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The Global Location of Biopharmaceutical Knowledge Activity: New Findings, New Questions

In: Innovation Policy and the Economy, Volume 10

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  • Iain M. Cockburn
  • Matthew J. Slaughter

Abstract

Location possibilities for biopharmaceutical firms are expanding, driven by factors such as falling natural and political barriers to trade and communication, extension and strengthening of patent protection through institutions including the World Trade Organization, and growing supplies of skilled labor and related infrastructure in large, relatively low-cost countries. This paper examines the causes and consequences of this global expansion of knowledge discovery by biopharmaceutical firms. We first discuss the empirical evidence on the extent and nature of this process. We then examine whether this global spread of biopharmaceutical R&D supports or hurts host country knowledge activity. We conclude that foreign knowledge discovery by biopharmaceutical companies tends to complement, not substitute for, home country activities, and we therefore anticipate no significant reduction in U.S. R&D employment or expenditure in this sector due to "globalization" per se. The same cannot be said for policy choices in areas such as tax and immigration, which may have a substantial impact on location of R&D activity.
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Suggested Citation

  • Iain M. Cockburn & Matthew J. Slaughter, 2010. "The Global Location of Biopharmaceutical Knowledge Activity: New Findings, New Questions," NBER Chapters,in: Innovation Policy and the Economy, Volume 10, pages 129-157 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:11767
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    References listed on IDEAS

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    1. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, January.
    2. William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, July.
    3. repec:pse:psecon:2009-11 is not listed on IDEAS
    4. Jeffrey L. Furman & Margaret K. Kyle & Iain Cockburn & Rebecca M. Henderson, 2010. "Public and Private Spillovers: Location and the Productivity of Pharmaceutical Research," NBER Chapters,in: Contributions in Memory of Zvi Griliches, pages 165-188 National Bureau of Economic Research, Inc.
    5. Mihir A. Desai & C. Fritz Foley & James R. Hines, 2009. "Domestic Effects of the Foreign Activities of US Multinationals," American Economic Journal: Economic Policy, American Economic Association, pages 181-203.
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