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Follow the Intellectual Property, How does Industry pay Programmers' Salaries when they move the related IP rights to offshore taxhavens?"


  • Wiederhold, Gio


In the ongoing discussion about offshoring in the computer and data-processing industries, the 2006 ACM report Globalization and Offshoring of Software addressed job shifts due to globalization in the software industry. But jobs represent only half of the labor and capital equation in business. In today’s high-technology industries, intellectual property (IP) supplies the other half, the capital complement. Offshoring IP always accompanies offshoring jobs and, while less visible, may be a major driver of job transfer. The underlying economic model—involving ownership of profits, taxation, and compensation of workers from the revenue their products generate—has not been explicated and is largely unknown in the computer science community. This article presents the issue of software income allocation and the role IP plays in offshoring. It also tries to explain why computer experts lack insight into the economics of software, from investments made, to profits accumulated, to capital becoming available for investment in new projects and jobs.

Suggested Citation

  • Wiederhold, Gio, 2009. "Follow the Intellectual Property, How does Industry pay Programmers' Salaries when they move the related IP rights to offshore taxhavens?"," MPRA Paper 30151, University Library of Munich, Germany, revised 07 Apr 2011.
  • Handle: RePEc:pra:mprapa:30151

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    References listed on IDEAS

    1. Walter Krämer & André Güttler, 2008. "On comparing the accuracy of default predictions in the rating industry," Empirical Economics, Springer, vol. 34(2), pages 343-356, March.
    2. Roger Newson, 2006. "Confidence intervals for rank statistics: Somers' D and extensions," Stata Journal, StataCorp LP, vol. 6(3), pages 309-334, September.
    3. Andre Güttler & Peter Raupach, 2010. "The Impact of Downward Rating Momentum," Journal of Financial Services Research, Springer;Western Finance Association, vol. 37(1), pages 1-23, February.
    4. C. A. Field & A. H. Welsh, 2007. "Bootstrapping clustered data," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 69(3), pages 369-390.
    5. Lando, David & Skodeberg, Torben M., 2002. "Analyzing rating transitions and rating drift with continuous observations," Journal of Banking & Finance, Elsevier, vol. 26(2-3), pages 423-444, March.
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    More about this item


    Offshoring; offshore outsourcing; tax havens; job loss; intellectual property; tax avoidance; non-routine profits;

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment


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