Capturing International R&D Trade and Financing Flows: What Do Available Sources Reveal about the Structure of Knowledge-Based Global Production?

Measuring the magnitude and intensity of globalization across different dimensions is a key activity of statistical agencies. The fragmentation of production processes across global sites is a distinctive feature of recent globalization and has implications for countries’ economic and financial interdependence. R&D has also become fragmented, with a combination of demand factors, incentivising the dispersal of production into global value chains (GVCs), and being driven from the supply side as knowledge creation requires inputs from dispersed technological inputs across and within companies. Understanding what drives the creation, funding, diffusion and exploitation of knowledge-based assets can contribute to our understanding of global production.
We emphasize the importance of compiling and contrasting statistics on knowledge-based assets, incorporating sources specifically designed to map the creation and funding of R&D. Frascati R&D statistics have tracked investment within and across countries. In the 2008 revision of the System of National Accounts, expenditures on R&D were recognized as investment, thus as assets to be used by the owners themselves or for a range of possible commercialization activities, including with affiliates, that may span beyond a country’s national boundaries. This paper focuses on R&D globalization in the business sector, and examines new and existing international statistical evidence.