THE ROLE OF R&D IN THE INTERNATIONAL TRADE AND INVESTMENT OF U.K. MANUFACTURING INDUSTRY

The general importance of technological advances, based on successful industrial research and development, is well established in the economics of international trade and investment. A part of the emphasis on technology as a factor in international trade has resulted from the general reaction to Leontief's findings about the apparent factor intensity of U.S. trade: findings which went against the accepted pattern of the capital‐ and labour‐ based Heckscher‐Ohlin model of international trade. More important though is the recognition of the commercial significance of product‐ and process‐ oriented industrial innovation in an industry's international operations. There is ample evidence to support the usually accepted connection between research and development and international trade and investment in the case of United States' manufacturing industry. There has not, however, been a proper examination of the nature of this relationship in U.K. manufacturing industries. With the availability of new data on book values of British direct investment abroad by industry groups, some assessment of the connection between research activity and export‐ and foreign‐investment positions can now be undertaken.