Companies are attracted to places with strong IPR

Finally, our analysis is closely related to a growing body of research investigating the rela-tionship between offshoring and intellectual property rights (IPR) reform. Indeed, stronger IPR regulation has been observed to be a key driver of both production offshoring (Branstetter et al.,2006, 2011; Canals & Şener, 2014) and innovation offshoring (Ito & Wakasugi, 2007; Moncada-Paterno-Castello et al., 2011). In part, this literature highlights the trade-off between access to low-cost high-skilled labor and the risk of product imitation in the offshoring decision for R&D activity. Interestingly, Bilir (2014) shows that strong IPR regulation attracts offshoring in indus-tries with relatively long product life cycles. Industries with short product life cycles are unaf-fected by IPR reform, however, because products tend to become obsolete before they are imitated. Cohle (2019a, 2019b) introduces employee mobility as a channel for imitation, study-ing the risk associated with researchers leaving firms to start businesses with competing prod-ucts, and shows that stronger IPR increases innovation offshoring, global welfare, and innovation activity. A key result is that high-tech firms are more likely to increase R&D offshoring in response to IPR reform (Cohle, 2021). In addition, stronger IPR protection may generate a brain effect by reducing employment opportunities for high-skilled researchers (Cohle, 2019a).