This chapter examines the impact of locational advantage and research and development (R&D) on international trade focusing on the case of Taiwan. The findings reveal that those sectors with a larger pool of R&D labor tend to attract more foreign affiliates' R&D activities. The result also suggests that foreign affiliates with higher R&D intensity tend to be more export oriented and localized in terms of their sourcing of materials and capital goods. The experiences of Taiwan seem to suggest that even without world-leading R&D centers of excellence, a less-advanced economy can still build up...

This chapter examines the impact of locational advantage and research and development (R&D) on international trade focusing on the case of Taiwan. The findings reveal that those sectors with a larger pool of R&D labor tend to attract more foreign affiliates' R&D activities. The result also suggests that foreign affiliates with higher R&D intensity tend to be more export oriented and localized in terms of their sourcing of materials and capital goods. The experiences of Taiwan seem to suggest that even without world-leading R&D centers of excellence, a less-advanced economy can still build up a competitive production base as a starting point to take part in global production networks.