Abstract This study tests the hypothesis that research and development (R&D) tax policy impacts the worldwide location of R&D expenditures by multinational companies based in the U.S. Although the overall percentage of R&D performed offshore did not change substantially between 1977 and 1989, large shifts by a few industries indicate that R&D can be quite mobile. Overall, R&D expenditure location appears to be sensitive to the R&D credit rules instituted in 1981, as well as the foreign tax credit limitation rules enacted in 1977, suspended in 1982, and reenacted in 1986.
Vines et al. (Sun,) studied this question.