R&D in Swedish Multinational Corporations

Using unique data on Swedish multinational corporations (MNCs), this study investigates several dimensions relating to industrial R&D. The development in the latter part of the 1980s is emphasized. Between 1978 and 1990, R&D intensity of the Swedish MNCs almost doubled from about 2 to 4 percent. It is further noted that growth in real R&D expenditures declined in the second half of the 1980s compared with the early 1980s. The statistical analysis supports the view that Swedish MNCs to a large extent base their international competitiveness, measured as foreign sales as a percentage of total sales, on technological capabilities created through R&D activities. On the other hand, the analysis also indicates that more sales in foreign markets increases the rate of return on each R&D SEK spent, and, thus, induces more R&D expenditures. Finally, it is shown that the marginal productivity of R&D is positive, although this effect is statsitically weak and seems to have decreased over time