...internationalization of R&D activities by EU MNEs Michele Cincera , Claudio Cozza , Alexander Tübke ∗,+ * * Draft for the 4th Annual Conference of GARNET Network, IFAD, Rome, 11-13 November 2009 11.11.2009 Abstract Based on an original and recent sample representative of the largest R&D corporations in the EU, this paper aims at investigating in a quantitative way the main factors explaining: (i) the decision of firms to increase their R&D investment effort in the near future; (ii) the main drivers explaining the favorite location choice for R&D; and (iii) the impact of direct and indirect policies to support R&D activities in the EU. Main findings suggest that competitive pressures from the US are the main determinants for increasing R&D investments. Public support to R&D and proximity to other activities of the company explain the decision to locate R&D in the home country while considerations on the cost of employing researchers appear also to matter for firms preferring a location outside their home country, in particular in China and India. Key words: R&D internationalisation; drivers; R&D policies; EU large R&D corporations JEL code: O33 1. Introduction In the last decade, theoretical (Dunning and Narula, 1995; Kuemmerle, 1997) and empirical studies (among the others: Kuemmerle, 1999; Kumar, 2001; Von Zedwitz and Gassmann, 2002) on the internationalization of R&D have highlighted a shift from the so-called home-base exploiting to the home-base augmenting R&D strategies. Within...
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...Chapter 12 & 20 Chapter 21 The Black-Scholes Formula and Option Greeks Adapted from Black & Scholes (1973), The Pricing of Options and Corporate Liabilities, The Journal of Political Economy, Vol. 81, No. 3., pp. 637-654. 2 Black-Scholes Assumptions • Assumptions about stock return distribution Continuously compounded returns on the stock are normally distributed and there is no jumps in the stock price The volatility is a known constant Future dividends are known, either as discrete dollar amount or as a fixed dividend yield • Assumptions about the economic environment The risk-free rate is a known constant There are no transaction costs or taxes It is possible to short-sell costlessly and to borrow at the risk-free rate 3 Black-Scholes Assumptions • The original paper by Black and Scholes begins by assuming that the price of the underlying asset follows a process like the following dS (t ) ( )dt dZ (t ) S (t ) where (20. 1) S(t) is the stock price dS(t) is the instantaneous change in the stock price is the continuously compounded expected return on the stock δ is the dividend yield on the stock is the continuously compounded standard deviation (volatility) Z(t) is the standard Brownian motion dZ(t) is the change in Z(t) over a short period of time 4 Black-Scholes Assumptions • There are 2 important implications of equation (20.1) Suppose the stock price now is S(0). If the stock...
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...Use of the Internet for Travel and Tourism Extract of the European Internet Travel Monitor 2000 & Summary of other research results Introduction The internet is revolutionising the distribution and sales of travel and tourism information. It provides direct access to end consumers, but is also a tool for business to business communication. The internet and its protocol (TCP/IP) have created a universal platform for communication and presentation. The cost of access to the internet is decreasing and the speed of access is increasing. This and other factors are driving the growth in usage. The internet will increasingly be accessed from different types of equipment – television, mobile devices, in-car technology, terrestrial phones, kiosks, computer games, consoles, etc. The web is becoming more useful – in terms of functions and content – as well as more userfriendly. From 1995 to 2000 the number of internet users worldwide grew by close to 830% to 413 million. Between 2000 and 2006 growth is expected to reach 220%, according to eTForecasts. This will take the total number of internet users to over 1.3 billion. The USA leads the market by a very wide margin – with 148 million users forecast at year-end 2001. Japan is in second position in the world ranking with 48 million users, followed by China (38 million), Germany (24 million), South Korea (24 million) and the UK (21 million). In terms of numbers of internet users as a share of the total population, the market rankings...
