Transnational R & D Investment With The Host Country Market Structure

With the development of knowledge economy and the intensification of international market competition, the main factor which multinational corporations look for to strengthen the competition ability has already extended from productions, sales to the field of R&D. In the new century, the R&D investment of MNCs in Mainland China has booming. For one thing, the quantity of R&D institutions has rising rapidly, until the end of the year of 2007, 1000 more R&D institutions of MNCs had been set in Mainland China. For another, MNCs are raising the levels of R&D investment, for many global R&D centers of MNCs have been set. Because the process of transnational R&D transfer is always accompanied with of advanced-tech transfer and innovation experience diffusion, it is certain that the emerging of R&D institutions of large number will affect the innovation of china greatly.Until now, though many relevant documents are available, yet few scholars take the prospect of market structure. Actually, the alternation of the market structure affects the efficiency of market resources allocation, besides, the industry competition affects the market action and performance of corporations. So, the market structure of host country also plays an important role in the determination of transnational R&D. Based on the ready documents, this paper studies the relationship between the transnational R&D and the concentration of market by using the data of 22 manufacturing industries during the year of 2003-2006. It surveys that there is no simple relations between the transnational R&D and the concentration of market, in details, both the industries of high tech-opportunity and low tech-opportunity show a reverse U-shaped relation between them, while considering the manufacture industry as a whole, the relation between them is not significant.The paper can be divided into five chapters. The first chapter mainly discusses the background and meaning of the R&D study,clears the basic conceptions, besides, combs the ready documents home and abroad. Especially, this chapter does many jobs on the past documents, including Schumpeter's theory of relationship between innovation and market structure, the well-known economy models of Arrow and Demsetz, the booming and successive empirical researches abroad and the analyzing results in Mainland China recently. On such a foundation, this paper classifies the ready documents in terms of the research methods and the results of different researchers, which is also the contribution to this field.The second chapter mainly interprets the interaction of transnational R&D and the structure of Chinese market macro-economically. Primarily, this part interprets the formation of R&D globalization and transnational R&D, together with the industrial characteristics, then, it analyzes the effects of FDI to the concentration of China manufacturing industries. Last, it interprets the interaction using the statistical data and economic theory.In the third chapter, with the referring to the ready documents, the author gives the empirical model, which mainly includes two parts, one is the selection of the proxies, including transnational R&D variables, market structure variables and the controllable variables; the other is the collection of data, considering all the data used are ratios, the important job is calculating the ratios from statistical yearbook.In the forth chapter, it mainly processes the data and analyzes the results of the regression. Based on the model testing and comparative analysis, this paper chooses Mixed data Ordinary Least Squares by dividing the industry of high-tech and low-tech opportunity. Last, this chapter explains the reverse U-shaped relationship by analyzing the relationship between the market share of multinational corporations and transnational R&D investment.Reaching the analysis result, the fifth chapter comes about the proposals of adjustment on manufacturing market structure in China. The first is to improve the market concentration of high-tech opportunities industry in order to attract more transnational R&D investment; the other is to strengthen the market degree of administrative monopoly industries.This research can be considered as a supplement to the theory of motivate of transnational R&D, however, because of the availability of the data, the model only use the data of four years, thus, the result has some limit to some degree. China manufacturing has a low concentration of market, which is difficult to reach the economy of scale, thus, the result can only interpret the industries of low concentration of market, which is also the drawback of the research.