Availability of researchers drives FDI

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. 

The EU is currently losing R&D investment to other countries as it invests much more abroad than it receives. The Commission thinks that Europe needs more and better qualified researchers to reverse this trend. Creation of European 'poles of excellence' can also help to attract more foreign direct investment (FDI) in R&D.

According to official estimates the EU needs 700,000 scientists and engineers to meet its target of raising investment in research to 3% of GDP by 2010. This goal was agreed by the Barcelona Council in 2002 and is an essential part of the Lisbon strategy of making the EU the most competitive knowledge-based economy in the world.

  • The 'Researchers in Europe 2005' initiative, a six-month Europe-wide awareness raising campaign on science and scientists continues until November 2005. It aims to improve the public image of science and scientists and attract young people to careers in science.

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