No 2008/18 Regional innovation systems and the global location of innovation activities

Lessons from China

Abstract

The global location of R&D centres by MNCs is a rather new phenomenon; especially when it comes to establishing R&D centres in developing countries. The existing and rather limited literature on globalization of innovation provides four possible explanations of why multinationals locate R&D departments in developing countries: reduce research costs, access large markets, tap into a large pool of qualified human resources or benefit from knowledge spillovers available in the local/regional system of innovation. The empirical research presented in this paper reveals that none of these arguments can fully explain the increasing location of R&D departments in China. The in-depth study of MNCs R&D centres in Beijing and Shanghai, China, reveals that specific aspects of market, technological and political uncertainty provide more adequate to explain the increasing presence of R&D labs from MNCs in developing countries such as China and thus calls for an integration in the regional innovation systems framework.