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...Evaluation of R&D relief and Patent Box scheme in the UK and Belgium | Content 1. Introduction 1 2. UK’s Research and development relief 1 2.1 definition and schemes 1 2.1.1 Small or medium-sized enterprise (SME) scheme 1 2.1.2 Large company schemes 2 2.2 Qualifications 2 2.3 Consultation and appraisement 3 2.3.1 Equity 3 2.3.2 Externalities 3 2.3.3 Further evaluation 4 3. UK’s Patent Box scheme 4 3.1 Definition and Objective 4 3.2 When and how to claim 5 3.3 Qualification 5 3.3.1 Patent Box 6 3.3.2 Qualified Income 6 3.4 Consultation and appraisement 6 3.4.1 Equity 6 3.4.2 Efficiency 7 3.4.3 Further-Evaluation 7 4. Belgium’s Research and Development relief 8 4.1 Nature of incentives 8 4.1.1 Super deduction 8 4.1.2 Notional Interest Deduction (NID) 8 4.1.3 Income tax withholding incentives 8 4.1.4 Incentives for staff 9 4.2 Compare and contrast with UK R&D relief 9 4.2.1 Tax Deduction 9 4.2.2 Notional interest deduction 10 4.2.3 Wage Tax Exemption (WTE) 10 5. Belgium’s Patent Box scheme 11 5.1 Definition and Objective 11 5.2 Compare and Contrast with UK Patent Box scheme 11 5.2.1 Effective Tax Rate 13 5.2.2 Qualified IP rights 13 6. Conclusion 14 7. Bibliography 15 1. Introduction Under the impact of globalization and revolutions in knowledge and technology fields, innovation, which...
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...EU 2020 Strategy and Policies towards China’s Presence To stimulate economic recovery, EU 2020 was schemed with three priorities namely smart, sustainable and inclusive growth. The targets include 75% employment rate of 20—64 year-olds, 3% of GDP invested in R&D, energy structural adaptation, a wider coverage of education, and poverty reduction. Therefore, European Commission urged to pursue differentiated, growth-friendly fiscal consolidation, restore lending to the economy, promote growth and promote sustainable growth and competitiveness, tackle unemployment and social consequence, and modernize public administration. However, the dilemma here is to balance fiscal spending while to invest more to R&D and labor market. Meanwhile, it’s difficult for EU to launch fiscal and financial reforms as a whole as problems confronting different countries are quite different. In many studies into EU 2020, great importance is attached to institutional consolidation and country-to-country differentiations while not as much to the role of foreign policies despite increasing presence of other countries in EU. China, as the second biggest trading partner of EU, has actively engaged in various corporations both with EU as a whole and with individual countries. China’s direct investment to EU reached 20 billion euro in 2011 covering all EU members. It will continue to increase as the Chinese authority is now revising its outbound investment law to encourage companies to go overseas...
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...Finland and Nokia Executive Summary Finland had transformed itself from a sleepy economy to a highly competitive one with maximum contribution from the telecommunications sector. Focused efforts in R&D and education helped Finland achieve this position with Nokia being a major player. While Finland maintained its ranking as a leading competitive nation in 2001, it was facing challenges. The overall growth rates were declining and the telecommunications cluster was experiencing a severe downturn. Nokia’s revenue and profits were falling and considering the fact that Nokia and the telecommunication sector played a large role in Finland’s economy, there were concerns about the level of exposure to a single cluster and company. Also, Finland was facing shortages of experienced engineers and scientists. Universities were offering programs tailored for foreign students in order to attract people to Finland. However, unemployment was increasing among the young and less skilled. Nokia was facing a challenge in evolution of standards and innovation. New standards were being developed in mobile internet services as well as software and hardware for phones and infrastructure. Smart mobile phones with multimedia messaging, internet connections and downloads from websites were being around the corner. We feel that Nokia has the options of outsourcing production to India and China to achieve reduced costs, higher production and improved benefits. They should consider development...
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...the company has three options to regain their standings in the industry, one is to make the European market the companies focus, the second alternative is to attempt to do some internal re-structuring to bring back the originality of the product development process, and finally streamline internal funding strategies to allow for the company to be specific to a consumer when need be but also have to abilities to cover a range of consumers needs. After further looking into to each alternative we recommend alternative 1, making the European market their main focus, because of the quality of the European market and the proximity it gives with regards to very prominent automobile companies. As well some of Modine’s major finances are already coming from this market and there is a lot of room for growth for Modine in this existing market they are already present in. Problem Modine Manufacturing was faced with a huge set back in the production of their exhaust-gas recirculation (EGR) cooler when their major customer announced the cancellation of their agreement to produce the EGR cooler just as the project was near completion. The company couldn’t help but blame the violation of the new strategy for product development that was implemented, as well as the decision to commit such sufficient resources towards this project, while leaving all ongoing projects with limited resources and R&D development. When accepting this project, the company was looking at the potential revenue,...
