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R&D offshoring and technology learning in emerging economies: Firm-level evidence from the ICT industry

  • Huang, Can

    ()

    (UNU-MERIT)

  • Qu, Zhe

    ()

    (College of Management, Georgia Institute of Technology)

  • Zhang, Mingqian

    ()

    (School of Economics, Hebei University of China)

  • Zhao, Yanyun

    ()

    (Center for Applied Statistic and School of Statistics, Renmin University of China)

This paper studies the impact of the R&D offshoring of multinational enterprises on the firms in host emerging economies. We develop a two-stage non-cooperative game to analyze the strategic interaction between multinational and host country enterprises engaged in R&D investment. An empirical analysis of 12,309 manufacturing firms in the ICT industry in China shows that R&D offshoring has a positive effect on the intensity of the R&D of host country firms. However, the magnitude of the impact depends on both the technological and geographical distance between the multinational and host country firms. The policy implications of these findings are that the governments of host country should be cautious about allowing advanced multinational R&D investment in under-developed sectors, but they should encourage such investment in developed sectors; and that local governments should be involved in R&D policy making because the positive impact of multinational R&D offshoring diminishes as the geographical distance between the multinational and host country firms increases.

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File URL: http://www.merit.unu.edu/publications/wppdf/2007/wp2007-023.pdf
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Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 023.

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Date of creation: 2007
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Handle: RePEc:unm:unumer:2007023
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