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A. Overview

A key factor of increasing importance in world R&D is the fact that both projects and knowledge are becoming multinational in character. With the growth in international corporations, travel and telecommunications, and growing numbers of foreign students in institutions of higher learning all over the globe, both the practice and the propagation of research are attaining global proportions. As the Congressional Research Service concluded in a recent review: "[W]ith worldwide communications systems, it is virtually impossible to prevent the flow of scientific and technical information." ¹

Industrial firms are turning to global research partnerships to expand their capabilities. Since 1986, over 4,000 known multi-firm R&D alliances for strategic high-technology activities have been created worldwide. Of these, over one-third were collaborations of U.S. firms with European and/or Japanese partners, and most were in information technologies. There is also substantial cross-funding of R&D by U.S. and non-U.S. companies. More than 10% of U.S. corporate R&D funds are spent overseas, and a comparable amount is spent by non-U.S. firms in the U.S. Foreign companies spent $6.5 billion on R&D in the US in 1987 -- that grew to $14.6 billion by 1993. Meanwhile, US corporate spending on R&D overseas also rose dramatically in these years – from $5.2 billion to $9.8 billion. . By 1995, foreign-owned companies spent over $17 billion on R&D in the United States, while U.S.-owned companies spent about $13 billion on R&D overseas. ² In other industrialized countries, the proportion of foreign funding of R&D is considerably higher than this level, and is welcomed and encouraged by some national governments as a public policy priority. Foreign funding of R&D ranged widely from nearly 14% in Britain to only 0.1% in Japan.

The number of foreign-owned R&D facilities in other countries is growing dramatically. In the U.S., the number of such foreign-company research facilities more than doubled in just three years -- from 250 in 1992 to 645 in 1995. Of these, 53 were automotive facilities (34 Japanese, 16 European, and 3 Korean). ³ Thus, it is becoming increasingly difficult to isolate any one nation’s R&D activities, spending and resources and assess it as an entity separate from the rest of the world

However, even though the ‘globalization of research’ is obvious, each nation still retains to a considerable extent its own R&D priorities, policies, capabilities and history. In fact, it is the uniqueness of each nation’s situation that drives the creation of multinational partnerships, which seek to exploit the best available resources, wherever they are, for a common goal. Thus, a discussion of the status of both general R&D and transportation-related R&D in individual nations is a necessary background for assessing the position of the U.S. in relation to the other major economies of the world.

B. Country Summaries

The 28 member nations of the Organization for Economic Cooperation and Development (OECD) spent a total of $410 billion on R&D activities in 1995. More than 90% of this amount was spent by the ‘Group of Seven’ nations -- USA, Japan, Germany, France, UK, Italy, and Canada -- and 44% was spent by the United States alone. This is more than double the level of the next country (Japan) and about the same as the next six nations combined. (See Table 1 and Figure 1) In only four other countries – Australia, the Netherlands, Spain, and Sweden -- do R&D expenditures exceed one percent of the OECD total for R&D spending.

Table 1 ⁴

GDP, R&D and Transportation R&D Expenditures, 1995 - Group of 7
(in 1995 $US unless otherwise noted.)

COUNTRY