The structure and location of business R&D: recent trends and measurement implications

Cross-border flows of Research and Development (R&D) expenditure have been rising in recent years, but their implications for the organisation of the R&D process and the international dispersion of R&D activities are less well-understood. This paper provides an overview of the available statistical evidence which is complemented by the results of a series of interviews with R&D managers in various countries. The interviews suggest that the drivers of internationalisation differ substantially between research, on the one hand, and development, on the other. Research activities are usually concentrated in a single location, mostly near the firm headquarters, to exploit ties with universities and maximise cooperation across activities. Development is generally tied to individual business units and is more likely to be positioned in proximity to production locations.