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R&D offshoring and home industry productivity

Author

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  • Gaetan de Rassenfosse

    (Ecole polytechnique federale de Lausanne)

  • Russell Thomson

    (Swinburne University of Technology)

Abstract

Offshoring R&D commonly invokes concerns regarding the loss of high value jobs and a hollowing out of technological capabilities, but it can also benefit domestic firms by enabling them to tap into the global technological frontier. We study the effect of R&D offshoring on industrial productivity in the home country using industry-level data for 18 OECD countries over a 26-year period. Simultaneity between productivity and R&D offshoring is addressed by using foreign tax policy as an instrument for offshored R&D. We show that R&D offshoring contributes positively to productivity in the home country, irrespective of the host country destination.

Suggested Citation

  • Gaetan de Rassenfosse & Russell Thomson, 2018. "R&D offshoring and home industry productivity," Working Papers 5, Chair of Innovation and IP Policy.
  • Handle: RePEc:iip:wpaper:5
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    2. Frietsch, Rainer, 2020. "Current R&I policy: The future development of China's R&I system," Discussion Papers "Innovation Systems and Policy Analysis" 63, Fraunhofer Institute for Systems and Innovation Research (ISI).

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    More about this item

    Keywords

    R&D offshoring; globalization; productivity; foreign R&D;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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