The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DGDP itself has grown by an approximate average of 9 percent per year. And overall,China’s investments in knowledge have grown considerably in a relatively short time span,even though these resources remain unevenly distributed and strongly concentrated in a fewregions, subject areas and social classes (von Zedtwitz 2004).Figure 10-1 R&D expenditure in selected countries, 1999–2003 (share of GDP, current PPPdollars and increase).Share of GDP(percent)Current PPP Dollars(billion)1999 2003 1999 2003Total1999–2003Increase(percent)Average AnnualIncreaseUnited States 2.6 2.6 244 285 16.9% 4.0%EU-15 1.9 1.9 163 204 25.5% 5.9%Japan 3.0 3.2 95 114 20.4% 4.7%Germany 2.5 2.5 48 54 14.3% 3.4%China 1.0 1.3 36 85 134.4% 23.7%France 2.2 2.2 32 38 17.9% 4.2%United Kingdom 1.9 1.9 25 34 32.0% 7.2%Sweden3.7 4.0 8 10 34.6% 7.7%Source: OECD, Eurostat, Germany Ministry for Education and Research (BMBF).While China’s R&D resources are increasing rapidly compared to developed countries, itstill invests little in basic research, which plays a key role in determining a country’sinnovative capacity (OECD and Stipp 2005). Basic research in China currently accounts forless than 6 percent of total R&D expenditure, compared with nearly 20 percent in the U.S.and 13 percent in Japan (MST 2005). R&D also accounts for a considerably smaller shareof total value added in high-tech industries such as aerospace, pharmaceuticals, computersand office equipment, and electronics and communications equipment, when comparedwith other countries (OECD and Chinese Ministry of Science and Technology). Finally, theprivate sector plays a smaller role in China’s R&D, both in terms of expenditure and investment,than in, for example, the U.S., Japan, Germany or Sweden (Schaaper 2004 andEuropean Commission 2005a).In terms of human capital resources, China still lags behind the U.S. and E.U. But the gap isclosing rapidly in terms of quantity and quality (Freeman 2005, Sigurdson 2004). Witharound 15 million students in tertiary education, China has approximately as manyuniversity students as the U.S. and the E.U., respectively, but these countries haveconsiderably more students enrolled in advanced research programs (OECD 2005d, NBSC2006, NSF 2006 and European Commission 2005b). The U.S. and the E.U. each haveapproximately 40 percent more R&D scientists and engineers in their labor forces thanChina (NRCSTD 2005). And, fewer researchers work in the Chinese private sector (only232