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

Can Huang, Zhe Qu (), Mingqian Zhang () and Yanyun Zhao ()
Additional contact information
Zhe Qu: College of Management, Georgia Institute of Technology
Mingqian Zhang: School of Economics, Hebei University of China
Yanyun Zhao: Center for Applied Statistic and School of Statistics, Renmin University of China

No 2007-023, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: 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.

Keywords: Research and Development; Offshoring; Spillovers; Emerging Economies (search for similar items in EconPapers)
JEL-codes: F23 L23 O32 O33 (search for similar items in EconPapers)
Date: 2007
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