Dewit, Gerda and Leahy, Dermot (2017) Thinking inside the box: Policies towards footloose R&D intensive firms. Working Paper. National University of Ireland Maynooth. (Unpublished)

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Abstract

We develop a model with a large R&D-intensive home firm that must decide whether to locate production domestically or to o¤shore it. Poli- cymakers have an interest in the firm's profits, the local external benefits generated by the firm's R&D and the employment provided by the do- mestic production facility. We demonstrate that attempts to boost the firm's R&D can encourage the firm to offshore its production. Hence, we highlight a possible conflict between two policy objectives: encouraging local R&D and discouraging the o¤shoring of production. In addition, if the government is concerned about the employment large domestic firms create, its R&D policy could potentially harm future productivity growth.

Item Type:	Monograph (Working Paper)
Additional Information:	Working Paper N285-17. JEL Classification: F12, F23, H25, O38.
Keywords:	Corporate tax rates; Multinational firms; O¤shoring; R&D subsidies;
Academic Unit:	Faculty of Social Sciences > Economics, Finance and Accounting
Item ID:	8946
Depositing User:	Ms Sandra Doherty
Date Deposited:	02 Nov 2017 16:52
Publisher:	National University of Ireland Maynooth
URI:
Use Licence:	This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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