Outsourcing in Product Cycles

Hsiao-Lei Chu

Review of Development Economics, 2015, vol. 19, issue 4, 941-956

Abstract: In this quality-ladder product-cycle model, a production process consists of core research and development (R&D), complementary R&D and manufacturing; and there exist northern imitation, southern innovation, and outsourcing of complementary R&D as well as manufacturing from the North to the South. It is found that a policy to protect intellectual property rights or to subsidize R&D may reduce the aggregate rate of innovation. In addition, not every globalized production strategy is innovation-improving.

Date: 2015
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