The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DFigure 2-2 Industry share of total R&D expenditures (percent) and industry R&D expenditureas a percentage of GDP in selected OECD and non-OECD countries, 2003.4Industry R&D related to GDP (%)3,532,521,510,5CanadaChinese TaipeiSingaporeFranceU.K.ChinaIsraelFinlandU.S. GermanyTotal OECDJapanSw edenKorea0Source: MSTI 2005.50 55 60 65 70 75 80Industry share of total R&D (%)The 320 top R&D spending companies in the world invested 331 billion dollars in2004, according to an analysis of companies investing more than 80 million dollarson R&D annually. About half of the total R&D spending (but only 35 percent oftotal sales) is accounted for by three large industrial sectors: pharmaceuticals,electronics and electrical equipment, and motor vehicles and parts.R&D is concentrated in a few large companies. One third of the total investmentwas made by the top 20 R&D-spending companies, such as IBM, MatsushitaElectric, Siemens, Ford Motor, DaimlerChrysler, Nokia, Sanofi-Aventis, Pfizer,Intel and Microsoft.The average R&D intensity (R&D as a percentage of sales) among all thecompanies was just over 4 percent. The most R&D intensive sector wasbiotechnology (29 percent), with a number of companies spending more on R&Dthan their total sales. Biotechnology was also the smallest industry (both in termsof total R&D and sales) compared to other high-tech sectors such assemiconductors and electronic components, network and communicationsequipment, software and data services, and pharmaceuticals. All four sectors hadR&D intensities between 12 and 14 percent (Figure 2-3, Bowonder et al. 2005, seealso EC 2004 and BAH 2005).R&D-spending companies are concentrated in a few countries around the world.Over 70 percent of the 700 largest R&D-spending companies came from three58