Governance

FSI's research on the origins, character and consequences of government institutions spans continents and academic disciplines. The institute’s senior fellows and their colleagues across Stanford examine the principles of public administration and implementation. Their work focuses on how maternal health care is delivered in rural China, how public action can create wealth and eliminate poverty, and why U.S. immigration reform keeps stalling. 

FSI’s work includes comparative studies of how institutions help resolve policy and societal issues. Scholars aim to clearly define and make sense of the rule of law, examining how it is invoked and applied around the world. 

FSI researchers also investigate government services – trying to understand and measure how they work, whom they serve and how good they are. They assess energy services aimed at helping the poorest people around the world and explore public opinion on torture policies. The Children in Crisis project addresses how child health interventions interact with political reform. Specific research on governance, organizations and security capitalizes on FSI's longstanding interests and looks at how governance and organizational issues affect a nation’s ability to address security and international cooperation.

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In a world of rivalrous states whose peoples are connected ever more directly by globalization, Thomas Nagel has forcefully reasserted a classical thesis of early modern political thought: outside the state, Nagel argues, there is no justice. 1From this it follows, given the absence of a global state, that there can be no global justice.

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Philosophy & Public Affairs
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Joshua Cohen
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This book explains the roots, politics, and legacy of Korean ethnic nationalism, which is based on the sense of a shared bloodline and ancestry. Belief in a racially distinct and ethnically homogeneous nation is widely shared on both sides of the Korean peninsula, although some scholars believe it is a myth with little historical basis. Finding both positions problematic and treating identity formation as a social and historical construct that has crucial behavioral consequences, this book examines how such a blood-based notion has become a dominant source of Korean identity, overriding other forms of identity in the modern era. It also looks at how the politics of national identity have played out in various contexts in Korea: semicolonialism, civil war, authoritarian politics, democratization, territorial division, and globalization

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Stanford University Press: Studies of the Walter H. Shorenstein Asia-Pacific Research Center
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Gi-Wook Shin
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James D. Fearon
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Is civil war likely to break out in Iraq? It already has, according to CISAC's James D. Fearon, a political science professor who studies recent civil wars. Fearon is among four experts Time asked to comment on the current violence in Iraq.

Noah Feldman

In looking at the brewing civil war between the two groups in Iraq, it's easy to assume that the cause is ancient hatred. Nothing could be further from the truth. For the overwhelming majority of Iraqi history, Sunnis and Shi'ites have lived peacefully side by side, and numerous Iraqis are the children of mixed marriages. Instead we are witnessing in Iraq what occurs when government collapses and there is no state around capable of guaranteeing personal security.

What do you do when your family is in peril and you cannot turn to the government for protection? The answer is that you will take security wherever you can get it. You need to find some group that will be capable of keeping you safe, and that group had better be one that can count on your loyalty just as you can count on its protection. If you are a member of my ethnic, racial or religious group, then we share at least some basic bond, which may be enough to ensure our loyalty to one another. I need some assurance that you will have my back, and identity is better than nothing.

Sunnis and Shi'ites may find themselves joining militias or supporting denomination-based political parties even if they are not particularly pious and would much prefer not to. Something similar happened in the former Yugoslavia when its government collapsed with the fall of communism and nothing replaced it. Ethnic activists - call them identity entrepreneurs - will always form the core of the new militia. These radicals will emphasize symbols, like al-Askari mosque that was blown up last week in Iraq, and hope that followers will react by strengthening their commitments to the group itself.

Is it possible to break the cycle of violence that gets under way when identity groups move toward civil war? One answer is for an outside force to impose a solution. The killing did not stop in Bosnia or Kosovo until Western powers showed they were willing to bomb. But this approach is not viable in Iraq, where U.S. bombs came first and civil strife has followed. Instead the only way out of the violence is for Iraqis to realize that they have more to gain by negotiating a settlement between their groups than they do by allowing a full-blown brothers' war to break out.

