The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DThe following sections summarize some of the policy measures and instruments implementedor discussed in different countries and regions. The overview is based on thestudies in this report and various secondary sources. The policy measures are categorizedin the following four levels or domains (see Figure 1-2 below):A. Strengthen the national science and technology base, including public investmentsin science and technology, education and training, and infrastructure and regulationsto support innovative activities.B. Foster attractive conditions based on excellent R&D conditions, highly developedproduction structures and attractive leading markets.C. Stimulate internationalization and mobility by measures to attract foreign R&Dactivities, internationalize domestic companies, and attract foreign talent and increasemobility.D. Maximize economic benefits and minimize negative effects by stimulating downstreameconomic activities stemming from R&D efforts and supporting the transitionfor individuals and regions.In most countries, politicians emphasize the opportunities presented by globalizationand the fact that it is necessary to embrace the emerging global division of labor.Similarly, the main view of globalization in Sweden is that it is favorable for society asa whole in the long-run. Policies thus aim to promote and realize the benefits of internationalizationand offshoring.Policies to Reduce or Prevent OffshoringHowever, it is important to note that in some countries and regions, politicians aretaking or preparing policy measures to prevent or reduce offshoring, including R&Dactivities. For example, in Poland the government is reducing support for companiesrelocating R&D or production abroad (OECD 2005d). Protectionist policies havebeen debated in many countries but very few such measures have actually beenimplemented.In this regard, it is important to monitor the development in the U.S. During 2005,Congress and nearly all 50 states introduced bills with the objective to reduce offshoringof services. Measures included state contract bans and data transfer restrictions.Of the few bills that actually became law, most were weak and some even hadnegative consequences. However, lobbying efforts to pass stronger legislation torestrict international trade in services appear to be intensifying according to analysts(NFAP 2005, GAO 2005). Democrats are more eager to pursue restrictive policiesthan Republicans, and a similar pattern can be noted for free-trade issues in general.36