The R&D activity of multinational enterprises in peripheral economies: evidence from the EU new member states
Rajneesh Narula & José Guimón
#2010-048
This paper explores the impact of MNEs on innovation systems and the
policy options available for peripheral economies to attract and embed
the R&D activities of MNEs. After developing the conceptual and policy
framework, we discuss the case of the new member states from Central and
Eastern Europe that joined the EU between 2004 and 2007. We analyse the
evolution of the R&D activity of MNE subsidiaries since the 1980s,
contrasting the new member states with the core and Mediterranean
countries of the EU. This analysis is useful to illustrate some common
challenges for peripheral economies, including the difficulty of
building linkages with MNEs in high value adding activities; the risk of
crowding-out of domestic R&D following cross-border acquisitions; the
risk of external dependency; and the limitations of protectionist
policies. We recommend that governments of peripheral economies focus
their efforts on fostering a demand-oriented upgrading of technological
capabilities and on stimulating domestic linkages and clusters around
MNEs, rather than seeking to attract supply-driven R&D.
Keywords: EU, FDI, innovation systems, innovation policies, linkages,
MNE, new member states, peripheral economies, R&D
JEL: O3, F2, P3
UNU-MERIT Working Papers
ISSN 1871-9868