Presenter: Siyao Li (University of Pittsburgh) and Jian Xu (National University of Singapore)

Discussants: TBD & Jack Zhang (KU) 

 

Abstract: To what degree does industrial policy affect outward investment patterns? As industrialized countries increasingly prioritize technology and innovation in their national development and foreign policy, it is important to understand how industrial policy in the form of innovation policies may affect international investment activity. We argue that home country innovation policies can spur multinational firms to expand operations abroad, and that these firms will be able to leverage home country support to expand into countries with higher regulatory barriers and less favorable political relationships. Host countries may also have competing policies to attract innovation-intensive firms, and when host government inducements are strong, home country funding has smaller effects on firm investment. Using data on OECD governments' support for research and development (R&D) activities combined with firm-level subsidiary data, we find that higher home government R&D subsidies are positively associated with a higher number of firm subsidiaries in host country sectors. This is much less the case in host countries with competing incentives for R&D activity. We also find that home country support is positively associated with investment in host countries that have high regulatory barriers and are less politically-aligned with the home country. Home country efforts to foster innovation may therefore support national firms' expansions abroad under certain circumstances.

 

Jian Xu is an Assistant Professor of Political Science at the National University of Singapore (NUS). He received his PhD in Political Science from Emory University in 2021, and was a Pre-doctoral Fellow with the Democracy Program at The Carter Center. He is from China and received a Bachelor of Management degree from Zhejiang University, and an MA from Duke University.


Siyao Li is an Assistant Professor of International Affairs with a focus on International Political Economy. She received her Ph.D. in Political Science from the University of Pennsylvania and holds a M.A. in Statistics from The Wharton School. She has been a GPEP predoctoral fellow at Georgetown University's Mortara Center for International Studies. Her research focuses on the politics of foreign direct investment and trade, and business-government relations. Her book project investigates why and how foreign direct investment into weak institutional environments achieve property protection through host government institutions, especially in terms of technology assets. Her work is published or forthcoming in the Journal of Conflict ResolutionJournal of European Public Policy, and Political Science Research and Methods.

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