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Overseas R&D by Multinational Corporations

The shift toward greater R&D expenditures in Asia is also reflected in R&D flows between MNCs and their overseas affiliates in which they hold majority ownership (figure O-6).

Overseas R&D expenditures of U.S.-based MNCs ($37 billion in 2008) shifted toward Asian markets whose combined share increased from 11% in 1998 to 20% a decade later, with increases in China, South Korea, Taiwan, and Singapore. In 1998, about 83% of all overseas R&D by U.S.-headquartered MNCs took place in Europe and Canada; by 2008, their combined percentage had decreased to 74%.

A crude indicator of the pace of utilization of overseas R&D talent and facilities by U.S. MNCs is the percentage of the MNCs' total R&D that is conducted by their majority-owned overseas affiliates. Over the past decade, this share has gradually risen from about 13% to 16% (figure O-7).

Affiliates of foreign-headquartered MNCs in 2008 spent about $40.5 billion on R&D in the United States, virtually unchanged from the preceding year. The companies' share of total U.S. business R&D has fluctuated between 13% and 15% since 2000.