Vali Nasr Author The Shia Revival (forthcoming)

What lies at the heart of the sectarian violence in Iraq is not so much religious dispute as it is a very secular competition for power and prominence in the new Iraq. Iraq is not all that different from Northern Ireland or Bosnia, where religion paraded as ethnicity and became a vehicle for communal rivalries. In the vacuum of power left by the fall of Saddam Hussein, the game of numbers has favored Shi'as, who are 60% of the population. It is for this reason that they wholeheartedly embraced democracy. Disgruntled Sunnis, on the other hand, vested their fortunes in boycott and violence, hoping that as spoilers, they would gain leverage in negotiating over the future.

Few in the West recognized the depth of either the Shi'a anger at the Saddam regime or the Sunni rage born of loss of power. There is a strong sense of Iraqi identity among both Shi'as and Sunnis, but as strong allegiance to sect and ethnicity in every election has shown, a shared notion of what Iraqi identity means and how each community sees the future of Iraq is fast disappearing. As happened in Bosnia, in Iraq mixed marriages and shared memory of coexistence will not be enough to stop internecine violence.

Shi'as embraced the political process that the U.S. set in place in 2003 in the hope that it would guarantee their security and serve their interests. There is indication now that many Shi'as are having second thoughts. Already overstretched in facing the Sunni insurgency, the U.S. can hardly afford losing the Shi'a as well. If tensions escalate to a full-blown civil war, Iran, Saudi Arabia, Jordan and Syria may all join the war to protect their co-sectarians and to scramble for pieces of a failed Iraq.

Pulling Iraq back from the brink will be difficult. Building a strong central government and an effective security force will help. The challenge is to get them up and running before events on the ground pass a point of no return.

James D. Fearon

By any reasonable definition, there has been a civil war in progress in Iraq at least since the Coalition Provisional Authority formally handed over authority to the Iraqis in 2004. A civil war is a violent conflict within a country fought between organized groups seeking to compel a major change in government policies or to take control of the center or a region. The insurgents in Iraq target the U.S. military, but they are also fighting against the Shi'ite-dominated Iraqi government and killing large numbers of Iraqis. There is little reason to think that if the U.S. suddenly withdrew, the insurgents would not continue to fight to control or shape the government.

When we hear talk about incipient civil war in Iraq, the fear is of an escalation of the current insurgency into a much bigger war. Analysts may have in mind something like the U.S. Civil War, with Sunni and Shi'ite armies fighting each other across well-defined fronts. Or they may imagine a sudden spasm of massive communal conflict and ethnic cleansing along the lines of Bosnia or Rwanda. Neither scenario is all that likely, although bouts of violent ethnic cleansing are certainly possible in a few parts of the country, especially Kirkuk.

My guess would be that as the insurgency continues to create insecurity, sectarian militias will continue to grow in power and influence. They will increasingly supply local security, but in the form of protection rackets that extort as they protect. They will clash with each other over territory and control of revenue sources. Since the Sunnis remain highly disorganized, some of these local fights may initially be intra-Shi'ite. But in the absence of effective political incorporation and protection from national police and army units - which are heavily infiltrated by Shi'ite militias - Sunnis will gradually form a patchwork of militias. Neighborhood-by-neighborhood conflict and violence will increase. Think Lebanon.

Juan Cole

If you look at the ethnic conflicts and street demonstrations during Iraq's modern history, it is remarkable how few have involved Shi'ites fighting Sunnis. During the colonial era, Iraqis were united by their opposition to the British occupation. Sunni and Shi'ite tribes cooperated in rebelling against British rule, and were only put down with a bombing campaign in 1920 that killed 9,000. In 1941 mobs targeted Iraq's small Jewish population; Jews had been a valued part of the Iraqi national fabric but were accused, unfairly, of being pro-colonial. After World War II, much of the violence in Iraq was fueled by issues of class. In 1948 slum dwellers and railway and oil workers revolted against a government treaty with Britain. In 1959, Arab nationalists assassinated Communist Party members, while mobs in Mosul and Kirkuk attacked and killed rich businessmen and landowners.