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...Evaluation of Framework Program Amsterdam Treaty obligated EU to implement some European research program and policies in order to not fall beyond the world’ powerful countries such as United States or Japan. Because of this obligation also involved a chapter on research and technological development, Framework Program of Research and Technological Development was established at early 80s. The main reasons of Framework Program focus on carrying European Union to the world standards in the basis of research and development and make EU to be able to compete with other countries on R&D areas, notably in energy and Information Technology. Even so Framework Program had been started as one of the supportive program of R&D, day by day it has become to be one of the most powerful and important component of EU policy. In connection with EU’s desire on becoming as one body, EU had to develop a way to be better at research and development areas than nation states. Nation states were already making investment on R&D therefore there was no need to depend on EU and this point of view was conflicting with EU’s. Therefore to avoid and block the diversification between member states and EU, EU has started to invest on Framework Program more and more by the time of progress and this made Framework Program sustainable and successful over time. Framework Program has become more importance with the release of European Research Area in 2000 and ERA made Framework Program more associated with...
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...T H E I N T E R N AT I O N A L M O N E TA R Y S Y S T E M AGENDA • Definition • History • Fixed Vs. Floating • Coalitions • Roadmap • Q&A DEFINITION • Sets of internationally agreed rules, conventions and supporting institutions, that facilitate international trade, cross border investment and generally the reallocation of capital between nation states. H I S T O R Y O F T H E M O N E TA R Y S Y S T E M Gold Standard 1870 1944 Nixon Shock 1971 1976 Bretton Woods Jamaica Agreement T H E G O L D S TA N D A R D T H E G O L D S TA N D A R D • When International trade was limited in volume, payment for goods purchased from another country was made in gold or silver. • As the volume of international trade expanded in the wake of the Industrial Revolution, a more convenient means of financing international trade was needed. T H E G O L D S TA N D A R D • The solution adopted was to arrange for payment in paper currency and for governments to agree to convert the paper currency into gold on demand at a fixed rate. = T H E G O L D S TA N D A R D • 1880: Most of the world’s trading nations including Great Britain, Germany, Japan, and USA adopted the Gold Standard. • Given the Gold Standard, the value of any currency in units of any other currency was easy to determine. T H E G O L D S TA N D A R D • The Gold Standard acts as an adjustment mechanism, which achieves the Balance-of-Trade Equilibrium...
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...Sealed Air Corporation Marketing Management, 45-720, Section A, Group 2 Arnab Basu Malcolm Johnson Douglas Meislahn Nicholas Reid Robert Schmidt 02/17/05 Marketing Management, 45-720, Section A Sealed Air Corporation A. Basu, M. Johnson, D. Meislahn, N. Reid, R. Schmidt Executive Summary By 1980, Sealed Air Corporation had built its company culture as a market leader. As the first developer of closed-cell, lightweight cushioning materials, foam-in-place packaging systems and complete solar heating systems for swimming pools, Sealed Air had become very profitable as the market leader, and the firm encouraged technological innovation to maintain that positioning. AirCap cushioning, a coated bubble wrap product sold in the protective packaging market, was Sealed Air’s most profitable product. However, due to new and unexpected competition, the company was forced to consider the prospect of manufacturing and distributing an uncoated bubble packaging product as well. In order to maintain its current level of profitability, Sealed Air must begin production of uncoated bubble wrap in the European market because of its large size and potentially high profit margins. These two enticements do not exist in the US uncoated bubble wrap market; therefore, Sealed Air should forego entering the US market with an uncoated bubble wrap product. Problem Statement With $25.35M in 1980 sales, Sealed Air’s AirCap product line revenue represented approximately 38% of total sales generated...
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...Question 1 For your dissertation, you obtained data on the number of food products that twelve random customers bought at your local WeightRose store. The results are as follows: 1 3 2 3 12 3 5 9 8 6 2 4 a. What is the mean and median number of food products bought by these customers? (5 marks) b. Based on your answer under (a), and considering the mode, describe the shape of the distribution of these data. (5 marks) The sample standard deviation is (approximately) 3.33. c. Give the 95% confidence interval for the number of food products that these twelve individual customers bought. (5 marks) d. What does this confidence interval tell us about the average number of food products bought within the overall customer population at this particular WeightRose store? (5 marks) You would like to draw a random sample of customers so that the probability that the sample mean is within plus or minus one unit of the population mean equals 0.95. e. What is the minimum sample size that will satisfy this criterion? (5 marks) Question 2 An independent motion picture company is interested in understanding the age profile of its online DVD customers buying the internationally acclaimed motion picture entitled “Bulb Friction”, starring the award-winning Jack L. Samuelson. The responsible marketing manager expects that the average age of these customers is at most 20 years. a. Formulate the null and alternative hypotheses that can be used to test this expectation...
