The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DFigure 12-1 R&D flows in 2001 between the U.S., the EU-15 and Japan, and total businesssector expenditures (inside the circles) in each country/region (in billion dollars PPP).EU-15119 billiondollars16.71.9811.30.62U.S.198 billiondollars1.031.54Japan76 billiondollarsSource: OECD 2005....but the share of developing countries is increasing.More recently, developing countries are attracting corporate R&D. The increase indeveloping Asia (most notably China and India) is the most dramatic. Moreover, multinationalcompanies are planning to increase R&D investments in the region, while notincreasing, or even decreasing, at home in the near future. Despite recent increases, thelevels of corporate R&D activities in developing countries are still low.If not interrupted by national events, political or otherwise, it is likely that foreigncompanies will continue to increase R&D activities in China (Schwaag Serger). Also inIndia, the potential for increased foreign R&D investments is high; it is possible forIndia to emerge as one of the international centers of R&D and high-technology tradeand investments within the next 10–20 years (Mitra).In the case of Sweden, corporate R&D activities in India and China have been growingrapidly during the last five years, but are still in an early phase of development. In general,R&D investments in non-OECD countries increased faster than in OECD countries. Forexample, several Swedish companies in software, communications, engineering and pharmaceuticalshave increased R&D, or are planning to do so, in India (Löf, Mitra).Foreign R&D is driven by acquisitions and political requirements,...Mergers and acquisitions are important drivers for the internationalization of corporateR&D. Foreign-controlled R&D is often the result of acquisitions. However, the motivesbehind mergers and takeovers might not be only to acquire strategic R&D capa-309