Iraqi Muslims have not all along been severely divided by religious sect. There have been many instances of strong cooperation between Sunnis and Shi'ites. Other social divides have led to mob violence in the past, but Iraqis have overcome them to re-establish national unity. It remains to be seen whether they can accomplish this feat again.

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In the past two years, Professor Xueguang Zhou conducted ethnographic research through participatory observations in villages and the township government and in-depth interviews/daily interactions with cadres and villagers. His presentation focuses on the episode of implementing state-sponsored Reforestation Project in the villages and related events to illustrate interactions between villages and the township government, corporatist bases in resource mobilization, and shifting group boundaries and identities.

His research shows that, in rural areas of northern China today, corporatist institutions are still a major organizing basis for resource redistribution and mobilization. In recent years, however, major changes have been underway that put the corporatist institutions under severe strain. As a result, these institutions are becoming fragile, truncated, and marginalized, with great variations among villages and townships. These observations lead him to argue that rural China today is at the crossroads of profound institutional changes, with significant implications for the role of local governments, patterns of social inequality, and collective action.

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Xueguang Zhou Professor of Sociology Speaker Duke University
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The Chen administration has attempted to deal with the growing economic and technological links across the Taiwan Straits through confrontation with and coercion against Taiwanese businesses with investments in the People's Republic of China. These attempts have done little to stop the flow of capital and knowledge from Taiwan to China, but this failure is not necessarily bad for Taiwan even as it is a boon for China. This talk will address in which sectors and in what ways the flow of Taiwanese business activities to China have been beneficial or detrimental to each economy. Looking forward, the talk will also attempt to answer how further integration will benefit each side.

Douglas Fuller has spent over ten years researching technological development in East Asia. Most recently, he completed a doctorate at MIT in political economy. The topic of his thesis was technological development in China's IT industry. For this and previous research, he has interviewed IT firms in Malaysia, Japan, Korea, Taiwan, the People's Republic of China and the US. He has published articles in Industry and Innovation and other peer-reviewed journals.

A wine and cheese reception will follow the seminar.

This is the inaugural seminar of the CDDRL Taiwan Democracy Program and it is co-sponsored by the Walter H. Shorenstein Asia Pacific Research Center.

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Doug Fuller SPRIE Postdoctoral Fellow Speaker
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One of the fundamental challenges facing the United States Department of Homeland Security is the determination of what is critical in critical infrastructure systems such as water, Internet, power, energy, and transportation. Current practice is focused on single-point security audits of things like power plants, airport terminals, and refineries. But this approach does not identify the most vital components of any infrastructure which leads to an inadequate strategy and wasted funding. We show that single-point audits lead to the wrong conclusions and do not provide sufficient national security relative to the effort and money being spent. Instead, we propose an approach similar to social network analysis whereby a critical infrastructure is modeled as a network and then analyzed to identify the critical nodes and links. We present models and software to analyze such networks to obtain optimal resource allocation such that network risk is minimized. In the parlance of network science, our approach extends the theory of scale free networks to incorporate damage estimates for nodes and links. By exploiting the structure inherent in a network, we are able to allocate resources in the most optimal manner, which leads to a fundamentally different strategy than currently practiced.

Rudolph Darken is the Director of the Institute for Modeling, and Simulation (MOVES) and an Associate Professor of Computer Science at the Naval Postgraduate School in Monterey, California. He is the Chair of the MOVES Curriculum Committee and is also the Associate Director for Research for the Center for Homeland Defense and Security. His personal research has been primarily focused on human factors and training using virtual environments and computer gaming media with emphasis on navigation and wayfinding in large-scale virtual worlds. He is a Senior Editor of PRESENCE Journal, the MIT Press journal of teleoperators and virtual environments. He received his B.S. in Computer Science Engineering from the University of Illinois at Chicago in 1990 and his M.S. and D.Sc. degrees in Computer Science from The George Washington University in 1993 and 1995, respectively.

