ECONOMIC GEOGRAPHY LAB

The paper explains the association between research and development (R&D) offshoring and regional innovation performance. Drawing on selected literature from the intersection of economics, innovation studies, strategic management and economic geography, we explore how the rate of patent offshoring reflects regional performance as well as how an increased rate of offshoring affects regions. Our results show that less developed and less innovative regions have significantly higher rates of patent offshoring. In these regions, knowledge production (measured by patent activity) is almost exclusively under the control of foreign companies. Moreover, this 20-year pattern of patent offshoring clearly trends towards increasing the outflow of patents from less developed regions towards the headquarters of multinational companies. These trends testify to the swiftly increasing globalization of R&D and, more generally, the importance of international knowledge flows to the competitiveness of multinational companies in the current era. Second, advanced regions typified by a balanced mix of knowledge bases or by a strong analytical knowledge base tend to have a lower level of patent offshoring than less developed regions with a dominant synthetic knowledge base. Third, growing patent offshoring tends to be intertwined with higher patenting activity among domestic companies.