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...Labour Productivity in the European Union: Innovation, Education and Investment Section 1 - Introduction The unique phenomenon of the European Union has attracted much attention from academics, diplomats and policymakers ever since its founding in the 1950s as the European Coal and Steel Community, with 6 member states. In 2009 there are 27 member states, and a large number of countries around the world have association agreements with the EU, notably those countries of the Mediterranean and the developing world. The goal of the EU is to become ‘the most competitive and dynamic knowledge based economy in the world’ (El-Agraa 2004: 433). Standard economic theory dictates that innovation, education and investment will be instrumental in the achievement of this goal. It is my intention in this essay to assess the impact of these factors upon labour productivity within the European Union member states. The explanatory variables that I have decided to look at are as follows: • The percentage of adults in training • Public spending on research & development (as a percentage of GDP) • Science and technology graduates per 1000 population • Internet access at home (percentage of population) • Foreign Direct Investment (net inflows as a percentage of GDP) • Public spending on education (as a percentage of GDP) These variables will be assessed against the dependent variable of labour productivity, for which an index series is used, with 100 representing...
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...A W A R D S A Comparative Analysis Of National and Regional Quality Awards by Robert J. Vokurka, Gary L. Stading and Jason Brazeal Q UALITY, AS MOST ORGANIZATIONS KNEW IT, RAPIDLY CHANGED DURING THE 1980s. Due to successful Japanese efforts, U.S. industries began to discover the competitive advantages that quality could bring and how the lack of a quality system could bring an end to business. With customers demanding quality and competitors responding to such demands, businesses turned to total quality management (TQM) as the key to enhance overall performance. As customer expectations increased and performance improvement initiatives were implemented, quality evolved from a product specific focus to an organizationwide effort, from a separate manufacturing function to a strategic business initiative. The quality function was expanding, and with that came new practices concerning continuous improvement. In the late 1980s and early 1990s, several countries established programs to recognize the inventive, yet effective, quality practices taking place—once again, after Japan, which began honoring quality practices in the 1950s. The criteria of most of these award programs encouraged strategic initiatives in the approach and deployment of quality practices. But as with most successful quality initiatives, the award programs underwent continuous improvements in design and administration. In their pursuit of TQM, organizations around the world began turning to quality...
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...European Scientific Journal January 2013 edition vol.9, No.1 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431 AGRICULTURE FINANCING AND ECONOMIC GROWTH IN NIGERIA Obansa S. A. J. Departments of Economics University of Abuja I. M. Maduekwe Departments of Economics and Agric. Economics Department University of Abuja Abstract The importance of agricultural surplus for the structural transformation accompanying economic growth is often stressed by development economists. This lead to the question: Does agriculture financing matters in the growth process? To this end, the need to investigate the impact of agriculture financing on economic growth appears more imperative for Nigeria. This paper employed secondary data and some econometric techniques such as Ordinary Least Square (OLS); Augmented Dickey-Fuller (ADF) unit root test; Granger Causality test. The results of the various models used suggest that there is bidirectional causality between economic growth and agriculture financing; and there is bidirectional causality between economic growth and agricultural growth. It further suggests that productivity of investment will be more appropriately financed with foreign direct private loan, share capital, foreign direct investment and development stocks. And also capital-output ratio will be more appropriate financed with multilateral loan, domestic savings, Treasury bill, official development assistant, foreign direct investment and development stock. It is recommended that maintenance...
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...challenges for funding of innovation policy 22 3. Thematic report: Demand-side innovation policies 23 3.1 Trends in the use of demand-side innovation policies 24 3.2 Governance challenges 30 3.3 Recent demand-side innovation policy measures 3 1 3.3.1 Sectoral specificities 3 1 3.3.2 Good practice case 3 1 Appendix A : Plan to increase the efficiency and effectiveness of RDI expenditure (Summary of provisions) 32 Appendix B : Recommendations of World Bank’s Functional Review for the reform of the Romanian RDI system 34 Appendix C : Research and innovation policy measures for Romania 35 Appendix D : References 37 Mini Country Report/Romania i Preface The European TrendChart on innovation is the longest running policy benchmarking tool at European level. Since its launch in 1999 it has produced annual reports on national innovation policy and governance, created a...
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