{'fraction_non_alphanumeric': 0.031587057010785825, 'fraction_numerical': 0.0015408320493066256, 'mean_word_length': 5.527638190954774, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Talent, Geography, and Offshore R&D

I model and quantify the impact of a new dimension of global integration: offshore R&amp;D. In the model, firms match with heterogeneous researchers to develop new product blueprints, and then engage in offshore production and exporting. Cross-country differences in the distributions of firm efficiency and researcher talent generate a “talent-acquisition” motive for offshore R&amp;D, while trade costs and the frictions impeding separation of R&amp;D from production lead to a “market-access” motive. I find evidence for the premise of both motives using a new firm-country level data of R&amp;D and production. Counterfactuals using the calibrated model show that international differences in endowment distributions and the market access motive collectively account for most of the observed offshore R&amp;D. Increasing offshore production to emerging countries might or might not lead to a large increase in offshore R&amp;D, depending on the fundamental force driving the offshore production increase. In terms of welfare, incorporating offshore R&amp;D amplifies the gains from global integration by a factor of 1.2, and has important implications for the welfare gains from traditional forms of global integration, namely trade and offshore production.