What Determines the Attractiveness of the European Union to the Location of R&D Multinational Firms?. ESRI WP306, July 2009

We analyse 446 location decisions of R&D activities by multinational firms incorporated in the European Union over 1999-2006. Our results suggest that on average, the location probability of a representative R&D foreign affiliate increases with agglomeration economies from foreign R&D activities, human capital, proximity to centres of research excellence and the research and innovation capacity of the region. We find evidence of geographical structures relevant for the location choice of R&D activities by multinational firms across the European Union. Further, our evidence suggests that while R&D government expenditure intensity increases the probability of location of European foreign-owned firms in the region, it does not have a significant effect on the probability of location of North American firms