In the 2015 Global Innovation 1000 study, Strategy&, PwC’s strategy consulting business, analyzed the flows of R&D spending among companies and countries worldwide. We found that the geographic footprint of innovation has expanded dramatically in the years since our 2008 study, when we first charted the globalization of R&D. The new landscape reflects significant regional shifts, as more companies pursue innovation programs abroad in search of access to top talent and high-growth market.
Led by dynamic growth in China and India, Asia is now the number one region for corporate R&D spending.
More corporate in-region R&D is now conducted in Asia (35 percent) than in North America (33 percent) and Europe (28 percent), which is a change from 2007, when Europe was the top region for R&D spending and Asia was third.
Massive growth in China and India propelled Asia to the top position. From 2007 to 2015, R&D imports to China grew 79 percent, helping to make it the second-largest destination for in-country R&D. India also saw imports increase 116 percent, making it the third-largest destination for imported R&D.
The U.S. holds its position as the largest corporate in-country R&D spender, importer, and exporter.
The U.S. is the largest spender on in-country R&D, but its lead is narrowing because its growth isn’t as robust as that of some Asian countries, specifically China. From 2007 to 2015, in-country R&D spending increased 120 percent for China but only 34 percent for the U.S.
Although the U.S. is shifting more of its R&D exports to low-cost countries in Asia such as China and India, most R&D imports are from Europe, which provided 63 percent of the U.S. total in 2015.
Europe falls from largest to third-largest region for corporate R&D spending.
A large increase (46 percent) in R&D exports out of Europe, and low growth in domestic and imported R&D spending (2 percent and 18 percent, respectively), caused Europe to drop from the largest to the third-largest region for R&D spending.
Most of Europe’s drop in in-country R&D spending was attributable to Western Europe, where net exports (exports minus imports) grew 352 percent between 2007 and 2015.
Globalization of R&D spending has paid dividends.
Companies with dispersed global R&D footprints continue to perform as well as or better than companies with a focused footprint, suggesting that there are material advantages to exporting R&D and that multinationals are able to coordinate successfully across many global sites.
R&D spending gets back on trend after its post–financial crisis dip.
In 2015, R&D spending by the Global Innovation 1000 increased by more than 5 percent to US$680 billion, the largest year-over-year increase since 2012.
Software & Internet had the highest year-over-year growth rate (27 percent) of all the industries in our analysis, which propelled it past the industrials sector to become the fourth-largest industry by R&D spending in 2015.
In 2015, Apple and Google remained the two most innovative companies, according to our survey respondents, and Tesla jumped to third place, pushing Amazon down to fifth. Toyota rejoined the ranking at number 10 after a two-year hiatus.
The 2015 Global Innovation 1000 study maps R&D spending worldwide
In this year’s study, we wanted to examine where R&D is being conducted — and to determine whether those destinations have changed since our 2008 study, when we first charted the global flows of corporate R&D. To analyze these flows among regions and countries, we researched the innovation activities of 207 companies in 23 countries conducting R&D at 2,041 R&D sites in more than 60 countries. This sample of major innovators accounts for 71 percent of the total Global Innovation 1000 R&D spending. The following are the results of this analysis.