Ted Lewis is Professor of Computer Science and Academic Associate of the Homeland Security curriculum at the Naval Postgraduate School. He served as Sr. Vice President of Eastman Kodak Company, President and CEO of DaimlerChrysler Research, North America, Editor-in-Chief (twice) of IEEE Computer magazine and IEEE Software magazine, and has authored more than 100 papers and 30 books over the past 35 years on subjects ranging from software engineering, parallel processing, to hi-tech business. Currently, he teaches the Critical Infrastructure Protection course at NPS and does research in the application of network science to strategy and policy questions for the US Department of Homeland Security. Dr. Lewis' textbook, "Critical Infrastructure Protection in Homeland Security: Defending a Networked Nation" will be published by John Wiley & Sons, in April 2006.

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Rudolph Darken Director, Institute for Modeling and Simulation; Associate Professor of Computer Science Speaker Naval Postgraduate School
Ted Lewis Professor of Computer Science; Academic Associate of the Homeland Security Curriculum Speaker Naval Postgraduate School
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Rosamond L. Naylor
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This past autumn the Freeman Spogli Institute for International Studies (FSI) in conjunction with the Woods Institute for the Environment launched a program on Food Security and the Environment (FSE) to address the deficit in academia and, on a larger scale, the global dialogue surrounding the critical issues of food security, poverty, and environmental degradation.

"Hunger is the silent killer and moral outrage of our time; however, there are few university programs in the United States designed to study and solve the problem of global food insecurity," states program director Rosamond L. Naylor. "FSE's dual affiliation with FSI and the new Stanford Institute for the Environment position it well to make significant steps in this area."

Through a focused research portfolio and an interdisciplinary team of scholars led by Naylor and CESP (Center for Environmental Science and Policy) co-director Walter P. Falcon, FSE aims to design new approaches to solve these persistent and under-prioritized problems, expand higher education on food security and the environment at Stanford, and provide direct policy outreach.

Productive food systems and their environmental consequences are at the core of the program. While many of these systems are global in character, but they are influenced significantly by differing food objectives, income level, and instruments among nations. The program thus seeks to understand the food security issues that are of paramount interest to poor countries, the food diversification challenges that are a focus of middle-income nations, and the food safety and subsidy concerns prominent in richer nations.

Chronic hunger in a time of prosperity

Although the world's supply of basic foods has doubled over the past century, roughly 850 million people (12 percent of the world's population) suffer from chronic hunger. Food insecurity deaths during the past 20 years outnumber war deaths by a factor of at least 5 to 1. Food insecurity is particularly widespread in agricultural regions where resource scarcity and environmental degradation constrain productivity and income growth.

FSE is currently assessing the impacts of climate variability on food security in Asian rice economies. This ongoing project combines the expertise of atmospheric scientists, agricultural economists, and policy analysts to understand and mitigate the adverse effects of El Niño-related climate variability on rice production and food security under current and future global warming conditions. As a consequence of Falcon and Naylor's long-standing roles as policy advisors in Indonesia, models developed through this project have already been embedded into analytical units within Indonesia's Ministry of Agriculture, the Planning Ministry, and the Ministry of Finance.

"With such forecasts in hand, the relevant government agencies are much better equipped to mitigate the negative consequences of El Niño events on incomes and food security in the Indonesian countryside," explain Falcon and Naylor.

Food diversification and intensification

With rapid income growth, urbanization, and population growth in developing economies, priorities shift from food security to the diversification of agricultural production and consumption. "Meat production is projected to double by 2020" states Harold A. Mooney, CESP senior fellow and an author of the Millennium Ecosystem Assessment. "In China alone, meat consumption has more than doubled in the past generation." As a result, land once used to provide grains for humans now provides feed for hogs and poultry.

These trends will have major consequences on the global environment-affecting the quality of the atmosphere, water, and soil due to nutrient overloads; impacting marine fisheries both locally and globally through fish meal use; and threatening human health, as, for example, through excessive use of antibiotics.

