What is it about?
This article presents openness to foreign direct investment as a substitute to subsidies to research and development in small open economies.
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Why is it important?
The literature has pointed out subsidies to research and development in firms as a growth-enhancing policy. Most of these contributions assume large or closed economies. However, for small open economies, openness to foreign direct investment can substitute government subsidies to research in increasing growth and welfare.
Perspectives
It was important as my first experience in modelling open economies setups which in economic growth modelling differ a lot from the more usual 'closed' (or big) economies setups. It is important as its conclusions can be applied to small and very open economies such as Portugal.
Tiago N Sequeira
Universidade da Beira Interior
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This page is a summary of: R&D Subsidies and Foreign Direct Investment, Open Economies Review, February 2016, Springer Science + Business Media,
DOI: 10.1007/s11079-016-9390-3.
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