US Multinational Corporations Have Shifted Foreign R&D towards Nontraditional Locations

The location of US multinational corporations' (MNCs) research and development (R&D) outside the United States has undergone a pronounced geographic shift. In 1989, US MNCs conducted 74 percent of all foreign R&D in just five countries—the United Kingdom, Germany, Japan, France, and Canada. By 2014, that number dropped to 43 percent. Many of the new hubs for R&D, which include China, India, and Israel, have only recently graduated from developing country status. US multinationals have created a new intellectual value chain that combines raw engineering talent available in developing countries with specialized knowledge needed to produce innovations in the global market.

This PIIE Chart is adapted from the PIIE Policy Brief 19-9, The Rise of Global Innovation by US Multinationals Poses Risks and Opportunities.