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International R&D Deployment and Locational Advantage: A Case Study of Taiwan

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  • Meng-Chun Liu
  • Shin-Horng Chen
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    Abstract

    Although it is evident that R&D has undergone a process of internationalization, and that the less-advanced economies are becoming increasingly involved in this process, the substantial body of literature in this area has been based largely on the experiences of the developed countries. This paper aims to contribute to the understanding of this issue by examining R&D internationalization within a newly-industrializing economy, a prime example of which is Taiwan, and focuses especially on factors underlying locational advantage in attracting multinationals' offshore R&D. We begin with an examination of the literature on R&D internationalization and globalization, based upon which we emphasize the significance of first-tier supplier advantage' in a Taiwanese context. We take advantage of an official database to reveal the patterns of foreign corporate R&D in Taiwan and to systematically examine the determinants of the R&D intensity of foreign affiliates at industry level. Our empirical results show that within Taiwan, foreign affiliates with higher R&D intensity tend to be more export oriented, are localized within Taiwan in terms of their sourcing of materials and capital goods, and belong to sectors with a larger pool of R&D labor.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10169.

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    Date of creation: Dec 2003
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    Publication status: published as Shin-Horng Chen, Meng-Chun Liu. "International R&D Deployment and Locational Advantage of Developing Countries: A Case Study of Taiwan ," in Takatoshi Ito and Andrew K. Rose, editors, "International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14" University of Chicago Press (2005)
    Handle: RePEc:nbr:nberwo:10169

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    1. Lall, Sanjaya, 1979. "The International Allocation of Research Activity by US Multinationals," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 313-31, November.
    2. Bruno Van Pottelsberghe & Dominique Guellec, 2001. "The internationalisation of technology analysed with patent data," ULB Institutional Repository 2013/6223, ULB -- Universite Libre de Bruxelles.
    3. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April.
    4. John Cantwell & Simona Iammarino, 2000. "Multinational Corporations and the Location of Technological Innovation in the UK Regions," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 317-332.
    5. Kumar, Nagesh, 2001. "Determinants of location of overseas R&D activity of multinational enterprises: the case of US and Japanese corporations1," Research Policy, Elsevier, vol. 30(1), pages 159-174, January.
    6. J R Firn, 1975. "External control and regional development: the case of Scotland," Environment and Planning A, Pion Ltd, London, vol. 7(4), pages 393-414, April.
    7. Carrincazeaux, Christophe & Lung, Yannick & Rallet, Alain, 2001. "Proximity and localisation of corporate R&D activities," Research Policy, Elsevier, vol. 30(5), pages 777-789, May.
    8. Asakawa, Kazuhiro, 2001. "Organizational tension in international R&D management: the case of Japanese firms," Research Policy, Elsevier, vol. 30(5), pages 735-757, May.
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