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Global Knowledge and R&D Foreign Direct Investment Flows: Recent Patterns in Asia Pacific, Europe, and North America

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  • Robert Huggins
  • Mehmet Demirbag
  • Violina Iankova Ratcheva

Abstract

The global nature of foreign direct investment (FDI) is changing in terms of both location and sectors of activity. This paper analyses recent flows of R&D FDI across the globe. It is found that North America has been the source of one-half of all R&D FDI between 2002 and 2005. Asia Pacific, especially China and India, has been the overwhelming destination for most R&D FDI, accounting for more than one-half of all investment and almost three-quarters of the jobs created. In general, R&D FDI has not been equitably spread across nations such as India and China but concentrated in a small number of locations. R&D FDI from advanced economies is facilitating the emergence of new centres and clusters of knowledge across the globe. This global redistribution of knowledge brings challenges to policymakers in both the developed and the developing world. The challenges come in two main forms: first, cross-regional disparities in knowledge-based wealth creation within particular nations; and second, anxieties about the offshoring of knowledge-based tasks and jobs. It is argued that current patterns of global knowledge flow require policies to nurture the open regional innovation systems being established by these flows.

Suggested Citation

  • Robert Huggins & Mehmet Demirbag & Violina Iankova Ratcheva, 2007. "Global Knowledge and R&D Foreign Direct Investment Flows: Recent Patterns in Asia Pacific, Europe, and North America," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(3), pages 437-451.
    • Handle: RePEc:taf:irapec:v:21:y:2007:i:3:p:437-451
    DOI: 10.1080/02692170701390437
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    References listed on IDEAS

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    1. Bardhan, Ashok Deo & Jaffee, Dwight M, 2005. "Innovation, R&D and Offshoring," Fisher Center for Real Estate & Urban Economics, Research Reports qt24d9s78v, Fisher Center for Real Estate & Urban Economics, UC Berkeley.
    2. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Andrea Coveri & Antonello Zanfei, 2023. "Who wins the race for knowledge-based competitiveness? Comparing European and North American FDI patterns," The Journal of Technology Transfer, Springer, vol. 48(1), pages 292-330, February.
    2. Deschryvere, Matthias & Kotiranta, Annu, 2008. "Domestic Employment Effects of Offshoring: Empirical Evidence from Finland," Discussion Papers 1166, The Research Institute of the Finnish Economy.
    3. Sheldon, Peter & Li, Yiqiong, 2013. "Localized poaching and skills shortages of manufacturing employees among MNEs in China," Journal of World Business, Elsevier, vol. 48(2), pages 186-195.
    4. Fatma Halide Kivrak, 2020. "An insight into R&D in emerging countries and prominent concepts within the literature," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 2(1), pages 01-16, January.
    5. Fernandez, Anne-Sophie & Chiambaretto, Paul & Chauvet, Mathieu & Engsig, Juliane, 2021. "Why do MNEs both make and coopete for innovation?," Technovation, Elsevier, vol. 106(C).
    6. Robert Huggins & Shougui Luo & Piers Thompson, 2014. "The competitiveness of China's Leading Regions: Benchmarking Their Knowledge-based Economies," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 105(3), pages 241-267, July.
    7. Rodgers, Peter & Khan, Zaheer & Tarba, Shlomo & Nurgabdeshov, Assylbek & Ahammad, Mohammad F., 2019. "Exploring the determinants of location choice decisions of offshored R&D projects," Journal of Business Research, Elsevier, vol. 103(C), pages 472-483.
    8. Lorena M. D'Agostino & Grazia D. Santangelo, 2012. "The Global Fragmentation of R&D Activities: The Home Region Perspective," DRUID Working Papers 12-06, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    9. Erickson, Andrew S. & Walsh, Kathleen A., 2008. "National security challenges and competition: Defense and space R&D in the Chinese strategic context," Technology in Society, Elsevier, vol. 30(3), pages 349-361.
    10. Itzhak Goldberg & Lee Branstetter & John Gabriel Goddard & Smita Kuriakose, 2008. "Globalization and Ttechnology Absorption in Europe and Central Asia : The Role of Trade, FDI, and Cross-Border Knowledge Flows," World Bank Publications - Books, The World Bank Group, number 6445.
    11. Meyer Susanne & Berger Martin, 2014. "Internationalisation of research and development activities of small and medium-sized enterprises in Austria: Strategic drivers for spatial organisation," ZFW – Advances in Economic Geography, De Gruyter, vol. 58(1), pages 1-17, October.
    12. Dirk Holtbrügge & Carina B. Friedmann, 2016. "Does location choice affect foreign subsidiary success in India? An empirical study based on Porter's diamond model," International Journal of Business and Emerging Markets, Inderscience Enterprises Ltd, vol. 8(1), pages 3-29.

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