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R&D, offshoring, and slicing along a global production chain

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  • Larry D. Qiu
  • Mohan Zhou

Abstract

This paper analyzes the decision of a multinational firm from a developed country to slice a production chain and to allocate different tasks in the production chain globally. The process involves a wide range of tasks that varies from very routine jobs to research and development (R&D) intensive work. We find that under certain conditions, a drop in offshoring costs (1) leads to more slicing (an increase in the length of production chain) and more offshoring, (2) stimulates R&D, and (3) raises employment in the developed country.

Suggested Citation

  • Larry D. Qiu & Mohan Zhou, 2014. "R&D, offshoring, and slicing along a global production chain," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(1), pages 18-34, March.
    • Handle: RePEc:taf:raaexx:v:21:y:2014:i:1:p:18-34
    DOI: 10.1080/16081625.2014.848510
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    References listed on IDEAS

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    1. Erica Fuchs & Randolph Kirchain, 2010. "Design for Location? The Impact of Manufacturing Offshore on Technology Competitiveness in the Optoelectronics Industry," Management Science, INFORMS, vol. 56(12), pages 2323-2349, December.
    2. Schwarz, Christian & Suedekum, Jens, 2014. "Global sourcing of complex production processes," Journal of International Economics, Elsevier, vol. 93(1), pages 123-139.
    3. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    4. Ann Harrison & Margaret McMillan, 2022. "Offshoring Jobs? Multinationals And U.S. Manufacturing Employment," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 11, pages 255-273, World Scientific Publishing Co. Pte. Ltd..
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