China Drawing High-Tech Research From U.S.

You could have seen this one coming. Developing economies nearly always start with low-skill, high-labor cost assembly such as garment and commodity manufacturing. As more foreign companies invest in that economy, technology transfer takes place, and wages begin to rise. As wages rise, more people go to school, further hastening economic development. As economic development rises, volumes go up and more of the factories' output ends up being sold locally. As volume rises, more of those foreign companies, that initially invested to take advantage of low labor costs, start paying attention to the local market as a place to sell their goods. The more that happens, the more those companies eventually decide to move R&D efforts and development to that country. That's exactly what is happening in China today, as the NYT explains.

China Drawing High-Tech Research From U.S. - NYTimes.com