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

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 OECD¹s 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 owner¹s
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), OECD¹s Science, Technology and Industry
Directorate (see website

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