ANALYSIS OF THE INTERACTION BETWEEN REGIONAL RESEARCH-AND-DEVELOPMENTPRODUCTIVITY AND THE INVESTMENT STRATEGIES OF MULTINATIONAL-ENTERPRISES

The aim of this article is to analyze the interaction between regional R&D productivity and the investment strategies of multinational enter prises. The discussion is based on the hypothesis that R&D investments cause a reduction in the production costs and an increase in firms' m arket share; furthermore, R&D costs may be affected by national indust rial policies. Supposing the existence of asymmetries in local researc h productivity, necessary and sufficient conditions for a geographical diversification of resources have been found. Suggestions with respec t to the optimal allocation of R&D investment are finally derived. (C) 1998 Elsevier Science Inc.