World Investment ReportCHAPTERIV R&D BY TNCS AND D

UnitedNationsConferenceonTradeandDevelopmentWorldInvestmentReportUnitedNationsNewYorkandGeneva,20052005TransnationalCorporationsandtheInternationalizationofR&D
 R&DBYTNCsANDDEVELOPINGCOUNTRIESTNCsareplayingamajorroleinglobalR&D,notonlythroughactivitiesintheirhomecountriesbutalsoincreasinglyabroad.TheinternationalizationofR&Disnotanewphenomenon.Whatisnewisitsfasterpaceinrecentyearsanditsspreadtodevelopingcountries(albeittoonlyafew,mainlyinAsia).Moreover,R&Dactivitiesindevelopingcountriesarenolongeraimedatadaptingtechnologiestolocalconditionsonly;theyincreasinglyinvolve“innovative”R&D,includingdevelopingtechnologiesforregionalandworldmarkets.Atthesametime,TNCsfromdevelopingcountriesarethemselvesinvestinginR&Dabroad,primarilyinordertoaccessadvancedtechnologiesandresearchcapabilitiesindevelopedcountries,aswellastoadaptproductstonewmarketsandtapsourcesofspecializedexpertiseinotherdevelopingcountries.Thischaptermapsthesetrends.A.TNCsaredominantR&DplayersTNCsaccountforamajorshareofglobalR&D.Indeed,with$310billionspentin2002(UnitedKingdom,DTI2004),the700largestR&Dspendingfirmsoftheworld–ofwhichatleast98%areTNCs1–accountedforclosetohalf(46%)oftheworld’stotalR&Dexpenditureandmorethantwo-thirds(69%)oftheworld’sbusinessR&D(annextableA.III.2).2Giventhatthereareanestimated70,000TNCsintheworld(annextableA.I.8),thisisaconservativeestimate.Itconfirmsearlierfindingsthatinthemid-1990sTNCsalreadyaccountedforaverylargeshareoftheR&DexpenditureoftheTriad(GassmannandvonZedtwitz1999).3Infact,theR&Dspendingofsomelargecorporationsishigherthanthatofmanycountries.InfourTNCs(FordMotor,Pfizer,DaimlerChryslerandSiemens),R&Dspendingexceeded$6billionin2003(tableIV.1).Inanothertwo(ToyotaMotorandGeneralMotors),itsurpassed$5billion.Bywayofcomparison,indevelopingeconomies,South-EastEuropeandtheCISasagroup,totalgrossexpenditureonR&D(GERD)cameclosetoorexceeded$5billionin2002(thelatestavailableyear)onlyinChina,theRepublicofKorea,TaiwanProvinceofChinaandBrazil,inthatorder(tableIII.1).Eveninlargeeconomies,suchasIndia,MexicoandtheRussianFederation,itremainedwellbelowthe$5billionmark.Thesameistrueforsuchsmall,developedandR&D-intensivecountriesasAustria,DenmarkandFinland(figureIV.1).Over80%ofthe700largestR&Dspendingfirmscomefromonlyfivecountries:theUnitedStates,Japan,Germany,theUnitedKingdomandFrance,inthatorder(tableIV.2).Only1%ofthetop700arebasedindevelopingcountriesorSouth-EastEuropeandtheCIS(tableIV.1),althoughseveralhavemoveduptherankssincethelate1990s(UnitedKingdom,DTI2004).AlmostallthesefirmscomefromAsia,notablyfromtheRepublicofKoreaandTaiwanProvinceofChina(tableIV.2),whileonlyoneisfromAfricaandtwoarefromLatinAmerica.The700largestR&Dspendersareconcentratedinrelativelyfewindustries.In2003,morethanhalfofthemwereinthreeindustries(IThardware,automotiveandpharmaceuticals/biotechnology)(tableIV.3).Withineachindustry,thetwolargestR&Dperformingfirmswereresponsibleforveryhighshares.Thetwomostconcentratedindustries120WorldInvestmentReport2005:TransnationalCorporationsandtheInternationalizationofR&DTableIV.1.Thetop20firms,byR&Dexpenditureintheworldandindevelopingeconomies,South-EastEuropeandCIS,2003(Millionsofdollars)WorldDevelopingeconomies,South-EastEuropeandCISWorldR&DWorldR&DrankCorporationHomeeconomyspendingrankCorporationHomeeconomyspending1FordMotorUnitedStates684133SamsungElectronicRepublicofKorea27402PfizerUnitedStates650495HyundaiMotorRepublicofKorea7343DaimlerChryslerGermany6409110LGElectronicsRepublicofKorea6124SiemensGermany6340178TaiwanSemiconductorTaiwanProvinceofChina3425ToyotaMotorJapan5688219PetroChinaChina2656GeneralMotorsUnitedStates5199255AccentureBermuda2287MatsushitaElectricJapan4929258KoreaElectricPowerRepublicofKorea2278VolkswagenGermany4763267KTRepublicofKorea2199IBMUnitedStates4614298MarvellTechnologyBermuda19710NokiaFinland4577300POSCORepublicofKorea19611GlaxoSmithKlineUnitedKingdom4557317PetroleoBrasileiroBrazil18312Johnson&JohnsonUnitedStates4272328SKTelecomRepublicofKorea17213MicrosoftUnitedStates4249337ChinaPetroleum&ChemicalChina16714IntelUnitedStates3977348WinbondElectronicTaiwanProvinceofChina15815SonyJapan3771349EmbraerBrazil15816HondaMotorJapan3718350UnitedMicroelectronicsTaiwanProvinceofChina15717EricssonSweden3715486PlivaCroatia9918RocheSwitzerland3515516SasolSouthAfrica9119MotorolaUnitedStates3439518AUOptronicsTaiwanProvinceofChina9120NovartisSwitzerland3426585HyundaiHeavyIndustriesRepublicofKorea77Source:UNCTAD,basedonUnitedKingdom,DTI2004.FigureIV.1.R&DexpenditurebyselectedTNCsandeconomies,2002(Billionsofdollars)Source:UNCTAD,basedonannextableA.III.2andUnitedKingdom,DTI2004.3.53.73.73.84.04.34.34.34.34.44.44.54.54.64.65.45.45.55.75.96.36.56.84.87.2012345678Motorola(UnitedStates)Johnson&Johnson(UnitedStates)India(2001)Intel(UnitedStates)Microsoft(UnitedStates)Volkswagen(Germany)RussianFederationMatsushitaElectric(Japan)DenmarkGlaxoSmithKline(UnitedKingdom)IBM(UnitedStates)AustriaFinlandToyotaMotor(Japan)Brazil(2003)Pfizer(UnitedStates)Israel(2001)GeneralMotors(UnitedStates)BelgiumSiemens(Germany)DaimlerChrysl