Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230462
Authors: 
Davis, Colin R.
Hashimoto, Ken-ichi
Year of Publication: 
2019
Series/Report no.: 
ISER Discussion Paper No. 1055
Abstract: 
In recent years firms have started to offshore their innovation activities to emerging economies. This paper investigates the implications of innovation offshoring for productivity growth in a two-country framework that features a tension between access to technical knowledge and low-cost high-skilled labor in the innovation location decision. Industry and innovation tend to concentrate in the asset-wealthy country when trade costs are relatively high. A positive relationship between innovation costs and industry concentration then ensures that improved international knowledge diffusion coincides with an increase in net offshoring flows in innovation from the asset-wealthy country to the asset-poor country, and potentially with faster productivity growth.
Subjects: 
innovation offshoring
international knowledge diffusion
endogenous productivity growth
process innovation
industry location
international trade
JEL: 
F12
F43
R11
Document Type: 
Working Paper

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