Working Paper - The Laboratory of The World?

Abstract 

This paper examines the global allocation of business research and development (R&D) by multinational firms, distinguishing between where R&D is financed and where it is performed. 

We compare innovation ecosystems in the European Union, the United States and China, and show that the United States is consistently more successful than the EU in attracting and retaining R&D activity within its territory, while China emerges as the largest net recipient of foreign R&D worldwide. 

China’s R&D ratio has fallen rapidly over the last decade and is converging to the EU level as large Chinese firms go increasingly abroad. However, the ratio remains exceptionally high in the manufacturing sector, suggesting that China is the world’s laboratory for manufacturing. 

At the same time, in the ICT sector China lags behind the other two regions, while the EU ratio convergences to that of the United States since the mid-2010s.

IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.

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