The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DMajority-owned foreign affiliates of U.S. parent companies spent about 22 billion dollars onR&D abroad in 2003. Developed economies dominated as locations for R&D but the shareof developing countries increased from 7.6 percent in 1994 to 15 percent in 2003. Mainlycountries in developing Asia, such as China, Singapore and Korea, compensated for thedeclining share of developed countries. In Asia (excluding Japan), computers and electronicproducts was the dominating industry sector for R&D investment. Sweden ranked fourth inEurope (after U.K., Germany and France) and accounted for 1.4 billion dollars (6 percent)of R&D spending by U.S. affiliates abroad (BEA 2005).A number of survey studies confirm that corporate R&D spending abroad is increasing (seefor example Roberts 2001, von Zedtwitz & Gassmann 2002, BusinessWeek 2005 andUNCTAD 2005a).From a country perspective, the level of internationalization can be measured both in termsof industrial R&D activates abroad (home country) and domestic activities of foreign companies(host country). For example, Germany and Finland are more internationalized abroadthan in the domestic market, while in the U.S., Japan and Sweden, in terms of total industry,R&D is more internationalized in the domestic market (OECD 2005c).2.3.3 Trade in R&D – Technology Balance of PaymentIn most OECD countries, technology receipts and payments increased during the1990s. Obviously, the OECD area was a net technology exporter to the rest of theworld, while the European Union had a deficit on its technology balance of payments.Japan increased its positive trade balance dramatically from almost nothing in 1993 to0.2 percent of GDP in 2003. The U.S. had a stable positive trade balance during the1990s of 0.25 percent of GDP. The U.K. was a major net exporter (almost 0.8 percentof GDP) while Ireland was a major net importer (over 10 percent of GDP), see Figure2-8. In absolute terms, the U.S. net trade balance (receipts minus payments) was thelargest (over 28 billion dollars) followed by the U.K. (13 billion dollars) and Japan(8 billion dollars) (OECD 2005c, MSTI 2005).69