U.S. R&D internationalization in less-developed countries: Determinants and insights from Brazil, China, and India

Resumo

The growing U.S. R&D internationalization has historically been concentrated in developed countries. However, in the past few decades, the internationalization has moved toward less-developed countries (LDCs), particularly Brazil, China, and India. What location factors are making some LDCs more “inviting” for U.S. R&D offshore? To answer this first question, we constructed a panel data using secondary data from the U.S. Bureau of Economic Analysis regarding the R&D investment made by the majority-owned foreign affiliates of U.S. parent companies in 71 countries. We then applied a Heckman two-step correction for selection bias test. The results highlight some important differences between developed countries’ and LDCs’ attractiveness. Based on these initial results, we conducted a detailed analysis of the determinants of U.S. R&D investments in Brazil, China, and India, which revealed that China’s determinants mostly match those found in more developed countries.