An FSE project is looking at these trends as it relates to intensive livestock production and assessing the environmental impacts to gain a better understanding of the true costs of this resource-intensive system. A product of this work recently appeared as a Policy Forum piece in the December 9, 2005, issue of Science titled "Losing the Links Between Livestock and Land".

Numerous factors have contributed to the global growth of livestock systems, lead author Naylor notes, including declining feed-grain prices, relatively inexpensive transportation costs, and trade liberalization. "But many of the true costs remain largely unaccounted for," she says. Those costs include destruction of forests and grasslands to provide farmland for corn, soybeans, and other feed crops destined not directly for humans but for livestock; utilization of large quantities of freshwater; and nitrogen losses from croplands and animal manure.

Naylor and her research team are seeking better ways to track all costs of livestock production, especially the hidden ones related to ecosystem degradation and destruction. "What is needed is a re-coupling of crop and livestock systems," Naylor says. "If not physically, then through pricing and other policy mechanisms that reflect social costs of resource use and ecological abuse."

Such policies "should not significantly compromise the improving diets of developing countries, nor should they prohibit trade," Naylor adds. Instead, they should "focus on regulatory and incentive-based tools to encourage livestock and feed producers to internalize pollution costs, minimize nutrient run-off, and pay the true price of water."

Looking ahead

The future of the program on Food Security and the Environment looks bright, busy, and expansive. While a varied portfolio of projects is in line for the upcoming year, a strong emphasis remains in the area of food security. Building on existing research at Stanford, researchers are identifying avenues for enhancing orphan crop production in the world's least developed countries-crops with little international trade and investment, but with high local value in terms of food and nutrition security. The work seeks to identify advanced genetic and genomic strategies, along with natural resource management strategies, to improve orphan crop yields and stability, enhance crop diversity, and increase rural incomes through orphan crop production.

Another priority area of research centers on the development of biofuels. Biofuels are becoming increasingly a part of the policy set for world food and agriculture. As countries such as the United States seek energy self-reliance and look for alternatives to food and feed subsidies under WTO (World Trade Organization) rules, the conversion of corn, sugar, and soybeans to ethanol and other energy sources becomes more attractive. New extraction methods are making the technology more efficient, and crude oil prices at $60 per barrel are fundamentally changing the economics of biomass energy conversion. A large switch by key export food and feed suppliers, such as the United States and Brazil, to biofuels could fundamentally alter export prices, and hence the world food and feed situation. A team of FSE researchers will assess the true costs of these conversions.

The FSE program recently received a grant through the Presidential Fund for Innovation in International Studies to initiate new interdisciplinary research activities. One such project links ongoing research at Stanford on the environmental and resource costs of industrial livestock production and trade to assess the extent and rate of Brazil's rainforest destruction for soybean production. "Tens of millions of hectares of native grassland and rainforest are currently being cleared for soybean production to supply the global industrial livestock sector," says Naylor. A significant share of Brazil's soybeans is being shipped to China, where rapid income growth is fueling tremendous increases in meat consumption."

A team of remote-sensing experts, ecologists, agronomists, and economists will be looking at the ecological effects on the landscape through biogeochemical changes and biodiversity loss, the impacts of land clearing on the regional hydrologic cycle and climate change, the economic patterns of trade, and the role of policies to achieve an appropriate balance between agricultural commodity trade, production practices, and conservation in Brazil's rainforest states.

"I'm extremely pleased to see the rapid growth of FSE and am encouraged by the recent support provided through the Presidential Fund for Innovation in International Studies," states Naylor. "It enables the program to engage faculty members from economics, political science, biology, civil and environmental engineering, earth sciences, and medicine-as well as graduate students throughout the university-in a set of collaborative research activities that could significantly improve human well-being and the quality of the environment."

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Since the controversy over cartoons of the Prophet Muhammad erupted, Europe's leaders have shown remarkable--and uncharacteristic--courage under fire. Refusing to apologize for the alleged slight to religious Muslims, a chorus of Continental voices has instead risen to the cartoons' defense, citing freedom of expression as the very essence of liberty, democracy and the European Way.

