Geography Reference
In-Depth Information
BOX 1.3
SOME FACTS AND FIGURES:
SKEWNESS IN GLOBAL R&D AND TOP
MNEs IN THE WORLD
Global R&D is overwhelmingly accounted for by the advanced
economies. Global public plus private sector R&D expenditure
grew rapidly during the 1990s to some $677bn in 2002, of which
some $450bn is in the form of global private R&D expenditure
(UNCTAD 2005). In 2002, the advanced economies accounted
for over 90 per cent of this global R&D expenditure, an even
higher proportion than the share of global outward FDI which
is accounted for by the same group of countries. In 2002, just
the top nine origin countries for outward FDI accounted for 87
per cent of both total global R&D and global private sector R&D
(UNCTAD 2005).
Yet, even allowing for these impressive figures, the role of
multinationals in the generation of world R&D has grown mark-
edly. The major multinational firms account for an ever-increasing
share of global R&D. By 2005 the 700 largest R&D expenditure
MNEs were estimated to account for over $310bn in R&D invest-
ment, which represents around 46 per cent of all global R&D and
69 per cent of the $450bn of global business sector R&D expendi-
ture (UNCTAD 2005). As such, almost half of global R&D and
over two thirds of global private sector R&D is concentrated in
less than 1 per cent of the world's 78,000 MNEs. Multinational
R&D is therefore extremely skewed according to firm size when
measured at the global scale.
As well as being concentrated in a tiny number of firms, such a
high degree of concentration or skewness in global multinational
R&D is in fact also manifested in terms of both sector and geo-
graphical origin. As for the former, of the 700 MNEs dominating
global R&D more than half are in just three sectors, namely IT
hardware, the automotive industry, and the pharmaceuticals and
biotechnology industry (UNCTAD 2007). In terms of the national-
ity of origin, we have already seen that all forms of R&D activity
are dominated by the most advanced economies and it is there-
fore not surprising that MNE activity closely reflects these overall
knowledge patterns. In fact, the US is the individual largest single
source of R&D expenditure, while over 80 per cent of the 700
largest R&D expenditure MNEs come from only five countries,
