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R&D, FDI, and Innovation: Examination of the Patent Applications in the OECD Countries

Author

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  • Shankar Ghimire

    (Western Illinois University, USA)

  • Nawaraj Sharma Paudel

    (Southern Illinois University, USA)

Abstract

This paper analyzes the effect of research and development expenditure (R&D) on innovation in the Organization for Economic Cooperation and Development (OECD) member countries over the period 1996-2015. Innovation, the dependent variable, is measured using two different proxies: patent applications by residents (PAR) and the patent applications by non-residents (PANR) in the host countries. R&D is the main variable of interest which is also interacted with foreign direct investment (FDI) to see how the entry of foreign competitors influence the role of R&D on innovation in the host country. The findings show that R&D alone promotes innovation by residents but impedes innovation by non-residents. However, when FDI interacts with the R&D in the host country, it produces opposite results. Specifically, increasing FDI in the presence of certain level of R&D in host countries impacts PAR negatively and the PANR positively. These results have important policy implications.

Suggested Citation

  • Shankar Ghimire & Nawaraj Sharma Paudel, 2019. "R&D, FDI, and Innovation: Examination of the Patent Applications in the OECD Countries," Journal of Development Innovations, KarmaQuest International, vol. 3(2), pages 1-11, December.
    • Handle: RePEc:kqi:journl:2019-3-2-1
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    References listed on IDEAS

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    More about this item

    Keywords

    R&D; FDI; OECD; Innovation; Patents;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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