June 19, 2018

Observing the growing trend of outsourcing in Asia’s biomedical research and development (R&D) market, International Enterprise Singapore launched a new Singapore Biomedical R&D Consortium on 23 June 2011 to help Singapore-based companies tap into this potential. Multinational corporations’ (MNCs’) decisions of where to locate R&D are influenced by push and pull factors. Efficient supervision and economies of scale pull R&D towards the headquarters whereas local product customisation, opportunity to take advantage of R&D resources, and economic incentives by the host country push R&D towards subsidiaries. A/P Albert Hu (Department of Economics), in ‘Multinational Corporations, Patenting, and Knowledge Flow: the case of Singapore’ (published in Economic Development and Cultural Change, 2004), argues that decentralisation of R&D by MNCs facilitates knowledge flows to local inventors and can have significant welfare implications in both the parent and host country.

Hu uses patent citations and corporate information from various sources to uncover whether the research conducted in Singapore R&D subsidiaries is qualitatively different from that conducted in MNCs’ headquarters. He further investigates the Singapore case to study knowledge flow to local inventors. Hu found that Singapore bucks the trend, with knowledge flow from MNCs to local Singaporean inventors. Furthermore, MNCs’ R&D in Singapore acts as a window through which local Singaporean inventors tap into a much larger knowledge pool created by MNCs’ R&D efforts outside Singapore. Hu emphasises that Singapore is a unique case since despite its small size and MNCs play an overwhelming role in its national economy.

Learn more about the study here.