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)



The rapid growth of the Irish economy over the past decade and the
simultaneous increase in (i) the number of foreign-owned plants in the
high-tech sectors and (ii) the research and development (R&D) activities
of foreign-owned plants has given rise to an increased interest in the
relationship between foreign direct investment (FDI) and economic growth
in Ireland. The issue arises as to whether the growth is linked to the
sectors in which FDI is taking place or whether the technological
performance of
individual plants is a significant contributory factor. In
particular, an important question is whether those plants that are
undertaking R&D activities in their Irish plants are contributing more to
the host region relative to those plants that undertake no R&D activities.

The exploration of plant-level technological activity in MNC plants
and their contribution to the host economy is a hybrid of two literature
traditions. The first relates to the internationalisation of R&D activity.
Many authors have debated about the true extent of this
internationalisation (Belitx and Beise, 1997, Braunerhjelm and Ekholm,
1997; OECD, 1998) and the tangible and intangible effects of this trend
on host economies (Blomstrom and Kokko (1996) and Beise et al (1998).
The second tradition are studies of the attraction of FDI to a host region
(Dunning 1988) and specifically to Ireland (Ruane and Gorg, 1996 and
Foley and McAleese, 1991) with its subsequent effects on the Irish
economy (McAleese and MacDonald (1978), Farrell and O'Loughlin
(1981), Barry and Bradley (1997); Ruane and Gorg (1998).

In this paper we undertake a plant-level empirical analysis of the
tangible effects of MNC technological activities, focusing on R&D
aspects. Specifically, we use our plant-level dataset to explore different



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