Shifting Tides: A Closer Look at the Changing R&D Investments of US Multinationals Abroad

Abstract

2021 was the first year in which US multinationals abroad spent more on R&D in services than in manufacturing. This reflects a fundamental shift in the R&D activities of US MNEs, and in our perceptions of R&D internationalization. Information, software, business, and scientific services have displaced automotive or pharmaceuticals as the main R&D investing industries. This shift also changes the relative importance of host countries; the European Union, with its specialization on manufacturing, is losing ground against Asian economies, but also other OECD countries.