The Role of National Policies on the Attraction and Promotion of MNEs' R&D Activities in Developing Countries

The technology internationalization process of multinational companies (MNCs) is characterized by the growing decentralization of this activity to other countries, including developing ones. Within this process, world competition for foreign direct investment (FDI) in research and development (R&D) has been increasing in the last few years. Consequently, to attract this kind of FDI national policies and their instruments have become ubiquitous. For a country to succeed in its quest for FDI, its policies need to be consistent and articulated encompassing measures that influence and promote all the determining factors of FDI in R&D, i.e. supply of qualified professionals, adequate infrastructure, favorable laws and regulations, etc. This means that a FDI policy cannot be restricted only to fiscal incentives and grants. The aim of this paper consists in identifying and analyzing Chinese, Indian and Brazilian policy measures, to offer a better understanding about how they affect the attraction and promotion of FDI in R&D, as well as their differences and similarities. The analysis shows that despite the flaws still presented in both Chinese and Indian economic and technological systems, they have been implementing a more articulated and consistent set of policies, thus attracting FDI in R&D from all over the world. However, Brazilian policies seem to be less articulated and still based on the concession of fiscal incentives to attract this kind of FDI.