Pontus Braunerhjelm

The geography of multinational firms

Preface. 1. Introduction P. Braunerhjelm, K. Ekholm. 2. Multinational Enterprises, and the Theories of Trade and Location J.R. Markusen. 3. Geographical Specialization of US and Swedish FDI Activity P. Braunerhjelm, R.E. Lipsey. 4. Proximity Advantages, Scale Economies, and the Location of Production K. Ekholm. 5. Organization of the Firm, Foreign Production and Trade P. Braunerhjelm. 6. Agglomeration in the Geographical Location of Swedish MNFs P. Braunerhjelm, R. Svensson. 7. Locating R&D Abroad: The Role of Adaptation and Knowledge-Seeking G. Fors. 8. Patterns of Foreign Direct Investment into Sweden K.-M. Moden. 9. The Choice of Entry Mode in Foreign Direct Investment: Market Structure and Development Level R. Svensson. 10. Strategic Location of Production in Multinational Firms M. Ganslandt. A. Appendix: Statistical Tables. B. Appendix: IUI Survey Questionnaire. Index.

Industry Clusters in Ohio and Sweden, 1975--1995

The purpose of the present paper is twofold. First, we formulate a general method of identifying clusters of economic activity in a country or region. The methodology is based on generally available industry data and does not start from a priori notions of geographic or technology clusters. Second, the proposed methodology is then used to identify the main clusters of economic activity in Ohio and Sweden and their evolution over the last twenty years.

Does Foreign Direct Investment Replace Home Country Investment? The Effect of European Integration on the Location of Swedish Investment

The purpose of this paper is to examine the effects of European integration on the location of investments by Swedish multinational corporations (MNCs). Evidence is presented about the extent to which European integration has attracted investment by Swedish MNCs, and whether foreign direct investment is being undertaken at the expense of home country investment. In the empirical analysis, involving both OLS and iterative SUR techniques, a significant difference across industries has been confirmed. A substitutionary relationship between foreign and home country investment is found for more R&D-intensive production, whereas the opposite pattern seems to prevail for production based on traditional comparative advantage. The results of this study emphasize the importance of using disaggregated industry-level data when analysing the effects of foreign direct investment on home country investment.

Entrepreneurship, knowledge, and economic growth

Knowledge plays a critical role in economic development, still our understanding of how knowledge is created, diffused and converted into growth, is fragmented and partial. The neoclassical growth models disregarded the entrepreneur and viewed knowledge as an exogenous factor. Contemporary current knowledge-based growth models have re-introduced the notion of the entrepreneur, however stripped of its most typical characteristics, and the diffusion of knowledge is kept exogenous. It implies that the predictions and policy conclusions derived from these models may be flawed. This paper reviews the literature that addresses the issues of knowledge creation, knowledge diffusion and growth, and the role attributed the entrepreneur in such dynamic processes. I will explore how these insights can be integrated into existing growth models and suggest a more thorough microeconomic foundations from which empirically testable hypotheses can be derived.

Academic entrepreneurship: Social norms, university culture and policies

Is a shift in intellectual property rights to universities the key instrument in increasing com-mercialization of publicly funded research? How much can actually be learned from the U.S. system, disregarding the ongoing debate as to whether the U.S. do actually outperform Europe in terms of commercializing university based research? Taking Sweden as a role model I claim that this policy will not work. This allegation stems from the analysis of a unique data-base giving individual university researchers view on participation in commercialization of public research, their commercialization experiences, and the obstacles researchers claim exist to increase academic entrepreneurship. Despite researchers positive attitudes towards engag-ing in commercial activities, the university culture, weak incentive structures and badly man-aged support facilities impede the creation of efficient links to markets. I conclude that meas-ures must be taken at primarily the national level, but also at the university level, to enhance commercialization activities.

The Knowledge Filter, Entrepreneurship, and Economic Growth

This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. According to the “new growth theory,” investments in knowledge and human capital generate economic growth via spillovers of knowledge. But the theory does not explain how or why spillovers occur, or why large investments in R&D do not always result in economic growth. What is missing is “the knowledge filter” - the distinction between general knowledge and economically useful knowledge. Also missing is a mechanism (such as entrepreneurship) converting economically relevant knowledge into economic activity. This paper shows that the unprecedented increase in R&D spending in the United States during and after World War II was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades.

Taxes, tax administrative burdens and new firm formation

This paper examines the tax administrative burden and its effect on new firm formation. It is well recognized that entrepreneurship and new firm formation are critical factors in determining economic growth and development. New firm entry into the marketplace enhances welfare in two distinct ways: 1) by promoting innovation, productivity and economic growth and 2) by increasing competition, which lowers prices and expands output. It is also well documented that barriers to entry reduce the likelihood that new firms will enter various sectors. We argue that the burden imposed by tax codes and tax compliance constitutes a barrier to entry that has been neglected in the previous literature. We use data from the World Bank to measure the administrative burden that the complexity of tax policy imposes on new firms. Additionally, we use a measure of new firm formation – entry density. Our data cover 118 countries over a period of six years. We find that the entry rate is significantly reduced by the tax administrative burden and that this effect is unrelated to general taxes on corporate profits and is robust to the inclusion of several important control variables.

The Determinants of Spatial Concentration: The Manufacturing and Service Sectors in an International Perspective

Determinants of spatial concentration of production in Sweden 1975-1993 : Linkages, scale economies or trade costs

Agglomeration in the Geographical Location of Swedish MNFs

Until recently, locational analysis in international economics was mainly carried out by applying John Dunning’s so called eclectic - or OLI - approach.1 Dunning’s contribution (1977) was to provide a taxonomy that related micro- and macroeconomic variables in a consistent way to the pattern of foreign direct investment (FDI). However, as shown in the preceding chapters, the substantial theoretical advances made in the last decade enables the location of economic activities to be modelled as an endogenous process (Krugman, 1991; Brainard, 1993, 1997; Venables, 1996; Markusen, 1995).

Creative Destruction and Productivity – entrepreneurship by type, sector and sequence

Schumpeter claimed the entrepreneur to be instrumental for creative destruction and industrial dynamics. Entrepreneurial entry serves to transform and revitalize industries, thereby enhancing their competiveness. This paper investigates if entry of new firms influences productivity amongst incumbent firms, and the extent to which altered productivity can be attributed sector and time specific effects. Implementing a unique dataset we estimate a firm-level production function in which the productivity of incumbent firms is modeled as a function of firm attributes and regional entrepreneurship activity. The analysis finds support for positive productivity effects of entrepreneurship on incumbent firms, albeit the effect varies over time, what we refer to as a delayed entry effect. An immediate negative influence on productivity is followed by a positive effect several years after the initial entry. Moreover, the productivity of incumbent firms in services sectors appears to be more responsive to regional entrepreneurship, as compared to the productivity of manufacturing firms.