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Domestic R&D Employment Effects of Offshoring R&D Tasks: Some Empirical Evidence from Finland

  • Ali-Yrkkö, Jyrki
  • Deschryvere, Matthias
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    This study empirically explores whether R&D offshoring affects the domestic R&D employment at the firm level. Overall, the Finnish survey data suggest that the impact of R&D internationalization on domestic R&D employment depends on the mode of internationalization (in-house offshoring vs. offshore outsourcing vs. in-house expansion of R&D abroad). Moreover, manufacturing and service firms are found to be different when it comes to R&D internationalization and its domestic employment effects. In the manufacturing sector, especially in-house offshoring of R&D has a significant negative impact on the plan to increase R&D employment. But the relationship between the in-house expansion of R&D abroad and domestic R&D employment turns out to be complementary. In the service sector, it is in the first place offshore outsourcing of R&D that has a significant negative impact on the plan to increase R&D employment. A final result supports the view that R&D does not always follow production but that a strong location link between production and R&D does have a significant negative effect on the domestic R&D employment.

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    File URL: http://www.etla.fi/wp-content/uploads/2012/09/dp1163.pdf
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    Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1163.

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    Length: 31 pages
    Date of creation: 2008
    Date of revision:
    Handle: RePEc:rif:dpaper:1163
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    1. Kozo Kiyota, 2006. "Reconsidering the Effects of Intranational and nternational R&D Spillovers on Productivity Growth: Firm-level Evidence from Japan," Discussion papers 06001, Research Institute of Economy, Trade and Industry (RIETI).
    2. Leiponen, Aija, 2008. "Is Service Innovation Different?," Discussion Papers 1151, The Research Institute of the Finnish Economy.
    3. Pol Antràs, 2003. "Incomplete Contracts and the Product Cycle," NBER Working Papers 9945, National Bureau of Economic Research, Inc.
    4. Pol Antràs & Luis Garicano & Esteban Rossi-Hansberg, 2005. "Offshoring in a Knowledge Economy," Discussion Papers 04-020, Stanford Institute for Economic Policy Research.
    5. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc.
    6. Barbara J. Spencer, 2005. "International Outsourcing and Incomplete Contracts," NBER Working Papers 11418, National Bureau of Economic Research, Inc.
    7. Ilke Van Beveren, 2007. "Footloose Multinationals in Belgium?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(3), pages 483-507, October.
    8. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "The rise of offshoring: it's not wine for cloth anymore," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 59-102.
    9. Hans Gersbach & Armin Schmutzler, 2006. "Foreign Direct Investment and R&D offshoring," SOI - Working Papers 0606, Socioeconomic Institute - University of Zurich.
    10. Baldwin, Richard & Okubo, Toshihiro, 2006. "Agglomeration, Offshoring and Heterogenous Firms," CEPR Discussion Papers 5663, C.E.P.R. Discussion Papers.
    11. repec:hrv:faseco:4784031 is not listed on IDEAS
    12. Ito, Banri & Wakasugi, Ryuhei, 2007. "What factors determine the mode of overseas R&D by multinationals? Empirical evidence," Research Policy, Elsevier, vol. 36(8), pages 1275-1287, October.
    13. Richard B. Freeman, 2006. "Does Globalization of the Scientific/Engineering Workforce Threaten U.S. Economic Leadership?," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 123-158 National Bureau of Economic Research, Inc.
    14. ITO Banri & TOMIURA Eiichi & WAKASUGI Ryuhei, 2007. "Dissecting Offshore Outsourcing and R&D: A Survey of Japanese Manufacturing Firms," Discussion papers 07060, Research Institute of Economy, Trade and Industry (RIETI).
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