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Globalization of Technology Dr Henry Loewendahl VP North America, fDi Intelligence, Financial Times Ltd Managing Dir

Globalization of Technology Dr Henry Loewendahl VP North America, fDi Intelligence, Financial Times Ltd Managing Director, WAVTEQ Ltd INSME Annual Meeting “The Governance of Innovation" 9:50-11:00 23 May 2013 , Izmir, Turkey.

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Globalization of Technology Dr Henry Loewendahl VP North America, fDi Intelligence, Financial Times Ltd Managing Dir

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  1. Globalization of Technology Dr Henry Loewendahl VP North America, fDi Intelligence, Financial Times Ltd Managing Director, WAVTEQ Ltd INSME Annual Meeting “The Governance of Innovation" 9:50-11:00 23 May 2013, Izmir, Turkey No part of this material may be copied, distributed or used without the prior written permission of Henry Loewendahl

  2. Contents • Trends in R&D investment • Corporate strategies and competitiveness factors • Policy implications

  3. Foreign Direct Investment Trends in R&D Date range: 2003-2013 Definition: Job-creating greenfield FDI projects in R&D Source: fDi Markets database, fDiIntelligence, Financial Times Ltd

  4. Global trends in R&D FDI • Over 7,600 R&D projects creating >1m direct jobs tracked • R&D more resilient to global conditions • Increased its share of global FDI to a record 6.2% 2013 YTD

  5. Global market shares of R&D ORIGIN LOCATION Top Regions North America (46%) Western Europe (35%) Asia Pacific (16%) Other Regions (3%) Top Regions Asia Pacific (47%) Europe (33%) North America (11%) Latin America (5%) Top Countries USA (44%) Germany (9%) Japan (7%) France (5%) Top Countries India (17%) China (15%) USA (8%) UK (6%) Top States California (13%) New York (5%) Kanto (5%) South East UK (5%) Top Cities Bangalore (6%) Shanghai (5%) Singapore (4%) Beijing (3%)

  6. Industries and Companies CLUSTERS COMPANIES 2003-12 Top Clusters ICT & Electronics (43%) Life Sciences (14%) Transport Equipment (11%) Industrial (6%) Creative Industries (5%) Top Companies IBM Microsoft Intel Siemens / HP / GE Du Pont COMPANIES 2012 SUB-SECTORS Top Companies Microsoft Henkel Du Pont IBM / Samsung / Blackberry Tata / Intel / Honeywell Top Sub-Sectors Software Publishers (15%) Custom Programming (9%) Semiconductors (7%) Pharma Preparations (6%) Telecom Equipment (4%) Two-thirds of investing companies had turnover >$1 bn. 10% had turnover <$25m

  7. Corporate Strategies & Competitiveness Factors Date range: 2003-2012 Definition: Job-creating greenfield FDI projects in R&D Source: fDi Markets & fDi Benchmark, fDi Intelligence, Financial Times Ltd

  8. Globalization or Regionalization? • Companies primarily establish regional R&D centres • Nearly ¼ of centres are for domestic markets • EspeciallyR&D in China and USA • Nearly one-fifth are global centres Source: fDi Markets database, fDi Intelligence, from Financial Times Ltd, based on information on 2516 projects

  9. Location determinants • Search for skills • Meeting market and customer needs • Accessing specialist industry clusters • University/researcher knowledge and talent pool Source: fDi Markets database, fDi Intelligence, from Financial Times Ltd, based on 1,648 projects with motives specified

  10. FDI #1 location determinantSize of R&D labour force Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

  11. FDI #2/3 location determinantsMarkets Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

  12. FDI #3 location determinantSize of R&D cluster Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

  13. FDI #4 location determinantSize of talent pool and research Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

  14. FDI #9 location determinantCosts are negatively correlated!! Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

  15. Policy Implications

  16. Implications • R&D projects account for over 6% of global FDI so have become a very important source of investment – especially for emerging markets • Companies typically have a regional R&D strategy, so understanding your competitive position regionally is key • Innovation-driven investors can have a major impact on the economy. Microsoft estimates 1 job it creates leads to 30 spin-off jobs compared to a 1:3 ratio typical in manufacturing • To attract R&D investors requires a combination of available skills, markets, clusters, and universities • Most investment still comes from the developed economies, although major EM companies are playing a bigger role • Major corporations dominate R&D investment, but still 1 in 10 R&D projects come from SMEs often linked to new VC

  17. Contacts • Dr Henry Loewendahl • VP North America, Representing fDi Intelligence, Financial Times Ltd • Managing Director, WAVTEQ Ltd • E-mail: henry.loewendahl@wavteq.com • Skype/MSN: hloewendahl • Linkedin: Henry Loewendahl • Twitter: @hloewendahl • Skype: +44 (0) 203 239 3224 (redirects to my current phone) • W: www.fdiintelligence.com/ www.wavteq.com

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