Seminars & Events
APL (Ajiken Power Lunch)
Dr. Trang Hoang (Federal Reserve Board of Governors): Multinational firm innovation and affiliate sourcing decisions: Evidence from Japan
Date & time
Wednesday, 21 October 2026, 10:00 a.m. to 11:15 a.m.
Venue
Abstract
The paper studies the effect of R&D investment by multinational companies' (MNC) parent firms and their affiliates on the affiliates' decision to purchase intermediate inputs across different locations. We first develop a theoretical model that allows R&D to affect sourcing decisions through two channels: Hicks-neutral productivity and input prices. While the first channel implies that R&D in one location would affect imports from all locations equally, the second channel implies that R&D might have location-specific effects. Using data on a sample of Japanese multinationals and affiliates, we find that parent R&D has a robust positive effect on affiliate productivity. Furthermore, parent R&D and third-party affiliates' R&D seem to increase the prices of inputs from Japan and third-party countries, suggesting higher quality of inputs from those locations. Our findings suggest that through MNC activities, the geography of R&D has important implications for global trade flows.
Speaker
Dr Trang Hoang (Federal Reserve Board of Governors)
Moderator
Contact:
Institute of Developing Economies, APL Organizers
E-mail: APL