Offshoring and the global geography of innovation

In this article we investigate the long term impact of value chain offshoring on the global spatial distribution of innovation activities. The study relies on a sample of 14, 806 rare earth technology patents from 1976 to 2002 and the associated location of over 36, 000 inventors. We employ the interpoint distance between inventors to examine the changing spatial pattern of innovation in rare earth catalyst and magnet technologies, two major rare earth applications. We find that rare earth catalyst innovation activities expand globally, while rare earth magnet innovation activities become more clustered. We suggest that this heterogeneous response is conditioned by the role of within value chain knowledge in technology knowledge production functions and explore the policy and strategy implications of these findings.