Globalisation driving increase in international offshoring of research and development centres, finds OECD report


11/10/2005 - Offshoring of research and development is on the rise, with more multinationals setting up research and development (R&D) laboratories abroad, according to a new OECD report. In Hungary and Ireland, for example, foreign companies account for 70% of industrial R&D but the role played by foreign affiliates varies widely around the world. At over 40%, the share of R&D conducted by multinationals is also high in the Czech Republic, Portugal, Spain and Sweden, compared to less than 5% in Japan.

According to the OECD Science, Technology and Industry Scoreboard 2005, the importance of non-OECD-countries in driving global innovation is increasing fast. China has become the third largest R&D performer behind the United States and Japan, largely due to the rapid growth in researcher salaries that have encouraged talented Chinese scientists and engineers to remain in China.

Japan is the least active OECD country in international co-operation in patenting. Less than 4% of domestic inventions in Japan are owned by foreigners, compared with over 12% in the United States and 37.5% in the United Kingdom. Japan is also the least involved in international collaboration, with less than 3% of its patents being the result of such collaboration, compared with almost 12% for the United States and over 21% for the United Kingdom.

The Scoreboard also reveals worrying evidence of falling interest in scientific studies in OECD countries, with only one in four on average graduating in those subjects. Students and skilled workers are also becoming more mobile, with flows into the OECD increasingly coming from outside the OECD area. In Australia, Canada, New Zealand and Switzerland, more than 30% of highly-skilled workers are migrants; in Japan and Korea, migrants account for less than 1% of highly-skilled workers.

With a wide range of internationally comparable indicators, the OECD Scoreboard gives policy makers and analysts a comprehensive overview of the growing impact of globalisation on the knowledge economy. In addition to analysis of developments in the international mobility of researchers and scientists, the growth in patenting, the role of multinational companies and the rapid diffusion of new information technologies, it also focuses on the emergence of key international players outside the OECD area, notably China and Russia.

Among its findings are :

  • Since 1995, annual R&D spending has grown faster in the EU (3.3%) than in the US and Japan, reaching (2.7%).
  • While business still accounts for about two-thirds of total R&D spending in the OECD area, its role has declined, most significantly in the United States and slightly in the European Union.
  • Three quarters of the increase in R&D spending by the US government since 2001 was devoted to defence R&D.
  • In 2003, China had the highest number of researchers in the world (863,000), behind the US (1.3 million) but ahead of Japan (675,000) and the Russian Federation (487,000).
  • Sweden is the OECD’s biggest investor in R&D as a percentage of GDP (3.98%), followed by Finland ( 3.49%), Japan (3.15%) and Iceland (3.04%).
  • Australia, Sweden and the US received the largest boost to GDP growth from investment in information and communications technology (ICT) between 1995 and 2003, of around 0.8 percentage points annually, or around one-quarter of total GDP growth. In Japan and the United Kingdom, about 0.6% of GDP growth was due to ICT capital, while in France and Germany ICT contributed less than 0.4% each year.
  • The rapid rise in the number of people with high-speed Internet access (118 million OECD subscribers by end of the 2004) and who are often connected to the 24 hours a day is posing a growing threat to online privacy and security. In 2004, Internet users in Korea and Spain were most likely to have had their computer infected by a virus. For businesses, Australia, Finland and Japan were worst affected.
  • A new threat has emerged with the rise in broadband connections, involving networks of computers being controlled remotely without the owner’s knowledge, so-called bot-nets. These are driving the growth in spam, denial of service attacks and phishing. In the second half of 2004, the United Kingdom, Portugal, Greece, Spain and Sweden had the highest rates of infected computers.
  • Use of Internet Telephony is also increasing dramatically. Between October 2004 and April 2005, the number of users of one Voice over Internet Telephony provider, Skype, doubled or tripled in most countries. More than one in ten people in Israel, Chinese Taipei and Denmark now subscribe to Skype, and usage has tripled in France, Germany, Spain, the United Kingdom and the US, among others.

The report is available for journalists from the password protected website or from SourceOECD ( For more information, the journalists should contact the OECD's Media Relations Division. For further information about this report, please contact Dirk Pilat (tel. + 33 1 45 24 87 49), OECD’s Science, Technology and Industry Directorate (see website


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