R&D Offshoring and the Productivity Growth of European Regions

The recent increase in R&D oshoring have raised fears that knowledge and competitive- ness in advanced countries may be at risk of `hollowing out'. At the same time, economic research has stressed that this process is also likely to allow some reverse technology transfer and foster growth at home. This paper addresses this issue by investigating the extent to which R&D oshoring is associated with productivity dynamics of European (NUTS2) regions. In particular, we explore whether R&D investments abroad have a dierent impact from those in manufacturing and other business activities. We nd that oshoring regions have higher productivity growth, but this positive eect fades down with the number of investment projects carried out abroad. However, a large and positive correlation emerge between the extent of R&D oshoring and the home region produc- tivity growth, supporting the idea that carrying out R&D abroad strengthen European competitiveness.