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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 254:
Offshoring and Home Country R&D

Patrik Karpaty and Patrik Gustavsson Tingvall

Abstract: National concerns are sometimes raised against offshoring of economic activities to other countries. While most of the existing literature has focused on the effects on labor demand and productivity the effects on domestic R&D have been neglected. This is unfortunate since the decision to offshore activities also includes R&D. We use unique and rich firm level data for the Swedish manufacturing sector to analyze how offshoring impacts domestic R&D and how these effects vary with respect to target region and type of firm. The results suggest that offshoring of production alter a firmís investments in R&D in Sweden and that a negative impact on home country R&D is confined to offshoring by non-multinationals and offshoring to Europe and EU15 countries.

Keywords: Offshoring; R&D; Manufacturing sector; EU15; (follow links to similar papers)

JEL-Codes: C23; F16; F23; J23; (follow links to similar papers)

20 pages, August 17, 2011

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