R&D Offshoring and Home Industry Productivity

41 Pages Posted: 21 Jul 2016 Last revised: 21 Dec 2018

See all articles by Gaétan de Rassenfosse

Gaétan de Rassenfosse

Ecole Polytechnique Fédérale de Lausanne

Russell Thomson

Swinburne University of Technology

Date Written: December 2018

Abstract

Offshoring 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.

Keywords: R&D offshoring, globalization, productivity, foreign R&D

JEL Classification: F23, F62, O25, O33, O47, L6

Suggested Citation

de Rassenfosse, Gaétan and Thomson, Russell, R&D Offshoring and Home Industry Productivity (December 2018). Available at SSRN: https://ssrn.com/abstract=2812184 or http://dx.doi.org/10.2139/ssrn.2812184

Gaétan De Rassenfosse (Contact Author)

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
Odyssea 1.04
1015 Lausanne, CH-1015
Switzerland

Russell Thomson

Swinburne University of Technology ( email )

Cnr Wakefield and William Streets, Hawthorn Victor
3122 Victoria, Victoria 3122
Australia

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