The Global Fragmentation of R&D Activities: The Home Region Perspective

R&D offshoring has increasingly involved emerging countries as host locations and promoted a greater fragmentation of R&D activities across borders. As a result, a subtle international division of labor in knowledge production has yielded a fine-slicing of R&D activities with the highest valueadded activities located in the most advanced countries and the lowest value-added activities in emerging countries. However, no study, to our knowledge, has investigated whether finely sliced foreign R&D activities complement each other in terms of greater knowledge production at home. Drawing on a rich dataset, we estimate a regional knowledge production function and apply a direct complementarity test. Our results suggest that the global fragmentation of R&D activities produces synergic effects on the knowledge production of the home investing OECD regions when R&D activities are optimally rather than randomly located.