Global Innovative R&amp;D Offshoring with Heterogeneous Labor: The Role of IPR‐Protection on Technology Transfer and the Brain Drain Effect

Cohle, Zachary

doi:10.1002/soej.12397

Cited by 7 publications

(8 citation statements)

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“…Two interesting directions for future research are intellectual property rights (IPR) regulation and reshoring. Our framework could be extended to consider how long‐run productivity growth is affected by IPR reform through adjustments in the incentives for innovation offshoring (Bilir, 2014; Cohle, 2019a, 2019b, 2021). A new strand of literature examines the trade‐off between domestic investment in automation and offshoring production to low‐wage locations as a determinant of the reshoring that occurs when firms relocate production back to home countries (Krenz et al, 2021).…”

Section: Discussionmentioning

confidence: 99%

“…A key result is that high‐tech firms are more likely to increase R&D offshoring in response to IPR reform (Cohle, 2021). In addition, stronger IPR protection may generate a brain effect by reducing employment opportunities for high‐skilled researchers (Cohle, 2019a).…”

Section: Related Literaturementioning

confidence: 99%

“…Industries with short product life cycles are unaffected by IPR reform, however, because products tend to become obsolete before they are imitated. Cohle (2019aCohle ( , 2019b introduces employee mobility as a channel for imitation, studying the risk associated with researchers leaving firms to start businesses with competing products, and shows that stronger IPR increases innovation offshoring, global welfare, and innovation activity. A key result is that high-tech firms are more likely to increase R&D offshoring in response to IPR reform (Cohle, 2021).…”

Section: Related Literaturementioning

confidence: 99%

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Innovation offshoring and reshoring with fully endogenous growth

Davis

Hashimoto

2023

Southern Economic Journal

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This paper studies the implications of innovation offshoring and reshoring for long‐run productivity growth in a North–South framework that features a tension in the firm‐level innovation location decision between accessing technical knowledge in an asset‐wealthy country and sourcing low‐cost high‐skilled labor in an asset‐poor country. We show that, with trade costs and imperfect international knowledge diffusion, industry and innovation tend to concentrate geographically in proximity to the larger market of the asset‐wealthy North when trade costs are high. Investigating the effects of greater economic integration, we find that an improvement in knowledge diffusion increases the share of firms offshoring innovation to the asset‐poor South to take advantage of lower high‐skilled wages, potentially raising the rate of productivity growth. A decrease in trade costs, however, induces firms to reshore innovation to the asset‐wealthy North to take advantage of greater knowledge spillovers, with rising high‐skilled wages potentially lowering the productivity growth rate.

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Section: Discussionmentioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

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Innovation offshoring and reshoring with fully endogenous growth

Davis

Hashimoto

2023

Southern Economic Journal

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“…Interestingly, however, there is little research done about how this tension affects skilled labor. One notable exception is Cohle (2019) who develops a theoretical model to examine the broad issue of offshoring by examining the impact that the offshoring has on the emigration of the highly skilled. Interestingly, he finds that increased intellectual property protection in countries where the offshoring happens (e.g., the "South") increases the movement of the highly skilled to the countries where innovation happens (e.g., the "North").…”

Section: Legal Aspects Of Innovation: Patent and Intellectual Property Protection Patent Sharing And Liability Protectionmentioning

confidence: 99%

The Political Economy of Skilled Workers and Innovation

Bansak

Bender

Coon

2021

Handbook of Labor, Human Resources and Population Economics

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This chapter examines the link between skilled workers and innovation, and the political economy that affects this relationship. With a focus on the current state of research in this area, the chapter first summarizes the new evidence on the connections between skilled labor and innovation relating to knowledge development, entrepreneurship, teams, diversity, and brain drain. The second section discusses the possibility for reverse causalitynamely, that innovation can be a driver of the demand for high-skilled labor. In the following section, connections are made between public policies related to education systems, immigration, patent systems, intellectual property, public-private partnerships and amenities, and the possible effect on the level of skilled workers in various labor markets. The recent research is largely focused on the USA and OECD countries, and empirical evidence is provided using current data that corroborates the results of many of the reviewed studies. The final section lists resources for researchers aiming to move forward on the frontier of this line of research.

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“…Dinopoulos and Tsoulouhas (2015) model the offshoring of heterogenous tasks to the South while assuming Southern workers are less skilful than their Northern counterparts. Cohle (2019a), in explaining IPR protection's role in the brain drain effect, builds a model of firms offshoring innovation to the South and selling products to a global economy. I contribute to this strand of literature by exploring a negative consequence to using Southern researchers: product imitation.…”

Section: Introductionmentioning

confidence: 99%

Innovative R&D offshoring in North–South trade: Theory and evidence

Cohle

2020

World Economy

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for their helpful comments.906 | COHLE size. The connection between industry-level innovative R&D offshoring and Southern market size implies that Southern consumers often prefer foreign goods to domestic goods. Finally, I find evidence to support Proposition 3. Firm-level innovative R&D offshoring is not affected by import tariffs at an economically significant magnitude.This paper contributes to a number of different strands of literature. Using a new North-South model, I contribute to the global outsourcing and offshoring literature as a whole. Previous North-South models have explored the offshoring of tasks; however, few studies have specifically modelled the offshoring of innovation to the South. Acemoglu et al. (2015) develop a model with offshoring of intermediate inputs in a global economy. Fan (2017) builds a global model to show talent acquisition and market access motivate the offshoring of innovation; however, the author does not specifically model the challenges related to choosing Southern researchers over Northern researchers. Feenstra and Taylor (2011) show the relationship between the price of outsourced inputs and R&D affects the amount of outsourcing in equilibrium. Dinopoulos and Tsoulouhas ( 2015) model the offshoring of heterogenous tasks to the South while assuming Southern workers are less skilful than their Northern counterparts. Cohle (2019a), in explaining IPR protection's role in the brain drain effect, builds a model of firms offshoring innovation to the South and selling products to a global economy. I contribute to this strand of literature by exploring a negative consequence to using Southern researchers: product imitation. Following Lai et al. ( 2009), I include the notion of information leakage when using Southern researchers. Using employee mobility as the channel of imitation, the probability of imitation of a firm's product depends on how many Southern employees are working on a single product. Employee mobility then also acts as the channel of technology transfer. 3 This study also contributes to literature exploring the connection between multinational activities, high-tech industries and IPR protection. Javorcik ( 2004) finds weak IPR protection deters FDI in hightech industries. Bilir (2014) shows that countries with strong IPR protection see high R&D intensity industries increasing activities in host countries more than their low R&D counterparts. Canals and Sener (2014) identify 16 countries that underwent an IPR reform and examine the effect of the reform on offshoring to those countries. The authors find that high-tech industries in the U.S. increase their intraindustry and broad offshoring following IPR reform. Branstetter et al. (2006), Branstetter et al. (2011 also use the time of a major IPR reform in a country. The authors find that these high patent firms increase intrafirm royalty payments, affiliate employee compensation, affiliate assets and affiliate R&D spending for parent firms with high technology transfer rates when faced with a strengthening of IPR pr...

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Global Innovative R&D Offshoring with Heterogeneous Labor: The Role of IPR‐Protection on Technology Transfer and the Brain Drain Effect

Cited by 7 publications

References 57 publications

Innovation offshoring and reshoring with fully endogenous growth

Innovation offshoring and reshoring with fully endogenous growth

The Political Economy of Skilled Workers and Innovation

Innovative R&D offshoring in North–South trade: Theory and evidence

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