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Treatment of R&D flows within multinational companies

Treatment of R&D flows within multinational companies. OECD task force on IPP’s October 2008, Paris Soli Peleg. Problem with MNC’s. National borders are not important to MNC’s  Transactions may not be registered  Transfer of asset or transfer of service?. Ownership of R&D.

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Treatment of R&D flows within multinational companies

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  1. Treatment of R&D flows within multinational companies OECD task force on IPP’s October 2008, Paris Soli Peleg

  2. Problem with MNC’s • National borders are not important to MNC’s Transactions may not be registered Transfer of asset or transfer of service?

  3. Ownership of R&D • Ownership lies at headquarters • License payments are unusual • Users are economic owners  Imports and exports are more like transfer of asset than transfer of service

  4. Funding of R&D • Based on expected benefits • More or less based on expected benefits (based on R&D intensity) • Unrelated to expected benefits (percentage of turnover) Funding through headquarters is not always included in funding responses

  5. 2. Transactions in IPP's in connection with international takeovers or mergers

  6. Why of interest? • International takeovers or merging of companies often involve transfers of IPP's. • Especially in takeovers of start-up companies, the value of company taken over will reflect value of the IPP’s produced in beginning stages. • The transfer of IPP’s in connection with the takeover is mostly not registered, only a financial transaction is recorded.

  7. Information on takeovers, mergers • Banking data on financial transactions. • Newspapers or other media. • Reports disseminated by market analysts. • Reports of groups of VC funds. • Once a transaction is located, cross-check with registration in statistics – balance of payments, business registers.

  8. Information on takeovers, mergers • The transactions should be examined in detail and, if possible, additional information should be collected from persons involved in the transaction. • The information gathered is used in a decision tree to decide if a sale of an IPP is involved or not.

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