Industry R&D Location – the role of accessibility to university R&D and institutions of higher education

The rapid globalization in recent years has created a radically new competitive situation for the rich industrialized countries. Newly industrialized countries and not least China have become more and more successful in penetrating the markets in the rich industrialized countries with increasingly more advanced export products. This has generated a discussion in the rich industrialized countries on how to meet this increased international competition. In some countries demands for various protective measures have been raised while in others the discussion has mainly focused on how to develop a competitive strategy mainly concentrating on making the own products more sophisticated by increasing their knowledge content. This is by no means since the direct product development is controlled to a high extent by multinational firms, which to an increasing degree are foreign owned. Governments mainly have to rely on indirect measures, such as increasing the volume of higher education and public, mainly university R&D. This raises the question: how responsive is private industry to these kinds of indirect measures. Against this background, the purpose of this paper is to analyze to what extent that the location and the extent of higher education and university R&D, respectively, influence the location and the extent of industry R&D in Sweden using an accessibility approach. After an extensive literature survey, we develop a simple theoretical model for the location of R&D from the perspective of a multinational enterprise. From this theoretical model, we then deduce our empirical model, which we then estimate in the form of a Tobit model using data from Swedish labour market regions and municipalities. We show that the location of industry R&D in Sweden can be partly explained by the intra-municipal accessibility to students in higher education, while the accessibility to university R&D turned out to be insignificant