ABSTRACT
When innovative activities relocate abroad, regional policy decision-makers should look at the potential to gain from them. Regional policy decision-makers should not limit the international expansion of domestic firms byencouraging reshoring. Once establishing the locational factors driving the link to the global value chain (GVC) through foreign direct investment, thought and policy must turn to embedding the multinational enterprise in the host economy. Knowledge flows can also occur back to the regional economy via the GVC from outward connections elsewhere. The categorisation of these connections can be either outsourcing or offshoring. Offshoring from the providing region’s perspective is the same as technology diffusion from the receiving region’s perspective. The offshoring ties in the home region with potential new knowledge sources of the host region. The regional innovation impacts associated with the activities of foreign firms are highly varied.
