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With
exogenous R&D investments, the absorptive capacity effect (when small
R&D investments provide large spillovers) contributes to increase the
gains from going multinational when the firm is R&D-intensive.
If
R&D investments are endogenous, only medium-sized absorptive capacity
effects will result in firms going multinational.
Higher
spillover rates do not necessarily drive down R&D and profits for the
multinational firm.
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