The Tangible Contribution of R&D Spending Foreign-Owned Plants to a Host Region: a Plant Level Study of the Irish Manufacturing Sector (1980-1996)

(Table 2)

(B) R&D Activity and Foreign-owned Plants in Ireland

A key question is whether this increase in the number of plants in
the high-tech sectors was accompanied by an increase in the R&D
activities of foreign-owned plants. The latest OECD report (June 1998) on
the internationalisation of industrial R&D provides estimates of the
importance of R&D expenditure of foreign affiliates as a percentage of
total industrial R&D in a range of host economies:

(Table 3)

Ireland has the largest share of industrial R&D accounted for by foreign
affiliates as shown in Table 3, by a factor of almost two. The country's
unique position in terms of the scale of R&D activity accounted for by
MNCs is explained by the OECD as the combination of (i) very low levels
of R&D spend by indigenous plants in the Irish manufacturing sector and
(ii) the relatively large presence of foreign multinationals in the Irish
manufacturing sector generally (OECD, 1998:18). The OECD also
estimates the intensity of the R&D investment by MNCs across countries.
We note from Table 3 that Ireland has a lower R&D intensity than many
of the other countries, with the exception of the Netherlands (OECD,
1998:22). ¹³ There are two possible explanations for this low intensity.
Firstly, the small numbers of foreign-owned plants undertaking R&D
relative to the total number of such plants in Ireland. Thus, when all
foreign-owned plants are aggregated, we arrive at a relatively high total for
manufacturing turnover and a relatively smaller total for R&D spend. An
alternative measure of R&D intensity would involve aggregating over only
those plants that undertake R&D expenditure. Secondly, the turnover

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