:kap:iecepo:v:12:y:2015:i:4:p:497-507
    DOI: 10.1007/s10368-014-0294-7
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