The pace of internationalization in R&D is picking up – and that's good

Richard L. Hudson

R&D spending by multinational companies outside their home countries has more than doubled in a decade, according to a recent OECD report: $70.6 billion in 2003, compared to $33.9 billion in 1995. Multinationals are shopping for the best ideas and brains regardless of location. Indeed, the quality of the local universities is usually more important to where an IBM or Lilly builds a new lab than are tax breaks, patent protection or market size, according to a separate study last year in Science.

In the U.S., 21 of the top 35 patent-winners in 2006 were foreign companies, according to US Patent and Trademark Office data compiled by IFI Claims. IBM hangs on to first place, but Samsung, Canon and Matsushita are nipping at its heels.

A decade ago, UK universities were teaching 12,000 students from India, China and Korea. By the 2004/5 school year, that population had climbed to 70,000, according to a report on the global impact of Asian science by Demos, a UK think-tank. The numbers are even higher in the U.S., of course, where some recent research found that a surprisingly large percentage of university spin-out companies there are co-founded by foreign students – especially from India and China.

Since joining the EU in 2004, several of the ex-Soviet satellites have been reaping a rich harvest of R&D investment. About 60 per cent of U.S. investments in the Czech Republic in 2006 were R&D-related, according to CzechInvest. And in Hungary, there’s now more business R&D done by foreigners than locals, according to the OECD.

All this has profound implications. In many countries, these trends slot into the globalisation debate: My neighbour’s gain is my loss. For instance, if you’re French, you might call it a loss of potential wealth for Alcatel to open new labs in Guangdong rather than Brittany. Or it’s a loss of local talent if a University of Paris student moves to Stanford and stays on in California to start a company there rather than return home. Such fears matter. With presidential elections on the way in France, research policy is coming into play as an electoral issue – as evidenced by a just-leaked audit in Le Monde, condemning past governments’ R&D spending as ineffectual and wasteful.

In fact, as the Demos report states, “innovation is not a zero sum game.” In research, my neighbour’s gain is my own, as well. Economic growth comes, not so much from being first to invent, as being best at exploiting inventions. And that’s more a matter of regulations and taxes than patents and scientific publications.

Science|Business began publishing a little over a year ago with these international trends foremost in mind. Our focus, as a news service, is on R&D investments and policies that cross borders. As a company, our focus is on helping researchers in one country find investors or corporate partners in another. As we enter our second full year of publication, we will redouble our efforts to follow this globalization trend with new features, events and services that you will be hearing more about. In science, it’s a small world.