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Policies to attract and benefit from globalization of R&D

Policies to attract and benefit from globalization of R&D. Prasada Reddy Research Policy Institute Lund University Sweden. Category of R&D units. Technology transfer units (TTUs) - to facilitate transfer of parent’s technology to affiliate and local technical services;

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Policies to attract and benefit from globalization of R&D

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  1. Policies to attract and benefit from globalization of R&D Prasada Reddy Research Policy Institute Lund University Sweden

  2. Category of R&D units • Technology transfer units (TTUs) - to facilitate transfer of parent’s technology to affiliate and local technical services; • Indigenous technology units (ITUs) - to develop new products for the local markets, drawing on local technology; • Global technology units (GTUs) - to develop new products and processes for major world markets • Corporate technology units (CTUs) - to generate basic technology of a long term nature for corporate use (Ronstadt, 1977); • Regional technology units (RTU) - to develop products for the regional markets.

  3. Corporate R&D - prior to the 1960s Home Country-based R&D - need for coordination between manufacturing, R&D, finance & marketing, - R&D scale economies. - sophisticated and advanced home markets, - technologically advanced home economies.

  4. Evolution of Globalization of R&D - 1960s The beginnings of internationalization of R&D - first wave TTUs (adaptation R&D) - - need to tap markets abroad, - technology transfer for cost effective production. - large local markets, - proximity to production facilities. Category of industries - mechanical, electrical, and engineering, including automobiles.

  5. Evolution of Globalization of R&D - 1970s The growth of internationalization of R&D - second wave ITUs - to enhance market share in local markets abroad, - need to understand sensitivity of local consumer, - host country government policies. - large and protected markets with unique characteristics, - proximity to market and production. Category of Industries - branded packaged consumer goods, chemicals and allied products.

  6. Evolution of Globalization of R&D - 1980s (1) External forces in the business environment: - liberalization of economies worldwide, - homogenization of consumer preferences worldwide, - emergence of regional markets, - science-base of new technologies and multidisciplinary innovations. Internal forces: - rationalization of TNCs’ operations, leading to specialization of affiliates, - world and regional product mandates for affiliates

  7. Evolution of Globalization of R&D - 1980s (2) From internationalization to globalization of R&D - third wave GTUs/RTUs/CTUs - need for monitoring and learning the new trends worldwide, - need for multi-sourcing of technology inputs. - improved information and communication technologies, - flexibility of new technologies allows de-linking of manufacturing & R&D, - comparative advantages of host countries. Category of Industries - microelectronics, pharmaceuticals, biotechnology and new materials.

  8. Evolution of Globalization of R&D - 1990s Evolving patterns globalization of R&D - fourth wave (location of R&D outside the industrialized world) - shortage of R&D personnel in industrialized world, - increasing R&D costs. - availability of R&D personnel at lower costs in some developing countries, - divisibility of R&D into core and non-core activities, - changes in policy regimes, including intellectual property rights in host countries. Category of Industries - microelectronics, pharmaceuticals, biotechnology and new materials.

  9. National Policies for attracting global R&D 1 • General Agreement on Trade in Services (GATS) - R&D as a service (trade affiliate to parent) • R&D as a Performance Requirement - International framework, TRIMs, PTIAs & BITs - Incentives vs. subsidies (SCM Agreement)

  10. National Policies for attracting global R&D 2 • Performance requirements - implications for type of R&D. • Standards & Regulations (depends on the size of the market). - technology monitoring units Supply-side: Strengthen national innovation system (domestic R&D, start-ups) Driving force - access to skills Access to national research programs

  11. Regional Policies for global R&D • Availability of human resources (numbers) in required specializations. • Programs in local universities. • Science Parks (thematic). • Focus on areas of competitive strength • Cluster development • Incubators • Regional Investment Promotion Agency

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