This article investigates the impact of the introduction of the patent box/IP regime on foreign direct investment (FDI) inflows
in R&D and related activities, including design, developing, and testing activities, using city level data. The data are based
on approximately 1,200 cities in 80 countries. Results obtained by use of a difference‐in‐differences estimator show that
the introduction of the patent/IP box regime in the Netherlands has led to increases in the FDI inflows in R&D and related
activities in the subsequent three‐year period. For Spain and Belgium, no significant effects could be found. The results
are robust when other important factors are accounted for (capital city, city population, quality of local university, presence
of an airport, R&D tax incentives, protection of property rights, and PISA ratings in mathematics and science) and different
measures of FDI inflows (number of FDI projects, capital flows, and number of jobs generated).
Keywords:TP_Wettbewerbsfaehigkeit_Innovation
Forschungsbereich:Industrie-, Innovations- und internationale Ökonomie