The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DThe focus in this report is on where R&D is conducted, rather than on job movement or thepotential loss of jobs due to the process of internationalization. Even if investment in R&Dperformed abroad and imports of R&D services are increasing, job opportunities mightgrow at both locations (ACM 2006).2.2.2 How to Measure Internationalization?It is difficult to define and measure the internationalization of corporate R&D. It is acomplex process and it cannot be measured with direct indicators. Available data isincomplete, hard to compare among countries, difficult to interpret and only availablewith a considerable time lag.To capture the complexity, it is necessary to use indirect measures and differentstudy approaches (research methods). However, that may lead to differences in resultsand comparability problems.A detailed discussion on measurement issues can be found in the OECD Handbookon Economic Globalisation Indicators (OECD 2005b), see also NRC 2005a.Despite the limitations, several efforts to gather systematic data are under way. Someof the key data sources relevant for the internationalization of corporate R&D includethe OECD (MSTI 2005, OECD 2005c, OECD 2005d), UNCTAD (UNCTAD 2005a),the European Commission (EC 2004, EC 2005a, EC 2005b), in the U.S. (see Mattila2005 for an overview); the Bureau of Economic Analysis of the U.S. Department ofCommerce (BEA 2004, BEA 2005) and the National Science Foundation (NSF 2004,2006) and in Sweden, Statistics Sweden (SCB 2004) and the Swedish Institute forGrowth Policy Studies (ITPS 2005).The following is a short description of some indicators and their benefits and weaknesses(see OECD 2005b, NRC 2005a).International R&D investment, sometimes referred to as inward and outward R&Dforeign direct investment (FDI), is measured in terms of R&D expenditures and numberof researchers, both of foreign affiliates and of parent companies. These data setsare well established and regularly available, but lack detail and usually underestimatedesign and software R&D. Some transactions take place inside companies and cannotbe captured. In addition, there is certain overlap with trade indicators since there is acomplex relationship between direct investment transactions and the technology balanceof payments.Companies with R&D activities in multiple industry sectors are classified in a single(primary) industry. When primary business of a company changes, reclassifying ofR&D expenditures obscures data comparisons (for example when reclassifying IBMfrom computer manufacturer to computer services).65