The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DInternational R&D by companies is not a new phenomenon, but it did not begin toincrease significantly until in the mid–1980s. The trend accelerated during the 1990swith an increasing amount of cross-border, R&D-related transactions as well as awider geographical reach, including locating R&D to developing countries. This isdocumented for example in Norgren 1995, Kuemmerle 1999, Reddy 2000 and vonZedtwitz & Gassmann 2002.2.3.1 Foreign-Controlled R&D – Inward InvestmentThe R&D expenditure of foreign affiliates as a share of total industry R&D varies significantlybetween countries; it is less than 5 percent in Japan and over 70 percent inHungary and Ireland. The share in Sweden was about 45 percent in 2003, up from19 percent in 1997 (Figure 2-6). The foreign-controlled R&D in Sweden is concentratedamong a small number of owner countries. The U.S. and the U.K. accounted for 73percent of all foreign R&D expenditures in Sweden in 2003 (MSTI 2005, ITPS 2005).Figure 2-6 R&D expenditures of foreign affiliates as percentage of total R&D expenditures ofenterprises. Data from latest available year compared with 1997.Sw eden (2003)UK (2002)Canada (2002)Germany (2001)USA (2002)Finland (2001)Japan (2001)0 10 20 30 40 501997 2001-2003Source: MSTI 2005, data for Sweden ITPS 2005.Foreign-controlled industrial R&D is growing in all major OECD countries. The totalinvestments of foreign affiliates increased from 29 billion dollars in 1995 to 52 billiondollars in 2001. The U.S. accounted for more than 42 percent (21 billion dollars) of thisamount, followed by Germany, the U.K. and Japan, attracting about 15, 12 and 5 percentrespectively of the total investments. On an aggregated level, the share of R&Dexpenditure of affiliates under foreign control, in total business sector, R&D grew from12 to 16 percent between 1993 and 2001 in major OECD countries (OECD 2005c).67