Unfortunately, free speech is about the weakest card in Europe's hand these days. An Austrian court's conviction and sentencing of the British historian David Irving to three years imprisonment for Holocaust denial is merely the most recent footnote to European hypocrisy on freedom of expression over the past decade.

The European Convention on Human Rights, which legally binds all EU states and supersedes domestic law, explicitly guarantees "the right to freedom of expression" including "the freedom to hold opinions and to receive and impart information and ideas without interference by public authority."

This provision is in keeping not only with the U.S. Bill of Rights, but with the central instruments of international human rights law to which Europe and America claim adherence. Yet Europe's interpretation of free expression has diverged markedly from America's broad deference to First Amendment freedoms of speech, assembly and religion.

American courts have upheld the publication of false, even racist materials, the right of neo-Nazis to rally in Jewish neighborhoods, and the objections of some citizens to the Pledge of Allegiance and to school dress codes on religious grounds.

European governments, on the other hand, have consistently trampled analogous rights, outlawing publication of hate speech, trade in Nazi paraphernalia, and the wearing of distinctive religious clothing, to name but a few recent examples.

According to the Austrian court that convicted him on Monday, David Irving's offense was to have "denied, grossly played down, approved, or tried to excuse" the Holocaust in print or other media, in violation of a 1992 statute. Although he has not been tried at home in Britain, Irving was convicted and fined in Germany in 1995 for "inciting race hatred."

At best, Irving is a monumentally terrible historian, who, only after publishing dozens of books on World War II, read the notes of the Holocaust mastermind Adolf Eichmann and came around to admitting that the Nazi genocide might actually have occurred. At worst, he is an artless but unrepentant bigot, on the model of America's David Duke or Austria's own Jörg Haider, but without any independent political power.

Why, then, is Irving's Holocaust denial, like other minority and extremist views in European society, of such great concern to lawmakers? If European governments want to guard against the repetition of genocide, they should actively educate their citizens in tolerance and respect for different cultures and beliefs, not gag those who express conflicting ideas.

Europe's suppression of free speech is guaranteed to spawn and incubate precisely the kind of bigotry and sectarian violence it is intended to prevent. Hounded for the unthinkable crime of publishing false history, David Irving appears almost heroic as he stands up to censorship, fines and imprisonment, making him a kind of martyr for neo-fascist groups.

Likewise, suppression of young Muslims' rights to dress or worship as their religion requires lends government sanction to already widespread anti- Muslim attitudes. This official xenophobia in turn breeds simmering resentment that has already exploded into mass violence and been manipulated by radical Islamists to recruit willing terrorist agents from within European society.

While European leaders should be praised for their belated conversion to the cause of free speech, outraged Muslims around the world are right to allege a double standard. Until Europe consistently respects its own guarantees of free expression, and actively promotes tolerance instead of clumsily stifling dissent, its brave rhetoric will ring disappointingly false.

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Diplomatic maneuvering in response to the North Korean nuclear crisis has presented the United States, South Korea, and China each with strategic dilemmas that go beyond the issue of how to address the prospect of a nuclear North Korea. In response to the immediate question of how to denuclearize the Korean peninsula, a complicated triangular relationship between China, South Korea, and the United States has emerged that reflects longer-term strategic anxieties about the future of a revamped security order in Northeast Asia following the resolution of the North Korean nuclear crisis.

Increasingly, these three countries perceive that how the crisis is resolved, and the policies that each member of the triangle is likely to pursue as steps toward resolving the crisis, may influence their relative positions and regional influence after the immediate issue of North Korea's denuclearization--or North Korea's future--has been resolved. Strategic anxieties about the future of Northeast Asia may be emerging as an obstacle that is as serious as apparent North Korean intransigence in explaining the lack of progress in diplomatic efforts thus far. Based on interviews with foreign policy analysts representing each actor in the triangle, the presentation will attempt to explain how each country in the triangle perceives its respective foreign policy choices and how those choices might influence the interests of its neighbors in Northeast Asia.

