When developed world’s agony is developing world’s consolation
The growing trend of internationalisation of R&D has put the world in dilemma. It is the dilemma of fear and hope. The fear is of the developed world and the hope is of the developing world. The reason for the fear is that the developed world is going to lose its competitive edge and that innovation as a major portion of R&D investment is moving mostly to developing countries. The hope for the developing world is that the growing influx of foreign R&D investment will boost innovation and product development in the long run.
As per the 2002 world investment report, although the worldwide R&D expenditure stood at over $677 billion and four-fifth of that amount is concentrated in the top ten developed economies, the same report has revealed the trend of R&D expenditure of 1991 to 2002 where the R&D share fell from 97% to 91%. On the contrary, that of developing countries rose from a mere 2% to 6% during the same period. In 1994, major developed economies or regions accounted for 90% of overseas R&D expenditures. This share decreased to 80% by 2001. Sweden, one of the most innovative European countries, is also losing its innovative edge owing to increasing trend of outsourcing R&D. According to Government statistics, the country was carrying out over 78% of their R&D projects within the country which has dropped to 50% in 2007. On the other hand, developing countries like China, Taiwan, Korea, Singapore and India are the hottest destinations for transnational corporations because of cheap and dexterous labor flux. However, the fact is that the developed world’s agony is becoming developing world’s consolation.
The growing trend of internationalisation of R&D has put the world in dilemma. It is the dilemma of fear and hope. The fear is of the developed world and the hope is of the developing world. The reason for the fear is that the developed world is going to lose its competitive edge and that innovation as a major portion of R&D investment is moving mostly to developing countries. The hope for the developing world is that the growing influx of foreign R&D investment will boost innovation and product development in the long run.
As per the 2002 world investment report, although the worldwide R&D expenditure stood at over $677 billion and four-fifth of that amount is concentrated in the top ten developed economies, the same report has revealed the trend of R&D expenditure of 1991 to 2002 where the R&D share fell from 97% to 91%. On the contrary, that of developing countries rose from a mere 2% to 6% during the same period. In 1994, major developed economies or regions accounted for 90% of overseas R&D expenditures. This share decreased to 80% by 2001. Sweden, one of the most innovative European countries, is also losing its innovative edge owing to increasing trend of outsourcing R&D. According to Government statistics, the country was carrying out over 78% of their R&D projects within the country which has dropped to 50% in 2007. On the other hand, developing countries like China, Taiwan, Korea, Singapore and India are the hottest destinations for transnational corporations because of cheap and dexterous labor flux. However, the fact is that the developed world’s agony is becoming developing world’s consolation.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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