Offshore Outsourcing, Contractual R&D and Intellectual Property in Developing Countries

Sugata Marjit, Xinpeng Xu and Lei Yang

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the role of intellectual property in developing countries in offshore outsourcing of R&D. We find that strengthened intellectual property protection in developing countries provides incentive for firms, both multinational and local, to specialize in undertaking an R&D activity in which it has competitive advantage (the specialization effect). It also facilitates the process for local firms to switch from imitators to potential innovators (the switching effect). We demonstrate that the multinational firm's strategic behavior on IPR enforcement can be used as an effective instrument to subsidize contractual research and development in developing countries (the subsidizing effect). We further illustrate how a policy mix of IPR and FDI subsidy in developing countries affects R&D activities adding an offshore R&D subsidiary as an additional organizational form.

Keywords: Intellectual Property Rights; Contractual R&D; R&D Chain (search for similar items in EconPapers)
JEL-codes: F14 L13 O1 O34 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-ino, nep-ipr and nep-pr~
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19362

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