World Investment Report 2005 : Transnational Corporations and the Internationalization of R&D, United Nations Conference on Trade and Development United Nations, New York and Geneva (2005)

Abstract

UNCTAD's annual World Investment Report (WIR) has established itself as a source of invaluable data about global foreign direct investment. It has also become well recognised as an important source of overview commentary on FDI and related aspects of globalisation. So, when the WIR 2005 was published with a focus on FDI and the internationalization of R&D, one of the subjects at the heart of Research Policy interests, we took the unusual step of inviting two reviews by leading scholars in the field—hoping that they would raise critical questions from contrasting perspectives.

We have not been disappointed, as demonstrated in the two reviews published below: one by Helena Barnard and John Cantwell from the Rutgers Business School, New Jersey; the other by Nagesh Kumar, Director of the Research and Information System for Developing Countries, New Delhi. Both reviews raise critical questions, focusing mainly on problems in interpreting the R&D data assembled in WIR 2005 and drawn on heavily in its overview commentary. The main thrusts of the two critiques address different issues. Helena Barnard and John Cantwell focus in particular on the limited window on innovative activity that is provided by data about R&D, stressing that this is especially narrow in developing countries. Consequently, they argue, the extent of internationalization of innovative activity is substantially under estimated by concentrating only on R&D-based innovation. Nagesh Kumar, on the other hand, gives most attention to the care that is needed in interpreting the R&D data even in its own terms—in particular, in assessing whether they can be interpreted as showing internationalization proceeding beyond a narrow core of countries into a wider range of developing countries. On that issue the perspectives of the two reviews differ. Helena Barnard and John Cantwell see the emergence of a positive trajectory of globally dispersing innovative activity, not merely in terms of quantities of R&D by TNCs but also in terms of qualitative change in the kinds of innovation, including R&D-based innovation, being undertaken. Nagesh Kumar on the other hand wonders whether, beyond a small number of capability-rich developing countries like China and India, TNCs may “perpetuate, rather than diffuse, the existing asymmetries in the global technological order”.