Why Should Governments Subsidize Local R&D?
edward sevume, Member
There is an advantage of locally investing even when production is done in another country! By doing this, the country can attract companies willing to do R&D due the availability of trained manpower who are able to research into new areas of application or new products.
Production is outsourced as it would be cheaper as this lessens the impacts of research on the final costs of the product. By encouraging R&D, countries are able to continue competing in the upper region of high value jobs which are retained in the country
Besides, countries have different relative advantages in different fields which gives one country an edge in one field while having a disadvantage in another.