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)

Those MNCs locating R&D activities in their Irish subsidiaries are
predominantly large North American plants operating in the high tech
sectors. Thus our analysis confirms a positive association between this
R&D activity and a tangible contribution of MNCs to Ireland, through
plant survival and job persistence. Although it has long been recognised
that the attraction of FDI to Ireland has been beneficial, the results of this
paper supports the idea that R&D-active firms generally provide greater
benefit to the economy. On employment grounds alone, policy should
favour R&D-active plants in high-tech sectors.

Differences between our plant level results and those aggregate
estimates provided at OECD level point to the importance of plant level
studies in assessing the impact of all R&D activities on economies. Plant
level data allow one to distinguish between the proportion of R&D-active
firms in a particular group and the scale of the R&D activity in which they
engage. Aggregate statistics can hide the importance of the R&D impact, if
account is not taken of differences in the proportion of firms undertaking
R&D in a sector. In the Irish case, the level of R&D intensity of foreign-
owned firms at sectoral level is significantly lower than the intensity at
plant level because of the high proportion of non-R&D-active foreign
firms.

To develop this analysis, further study is required of the intangible
effects of MNCs' technological activities on their host economies. de
Arcos et al (1997) conclude, on the basis of their work, that '[t]he results
indicate that FDI holds little promise for peripheral regions as a means
of increasing the innovative capacity of the host region, though of course
FDI offers benefits in terms of employment - at least over the short to the

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