World Investment ReportPREFACE ACKNOWLEDGEMENTS OV

UnitedNationsConferenceonTradeandDevelopmentWorldInvestmentReportUnitedNationsNewYorkandGeneva,20052005TransnationalCorporationsandtheInternationalizationofR&DiiNOTEAsthefocalpointintheUnitedNationssystemforinvestmentandtechnology,andbuildingon30yearsofexperienceintheseareas,UNCTAD,throughitsDivisiononInvestment,TechnologyandEnterpriseDevelopment(DITE),promotestheunderstanding,andhelpsbuildconsensus,onmattersrelatedtoforeigndirectinvestment(FDI),transferoftechnologyanddevelopment.DITEalsoassistsdevelopingcountriestoattractandbenefitfromFDIandinbuildingtheirproductivecapacitiesandinternationalcompetitiveness.Theemphasisisonanintegratedpolicyapproachtoinvestment,technologicalcapacitybuildingandenterprisedevelopment.Theterm“country”asusedinthisstudyalsorefers,asappropriate,toterritoriesorareas;thedesignationsemployedandthepresentationofthematerialdonotimplytheexpressionofanyopinionwhatsoeveronthepartoftheSecretariatoftheUnitedNationsconcerningthelegalstatusofanycountry,territory,cityorareaorofitsauthorities,orconcerningthedelimitationofitsfrontiersorboundaries.Inaddition,thedesignationsofcountrygroupsareintendedsolelyforstatisticaloranalyticalconvenienceanddonotnecessarilyexpressajudgementaboutthestageofdevelopmentreachedbyaparticularcountryorareainthedevelopmentprocess.ThereferencetoacompanyanditsactivitiesshouldnotbeconstruedasanendorsementbyUNCTADofthecompanyoritsactivities.TheboundariesandnamesshownanddesignationsusedonthemapspresentedinthispublicationdonotimplyofficialendorsementoracceptancebytheUnitedNations.Thefollowingsymbolshavebeenusedinthetables:Twodots(..)indicatethatdataarenotavailableorarenotseparatelyreported.Rowsintableshavebeenomittedinthosecaseswherenodataareavailableforanyoftheelementsintherow;Adash(-)indicatesthattheitemisequaltozerooritsvalueisnegligible;Ablankinatableindicatesthattheitemisnotapplicable,unlessotherwiseindicated;Aslash(/)betweendatesrepresentingyears,e.g.,1994/95,indicatesafinancialyear;Useofahyphen(-)betweendatesrepresentingyears,e.g.,1994-1995,signifiesthefullperiodinvolved,includingthebeginningandendyears;Referenceto“dollars”($)meansUnitedStatesdollars,unlessotherwiseindicated;Annualratesofgrowthorchange,unlessotherwisestated,refertoannualcompoundrates;Detailsandpercentagesintablesdonotnecessarilyaddtototalsbecauseofrounding.Thematerialcontainedinthisstudymaybefreelyquotedwithappropriateacknowledgement.UNITEDNATIONSPUBLICATIONSalesNo.E.05.II.D.10ISBN92-1-112667-3Copyright©UnitedNations,2005AllrightsreservedManufacturedinSwitzerlandiiiThisReportisdedicatedtothememoryofSanjayaLallPREFACEKofiA.AnnanNewYork,July2005Secretary-GeneraloftheUnitedNationsTheglobalizationofproductionisreshapingtheinternationaleconomiclandscape.Withthat,theconventionalwisdomofdevelopedcountriesascapitalandtechnologyexportersanddevelopingcountriesasimportersisgraduallygivingwaytoamorecomplexsetofrelationships.Thegeographyofinternationalinvestmentflowsischanging.Developingcountriesareemergingasoutwardinvestors,andtheirimportanceasrecipientsofforeigndirectinvestmentinmoreknowledge-intensiveactivitiesisincreasing.TheWorldInvestmentReport2005,focusingontheinternationalizationofresearchanddevelopmentbytransnationalcorporations,illustratessomeofthesechanges.Asglobalcompetitionintensifies,transnationalcorporationsareinternationalizingeventhemostknowledge-intensivecorporatefunctions,suchasresearchanddevelopment.Untilrecently,thistrendwaslimitedalmostexclusivelytodevelopedcountries.Today,corporationsinindustriessuchasautomobiles,electronics,biotechnologyandpharmaceuticalsareestablishingresearchanddevelopmentfacilitiesinselecteddevelopingcountries.Theydothistoenhancetheirefficiency,toaccessexpandingpoolsofscientistsandengineers,andtomeetthedemandsofincreasinglysophisticatedmarketsinthesecountries.Theserecenttrendshaveimportantimplicationsfortheinternationaldivisionoflabour.Thetraditionalview,ofmorecomplexproductionactivitiesbeingundertakenintheNorthandsimpleronesintheSouth,islessandlessatruereflectionofthereality.Firmsnowviewpartsofthedevelopingworldaskeysourcesnotonlyofcheaplabour,butalsoofgrowth,skillsandevennewtechnologies.Astransnationalcorporationsarethedominantplayersinthecreationofnewtechnologies,itmatterswheretheyundertaketheirresearchanddevelopment.Currently,onlyafewdevelopingcountriesattractsuchactivitiesonasignificantscale.Mostlow-incomecountriesarenotparticipatinginglobalresearchanddevelopmentnetworks,andconsequentlydonotreapthebenefitsthattheycangenerate.Theinternationalizationofresearchanddevelopmentbytransnationalcorporationshasimportantimplicationsforpolicy-making.TheWorldInvestmentReport2005stressestheneedforcoherentnationalpolicies–particularlyintheareasofscience,technologyandinnovation,educationandinvestment–toensuregreaterbenefitsfromthisevolution.Formanycountries,however,thisisadauntingtask,whichwillnecessitatethefullsupportoftheinternationalcommunity.vviACKNOWLEDGEMENTSTheWorldInvestmentReport2005(WIR05)waspreparedundertheoverallguidanceofKarlP.SauvantbyateamledbyAnneMirouxandcomprisingD