10/6/2007
Impact of the Globalization of R&D and Innovation
by Mildred Holley, Technology Programs Manager
“In the last decade the share of U.S. firms’ R&D sites located in the United States declined from 59 percent to 52 percent, while the share in China and India increased from 8 percent to 18 percent.” So reported Dr. Robert Atkinson in testimony to the U.S. House of Representatives’ Subcommittee on Technology and Innovation, Committee on Science and Technology on October 4, 2007. Atkinson is president of the Information Technology and Innovation Foundation, a non-partisan public policy institute focused on innovation, productivity and digital economy issues.
Other data offered in his remarks include the following:
• Between 1998 and 2003, investment in R&D by U.S. majority-owned affiliates increased twice as fast overseas as did total corporate R&D (U.S. and foreign firms) in the U.S. – 52 percent compared to 26 percent.
• Corporate-funded R&D as a share of GDP fell by 7 percent in the U.S. from 1999 to 2003.
• R&D investment in the U.S. increased by 4.9 percent from 2005 to 2007, but increased by 8.7 percent in the rest of the world.
• The U.S. share of global R&D fell from 46 percent in 1986 to 37 percent in 2003.
• In 1990, the U.S. had the world’s most generous tax treatment for R&D. By 2004, we had dropped to 17th most generous.
Atkinson identified four key steps for Congress to consider:
1. Expand the R&D tax credit.
2. Create a National Innovation Foundation.
3. Ensure an adequate supply of skilled researchers.
4. More vigorously combat other nations’ efforts to force U.S. companies to move R&D offshore.
To see the entirety of Atkinson’s testimony, go to www.itif.org. The site provides access to numerous reports and testimony on issues of interest to the technology-based economic development community.
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