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)

lower probability of remaining in Ireland over the period relative to plants
in the high-tech sector. The greater the extent of entry of foreign
subsidiaries into the Irish manufacturing sector lowers the probability of
existing foreign affiliates remaining operational in Ireland. This is contrary
to our initial expectations that the continuous entry of high-tech plants
would encourage existing plants to remain and avail of spillovers from new
plants. One possible explanation for our estimate may lie in the
observation that the industrial restructuring which has taken place on a
global scale may be being replicated within Ireland. Those firms that are
currently expanding within an industry will be expanding their FDI while
simultaneously their declining competitors will be contracting their FDI.²³
Plants engaging in both small and large scale R&D investments have a
higher probability of remaining in Ireland relative to non-R&D spending
plants.

Equations 2 through 7 provide alternative measurements of a plant's
technological activity. Using these alternative measures we attempt to
account not only for the presence of R&D activity but for the scale of
activity within a plant. In Equation 2 we observe that large R&D spending
plants have a smaller risk of exit relative to both small and non-R&D
spending plants. All six measures of the scale of R&D activity are
significant and all reduce the risk of exit facing a plant, ceteris paribus.

²³ Two well known examples in Ireland would be the major expansions of Intel and IBM while
simultaneously Verbatim and Seagate were withdrawing from Ireland.

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