According to a United Nations report, foreign direct investment (FDI) in research and development is increasingly determined by the availability and cost of talented research manpower.
The United Nations yearly World Investment Report (WIR) presents the latest trends in foreign direct investment (FDI) around the world and analyses one specific topic related to FDI and development in depth. The WIR 2005 focuses on the internationalisation of R&D by transnational corporations and the development implications of this phenomenon.
The WIR 2005 report shows that:
- R&D internationalisation is growing fastest in developing countries, in particular Asia;
- drivers of FDI in R&D are changing;
- R&D investment in developing countries increasingly involves complex stages of R&D;
- developing country firms are, in return, setting up R&D units abroad.
According to the report, businesses state that the cost and availability of research manpower increasingly influences their decision to invest in another country. The absence of a sufficient number of skilled people in science-based activities in the companies’ home country, increasing R&D expenditure and the need to cut costs are pushing firms to locate R&D in countries with low-cost and abundant scientific manpower. Statistics show that firms are increasingly investing in R&D outside the EU, the United States and Japan.