Studying the Role of R&D Activities of Multinational Corporations in Building Technological Capabilities of Developing Countries through International Patent Analysis: China and India Case Study

Fast growth of level of technological capabilities of India and China has attracted the attention of policy makers and researchers in recent years. In addition to their domestic efforts, transfer of R&D activities of MNCs to these countries facilitates their rapid growth. In this context, this study intends to analyze the features foreign direct investment by multinational companies in R&D activities in India and China and its impact on their level of R&D activities through examination of international patents. For this purpose a new database has been created through cleaning and selecting of related data from USPTO database and joining the data to ORBIS dataset. After that the research hypothesis were analyzed by using a panel regression models. The result of the analysis confirms the important role of multinational companies in the development of technological capabilities in target countries, also the impact of competitive incentives for the development of innovative activities as well as evolutionary nature of multinational companies R&D activities. Based on the results of this study, the two main policies for the development of technological capabilities of the country are focusing on those MNCs that have market in Iran to transfer of their R&D activities, and second is to create a competition between the rival MNCs.