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R&D offshoring and home industry productivity

Gaétan de Rassenfosse and Russell Thomson

Industrial and Corporate Change, 2019, vol. 28, issue 6, 1497-1513

Abstract: Offshoring research and development (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.

JEL-codes: F23 F62 O25 O33 O47 L6 (search for similar items in EconPapers)
Date: 2019
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