The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D4.6.1 ConclusionsSweden has one of the highest corporate R&D intensities in the world. Sweden’s businessR&D expenditure as percent of GDP increased from under 2 percent in 1991 to almost 3percent in 2003. A few large multinational companies account for almost all R&D performedin Sweden. These companies mainly exist in three sectors: the telecommunicationproducts sector, motor vehicles sector and the pharmaceuticals sector.For the purposes of this study, R&D is considered “international” under two circumstances:1) R&D performed by Swedish-owned multinational companies outside ofSweden and 2) R&D performed by foreign-owned companies in Sweden.R&D investments by Swedish multinational companies have increased both in Swedenand abroad during the 1990s and early 2000. At the same time there has been an increasein the share of R&D performed outside of Sweden. The 20 largest Swedishownedenterprise groups increased their R&D performed abroad from 20 percent to 40percent of their total R&D expenditure between 1995 and 2003. All data sources showan increase in R&D performed outside Sweden by Swedish multinational companies.The 20 largest Swedish enterprise groups employed almost all the R&D personnel inthe high-income OECD countries. 60 percent of these R&D personnel were employedin Sweden and over 30 percent in other high-income OECD countries. The non-OECDcountries still (in 2003) only employed about 3 percent of the total R&D personnel.Swedish multinational companies in Sweden are also more R&D intensive (measuredas R&D personnel per 1000 employees), compared to their affiliates in both high incomeOECD and non-OECD countries. These companies have internationalized productionto a higher degree than R&D activity.About 45 percent of corporate R&D in Sweden was performed by foreign-owned companiesin 2003. This share has increased from 20 percent in 1997. The increase is explainedby change in ownership; a few large, Swedish-owned, multinational companieswere bought by foreign companies during the late 1990s. There is no evidence thatforeign-owned companies acquiring Swedish multinational companies moved R&Dactivities from Sweden during the 1990s.4.6.2 Forward Looking PerspectiveR&D investments are becoming more international. Swedish multinational companiesperform a high degree of R&D abroad and Sweden has an exceptionally high degree offoreign-owned R&D. Because the overall R&D performance in Sweden is very dependenton a small number of large, multinational companies, Sweden is vulnerable tothe effects of globalization. If in the next 10 to 15 years Sweden cannot be an attractivehost for the R&D investments of these large multinational companies, Sweden’s overallR&D intensity will be dramatically reduced.123