Innovation Files has moved! For ITIF's quick takes, quips, and commentary on the latest in tech policy, go to itif.org

Innovation Fact of the Week: Every Dollar a U.S. Multinational Company Invests in Domestic R&D Creates $1.80 in Economic Benefits for its Foreign Affiliates

(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

When U.S. multinational companies invest in domestic R&D, they create myriad economic returns for their foreign affiliates. These benefits include improved productivity, increased trade with the U.S. headquarters, and induced foreign R&D investment. Economists L. Kamran Bilir and Eduardo Morales estimate that every dollar a U.S. multinational invests in domestic R&D generates an average of $1.80 in knock-on benefits for its overseas affiliates.

This supports economic growth in both developing and developed countries. Kamran and Morales further estimate that for the computer industry alone, if U.S. multinationals’ foreign affiliates could no longer benefit from domestic R&D investment in the United States, then economic output would fall by 2.26 percent in Mexico, 2.40 percent in Indonesia, 8.11 percent in Canada, and 10.54 percent in Finland.

Read last week’s Innovation Fact of the Week

Photo Credit: Raaziq International via Flickr

Print Friendly, PDF & Email