41 The key variable is technology transfer which is defined in the survey as

41 the key variable is technology transfer which is

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41 The key variable is technology transfer, which is defined in the survey as expenses for international technology transfer [egre- sos por transferencia de technolog´ ıa (internacional)] and includes the cost for purchase or licence of patents and other non-patented inventions, revelation of know-how, and technical assistance. One limitation of the data is that we are not able to distinguish between technology transfer from parents and from other firms. However, we think that the variable mainly consists of technology transfer from the headquarters, as Branstetter, Fisman and Foley (2006) suggest that the mean of royalties paid by affiliates to their headquarters is 0.7 percent (after the patent reform for all the countries), which is actually larger than the mean of the variable in our sample (0.3 percent). 40 Surveys were done in 1996, 1998, 2002, 2004 and 2006. Teshima (2008) has used the same data to analyze the impact of import competition on different types of innovative activities. 41 The qualitative results do not change if we use 2001. The advantage of using a panel would be to allow for plant-fixed effects, but the use of expatriates does not change within plants much over a few years, which leaves us little variation within plants. 31
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5.2 Summary Statistics Table 5 presents summary statistics. We report the mean and the standard deviation of each variable by whether plants have foreign expatriates. Plants with expatriates have larger volumes of total sales and employment. The summary statistics for domestic sales and exports show that plants with expatriates are more export-oriented. They are consistent with the model’s prediction that higher productive plants and export-oriented plants are more likely to choose expatriates. We do not find a statistically significant difference of the number of domestic employees. Plants with foreign expatriates have on average 12 foreign employees. 5.3 Empirical Results We proceed in the following way. We first investigate whether Mexican subsidiaries of MNCs hiring foreign employees spend more in technology purchase from abroad, and if this correlation is stronger in industries whose R&D intensity is high in the U.S., a typical headquarter country. In the following section, we investigate whether Mexican states with higher levels of judicial efficiency (an inverse measure of local inefficiency whose increase will also increase local uncertainty at low levels and decrease it at high levels) find more/less expatriates and foreign firms. We also explore the composition of the industries in terms of R&D intensity. Finally, we examine whether the reliance on foreign employees is correlated with export status, domestic sales and total sales, as a robustness check rather than a direct test of our hypothesis.
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