Scott Snyder is a Pantech Fellow at Stanford University's Shorenstein Asia-Pacific Research Center during 2005-2006 and is concurrently a senior associate in the International Relations program of The Asia Foundation and Pacific Forum CSIS. He spent four years in Seoul as Korea Representative of The Asia Foundation during 2000-2004. Previously, he has served as a program officer in the Research and Studies Program of the U.S. Institute of Peace, and as acting director of The Asia Society's Contemporary Affairs Program. Past publications include Paved With Good Intentions: The NGO Experience in North Korea (2003), (co-editor with L. Gordon Flake) and Negotiating on the Edge: North Korean Negotiating Behavior (1999). Mr. Snyder received his B.A. from Rice University

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Stanford University
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Scott Snyder is a senior associate in the International Relations program of The Asia Foundation and Pacific Forum CSIS, and is based in Washington, DC. He spent four years in Seoul as Korea Representative of The Asia Foundation between 2000 and 2004. Previously, he served as a program officer in the Research and Studies Program of the U.S. Institute of Peace, and as acting director of the Asia Society's Contemporary Affairs Program. He has recently edited, with L. Gordon Flake, a study titled Paved With Good Intentions: The NGO Experience in North Korea (2003), and is author of Negotiating on the Edge: North Korean Negotiating Behavior (1999).

Snyder received his BA from Rice University and an MA from the Regional Studies East Asia Program at Harvard University. He was the recipient of an Abe Fellowship, administered by the Social Sciences Research Council, in 1998-99, and was a Thomas G. Watson Fellow at Yonsei University in South Korea in 1987-88.

Scott Snyder Speaker
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George Krompacky
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The following is a short summary of the November 29, 2005 presentation by SPRIE Fellow Dr. Xiaohong (Iris) Quan on her study of the research and development done by multinational corporations in China.

Multinational corporations (MNCs) have increasingly located research and development (R&D) in developing countries such as China and India since the 1990s. On the one hand, governments in developing countries are eager to attract R&D to their local economies; on the other hand, developed countries are concerned about losing their competitive advantage due to R&D offshoring. At the same time, intellectual property protection is a growing concern.

What are the MNC R&D labs actually doing in China? Quan noted that her 2004 survey of MNC R&D labs in information technology industries in Beijing found that these MNC R&D labs are not just providing technical support, product localization, or product development for the local market; rather, they are developing products for the global market. Her study documents an emerging spatial division of labor in R&D based on the increasing specialization of R&D activities.

Ensuring returns appropriation

Appropriating returns is essential to continuous R&D investment. However, returns appropriation is not necessarily realized through formal IP protection institutions such as the patent system. As the growing trend of globalization of R&D has evolved to this new stage characterized by MNCs locating R&D labs in developing countries, it provides a good test bed to further explore more theoretical mechanisms of IP protection. Considering the weak intellectual property rights regimes these developing countries typically have, it is crucial for MNCs to find an effective way to protect their valuable technologies thus facilitating returns appropriation from their R&D activities in host developing regions. It is in fact the effective means of IP protection that can greatly assist MNCs' location of R&D offshore, in addition to other well-known incentives such as low cost R&D labor and market attraction.

R&D specialization essential

Using evidence from MNC R&D labs in Beijing and Shanghai, Quan's study proposes that R&D is further specialized within MNCs' global R&D network. Furthermore, IP protection and returns appropriation can be realized through such R&D specialization. The key proposition is formulated as below: 'Hierarchical modular R&D structure can be an effective way for MNC R&D labs to protect their intellectual property and thus facilitate returns appropriation in weak IPR regime developing countries'. This 'hierarchy' includes 'core R&D' and 'peripheral R&D', based on two dimensions--technology value-added, desire and ease of IP protection. While 'core R&D' is mostly done in developed countries, 'peripheral R&D' is conducted in developing countries. Dr. Quan's study suggests that this hierarchical modular R&D structure facilitates the global configuration of MNC R&D labs.

Slides from this presentation can be found at the event link below.

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