Inventor Location and the Globalization of R&D

R&D is becoming increasingly globalized, but R&D statistics have not kept up with this development. Firm-level data capture R&D investments irrespective of location, and OECD survey data typically capture only R&D performed within national territorial boundaries. In this paper we rely on information regarding the location of a firm’s inventors and develop a method of quantifying the R&D investments by country of inventive activity. For 3,024 European and US business group and their subsidiaries we have identified all inventors and their locations at the time of invention. In year 2000 these corporations accounted for about 80 % of the overall intramural R&D in their countries as reflected in OECD data. Comparing inventor count data to consolidated R&D expenditures we find high correlations both in levels and growth rates. We estimate production function and market value regressions taking the geographical distribution of a firm’s inventive activities into account. Foreign-located inventors contribute significantly to productivity growth and market value