The recent location of foreign R&D activities by large MNCs in the European regions. The role of spillovers and externalities

Cantwell J. and Piscitello L. (2005) Recent location of foreign-owned research and development activities by large multinational corporations in the European regions: the role of spillovers and externalities, Regional Studies 39, 1–16. This paper examines the role of spillovers and externalities in influencing the recent siting of foreign-owned research and development activities in European regions. In accordance with the literature on knowledge creation in multinational corporations, the location of foreign-owned research tends to agglomerate depending upon the potential for the following different sources of spillovers and externalities: (1) intra-industry spillovers or specialization externalities associated with the presence of a wideranging collection of firms active in the same sector; (2) inter-industry spillovers or diversity externalities associated with the co-presence of firms working in different fields; and (3) science–technology spillovers and externalities stemming from the presence of a munificent scientific and educational infrastructure. Additionally, benefits from spillovers decline with distance, but this holds especially for intra- and inter-industry spillovers