Geography Reference
In-Depth Information
although the advanced economies overwhelmingly dominate R&D expend-
iture, there is evidence that the small role played by the developing coun-
tries in innovation and technology is actually increasing. In fact, in 1991
the developed world as a whole accounted for 97 per cent of total global
R&D expenditure (UNCTAD 2005), whereas by 2002 this share had fallen
to 91 per cent. In 1996, the top six developing and transition economies
(excluding Korea, Singapore, Taiwan and Hong Kong) accounted for just
4.1 per cent of total global R&D expenditure, whereas by 2002 this had
risen to over 5 per cent; in terms of private sector R&D, their share rose
from 1.2 per cent in 1996 to 3.5 per cent in 2002 (UNCTAD 2005). At the
same time, there has also been a substantial rise in innovation outputs on
the part of MNEs from developing or transition economies. Between the
two periods of 1991‒1993 and 2001‒2003 the share of foreign patenting
in the US from developing and transition economies increased from 7 per
cent to 17 per cent (UNCTAD 2005).
While global R&D is increasing, there have also been some impor-
tant structural changes taking place over recent decades in the nature of
multinational R&D, exactly as highlighted by the literature discussed in
Chapters 4 and 5. In particular, the knowledge creation role played by
MNE foreign affiliates - and their growing specific- and strategic-asset
seeking nature - is increasing for almost all locations of origin of MNEs
and almost all types of host economies (UNCTAD 2005). There are three
aspects to underline here in this respect.
First, while in general the large scale internationalization of R&D by
multinationals began in the 1980s and accelerated in the 1990s (UNCTAD
2005), the role played by foreign affiliate establishments in the global
R&D effort has increased even faster. As a result, between 1993 and 2002
the total R&D expenditure of all MNE foreign affiliates increased from
$30bn to $67bn, raising their share of global business R&D expenditure
from 10 per cent in 1993 to 15 per cent in 2002 (UNCTAD 2005, 2007).
The rate of such an increase was more than twice that of MNEs as a whole,
clearly demonstrating that the global R&D effort of MNEs is becoming
more geographically dispersed (UNCTAD 2005).
Second, the increasing role of foreign multinational affiliates in the global
R&D effort is overwhelmingly a story of advanced economies. The share
of global business R&D accounted for by the foreign affiliates of MNEs
located in developed countries rose during this period from 10 per cent to
13.9 per cent (UNCTAD 2005). If we focus only on multinational R&D,
the share of all multinational R&D undertaken by MNE foreign affiliates
located in developed countries was 93.1 per cent (UNCTAD 2005).
Third, however, the developing countries are starting to play an increas-
ing role in these processes. The developing world as a whole increased its
