This paper will firstly analyse the importance of R&D, its global dimension and its future trends. Furthermore, the emphasis by nations put on investment in knowledge will be explained. The second part then outlines the main economic theories concerning innovation and knowledge creation. Finally, Germany and its pharmaceutical industry will be taken as an example to illustrate the dimensions of investment in R&D and its outcomes.
Table of Contents
1. Introduction
2. Research and Development & Knowledge Creation
3. Economic Theories
4. Germany and the pharmaceutical industry
5. Conclusion
6. Bibliography
Objectives and Topics
This paper examines the global importance of Research and Development (R&D) and its role in fostering knowledge creation and economic growth. It explores theoretical frameworks of innovation and uses the German pharmaceutical industry as a case study to illustrate the impact of R&D investments on industrial competitiveness.
- The global significance and future trends of R&D investment.
- Core economic theories regarding innovation and knowledge-based economies.
- Germany’s industrial strategy and R&D expenditure.
- The competitiveness of the pharmaceutical sector within international trade.
Excerpt from the Book
1. Introduction
According to Krugman (1992, p.17), “there was never a time when the study of international economics was as important as it is today”. Through international trade in goods and services and the international flows of money, the extent of markets is widened in order to offer the consumer a larger variety of products. Along with Bolisani and Scarso (1996), “global competition urges firms not only to develop a strong commercial presence in the world market, but also to assume an international configuration with regard to operations.”
Van Marrewijk (2002) argues that it increases the “welfare of a nation through the love-of-variety effect for final goods or raises production through increased specialization leading to positive production externalities”. This, of course, raises the competition of different companies in different nations towards quality improvements and innovation which results in increasing efforts in Research and Development (R&D). Grossman and Helpman (1991) demonstrated in their approach that it is more complex to improve quality than increase product variety, even though they have similar profitable results. Nevertheless, it can be assumed that by innovation through more engagement in R&D the operating profit will be increased.
The WTO is one of today’s organisation dealing with international trade issues and basically assuring and emphasising free global trade, but during its formation also other regional trade agreements between countries occurred (regionalism). Soon the fear of a swift from multilateralism towards regionalism and protectionism appeared which was constituted by Krugman’s framework of intra-industry trade, which takes place “in order to take advantage of important economies of scale in production”. Therefore, intra-industry trade became of particular importance with the removal of tariffs and trade barriers. (Salvatore, 2004, p.171)
Chapter Summaries
1. Introduction: This chapter contextualizes international trade within global economics and introduces the increasing necessity for R&D due to international competition and consumer demand for variety.
2. Research and Development & Knowledge Creation: The chapter defines R&D as a systematic activity and analyzes the global trends in R&D expenditure, highlighting the shift toward knowledge-based economies.
3. Economic Theories: This section reviews theoretical perspectives such as the H-O theory, technological gap models, and product cycle theories to explain the dynamics of intra-industry trade and innovation.
4. Germany and the pharmaceutical industry: The chapter evaluates Germany as a knowledge-creating nation, focusing on its high investment in R&D and the structural challenges and successes of its pharmaceutical sector.
5. Conclusion: The concluding chapter synthesizes the relationship between knowledge creation, competitive advantage, and the strategic importance of R&D for national economic success.
6. Bibliography: This chapter provides a comprehensive list of books, journals, and electronic sources used to support the research.
Keywords
Research and Development, R&D, Knowledge Creation, International Trade, Intra-industry Trade, Pharmaceutical Industry, Economic Theory, Innovation, Competitive Advantage, Globalization, Technology, Germany, Investment, GDP, Market Integration.
Frequently Asked Questions
What is the fundamental focus of this paper?
The paper explores the critical role of Research and Development in international trade and how investment in knowledge creation drives industrial competitiveness.
What are the primary thematic areas?
Key themes include global R&D expenditure, economic growth theories related to innovation, and a detailed analysis of Germany's pharmaceutical sector.
What is the core research question?
The research investigates how nations leverage R&D to achieve competitive advantages and how these efforts shape their integration into the global economy.
Which scientific methods were employed?
The author utilizes a descriptive analysis approach, synthesizing existing economic literature and empirical data from international organizations like the OECD and WTO.
What topics are discussed in the main body?
The main body covers definitions of knowledge creation, reviews of trade theories such as the product cycle model, and empirical data on German R&D spending and output.
What defines the core keywords of this work?
The keywords reflect the intersection of macroeconomics, industrial policy, and specific sectoral analysis in the pharmaceutical domain.
How does Germany compare to other nations in R&D?
Germany is identified as a leading innovator in Europe, though it faces challenges regarding rising competitive pressures from other nations in the pharmaceutical landscape.
What is the role of the pharmaceutical industry in this study?
The pharmaceutical industry serves as a primary case study to illustrate the high costs and long-term investment required to sustain innovation-driven competitive advantages.
- Arbeit zitieren
- Miriam Mennen (Autor:in), 2006, International Trade and Finance - Pharmaceutical Industry in Germany, München, GRIN Verlag, https://www.hausarbeiten.de/document/145357
