Globalization of Software Innovation

Recent field research has provided some evidence of an increase in innovative activity in software development occurring in new locations outside of the United States. However, there has been little systematic analysis of the extent of this phenomenon, nor of the sectors involved. Using patent data from the United States, we provide evidence on the geographic distribution of inventive activity in software. We show that at present inventive activity in software remains concentrated in locations within the United States and among U.S. firms. We also provide evidence on recent trends in immigration and educational enrollments in the United States. We do find evidence of some declines in enrollments in U.S. computer science in recent years. However, of likely equal or greater importance in the short run may be the increasing incentives for skilled foreign workers to remain in their home countries or to depart from the United States immediately or some years after degree conferral. Nonetheless, there are powerful forces at work that are likely to keep the development of new software products and software innovation concentrated in the United States for some time to come.

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