Foreign Direct Investment, R&D Mobility and the New Economic Geography: A Survey

This paper surveys several strands of the economics literature focusing on the international mobility of FDI in general, and the offshoring and outsourcing of R&D activities in particular. The paper outlines key findings, identifies common features and existing divergences and addresses the relevant research gaps emerging from the R&D offshoring and outsourcing literatures. The aim is to investigate the main drivers of R&D (re)location and the possible impact that the offshoring and outsourcing of R&D activities might have on the competitiveness and growth of both firms and countries. Factor price differences, trading costs, countries' size and openness, relative skill endowments, productivity differentials, completeness and enforceability of contracts, knowledge production and spillovers and IPR regimes all shape foreign sourcing and the specific R&D location patterns that emerge. The overall impact of offshoring and outsourcing in generaland of R&D in particularcannot be seen in isolation, as it is part of more complex globalisation dynamics.