This paper examines the impact of the three main channels of international trade on domestic innovation, namely outward direct investment, inward direct investment (IDI) and exports. The number of Triadic patents serves as a proxy for innovation. The data set contains 37 countries that are considered to be highly competitive in the world market, covering the period 1994 to 2005. The empirical results show that increased exports and outward direct investment are able to stimulate an increase in patent output. In contrast, IDI exhibits a negative relationship with domestic patents. The paper shows that the impact of IDI on domestic innovation is characterized by two forces, and the positive effect of cross-border mergers and acquisitions by foreigners is less than the negative effect of the remaining IDI.

Additional Metadata
Keywords R&D, export, international direct investment, inward direct investment, negative binomial model, outward direct investment, triadic patent
JEL Country and Industry Studies of Trade (jel F14), International Investment; Long-Term Capital Movements (jel F21), Technological Change; Research and Development (R&D): General (jel O30)
Publisher Erasmus School of Economics
Persistent URL
Series Econometric Institute Research Papers
Journal Report / Econometric Institute, Erasmus University Rotterdam
Chang, C-L, Chang, S.P, & McAleer, M.J. (2010). Globalization and Knowledge Spillover: International Direct Investment, Exports and Patents (No. EI 2010-55). Report / Econometric Institute, Erasmus University Rotterdam (pp. 1–39). Erasmus School of Economics. Retrieved from