Premium
Impact of the Intellectual Property Tax Regime on FDI in R&D Activities at the City Level
Author(s) -
Falk Martin,
Peng Fei
Publication year - 2018
Publication title -
review of policy research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.832
H-Index - 45
eISSN - 1541-1338
pISSN - 1541-132X
DOI - 10.1111/ropr.12296
Subject(s) - foreign direct investment , incentive , intellectual property , capital (architecture) , investment (military) , economics , business , international economics , population , demographic economics , geography , political science , macroeconomics , market economy , demography , archaeology , sociology , politics , law
This article investigates the impact of the introduction of the patent box/IP regime on foreign direct investment (FDI) inflows in R&D and related activities, including design, developing, and testing activities, using city level data. The data are based on approximately 1,200 cities in 80 countries. Results obtained by use of a difference‐in‐differences estimator show that the introduction of the patent/IP box regime in the Netherlands has led to increases in the FDI inflows in R&D and related activities in the subsequent three‐year period. For Spain and Belgium, no significant effects could be found. The results are robust when other important factors are accounted for (capital city, city population, quality of local university, presence of an airport, R&D tax incentives, protection of property rights, and PISA ratings in mathematics and science) and different measures of FDI inflows (number of FDI projects, capital flows, and number of jobs generated).