1. Globalization of Technology Dr Henry Loewendahl VP North America, fDi Intelligence, Financial Times Ltd Managing Director, WAVTEQ Ltd INSME Annual Meeting “The Governance of Innovation" 9:50-11:00 23 May 2013, Izmir, Turkey No part of this material may be copied, distributed or used without the prior written permission of Henry Loewendahl

2. 1.Trends in R&D investment 2.Corporate strategies and competitiveness factors 3.Policy implications Contents

3. Foreign Direct Investment Trends in R&D Date range: 2003-2013 Definition: Job-creating greenfield FDI projects in R&D Source: fDi Markets database, fDi Intelligence, Financial Times Ltd

4. Global trends in R&D FDI Over 7,600 R&D projects creating >1m direct jobs tracked R&D more resilient to global conditions Increased its share of global FDI to a record 6.2% 2013 YTD

5. Global market shares of R&D Top Countries 1.USA (44%) 2.Germany (9%) 3.Japan (7%) 4.France (5%) Top States 1.California (13%) 2.New York (5%) 3.Kanto (5%) 4.South East UK (5%) Top Regions 1.North America (46%) 2.Western Europe (35%) 3.Asia Pacific (16%) 4.Other Regions (3%) ORIGIN Top Countries 1.India (17%) 2.China (15%) 3.USA (8%) 4.UK (6%) Top Cities 1.Bangalore (6%) 2.Shanghai (5%) 3.Singapore (4%) 4.Beijing (3%) Top Regions 1.Asia Pacific (47%) 2.Europe (33%) 3.North America (11%) 4.Latin America (5%) LOCATION

6. Industries and Companies Top Clusters 1.ICT & Electronics (43%) 2.Life Sciences (14%) 3.Transport Equipment (11%) 4.Industrial (6%) 5.Creative Industries (5%) CLUSTERS Top Sub-Sectors 1.Software Publishers (15%) 2.Custom Programming (9%) 3.Semiconductors (7%) 4.Pharma Preparations (6%) 5.Telecom Equipment (4%) SUB-SECTORS Top Companies 1.Microsoft 2.Henkel 3.Du Pont 4.IBM / Samsung / Blackberry 5.Tata / Intel / Honeywell COMPANIES 2012 Top Companies 1.IBM 2.Microsoft 3.Intel 4.Siemens / HP / GE 5.Du Pont COMPANIES 2003-12 Two-thirds of investing companies had turnover >$1 bn. 10% had turnover <$25m

7. Corporate Strategies & Competitiveness Factors Date range: 2003-2012 Definition: Job-creating greenfield FDI projects in R&D Source: fDi Markets & fDi Benchmark, fDi Intelligence, Financial Times Ltd

8. Globalization or Regionalization? Source: fDi Markets database, fDi Intelligence, from Financial Times Ltd, based on information on 2516 projects Companies primarily establish regional R&D centres Nearly ¼ of centres are for domestic markets Especially R&D in China and USA Nearly one-fifth are global centres

9. Location determinants Source: fDi Markets database, fDi Intelligence, from Financial Times Ltd, based on 1,648 projects with motives specified Search for skills Meeting market and customer needs Accessing specialist industry clusters University/researcher knowledge and talent pool

10. FDI #1 location determinant Size of R&D labour force Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

11. FDI #2/3 location determinants Markets Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

12. FDI #3 location determinant Size of R&D cluster Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

13. FDI #4 location determinant Size of talent pool and research Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

14. FDI #9 location determinant Costs are negatively correlated!! Source: Dr Henry Loewendahl analysis based on fDi Markets and fDi Benchmark databases for Canada cities

15. Policy Implications

16. R&D projects account for over 6% of global FDI so have become a very important source of investment – especially for emerging markets Companies typically have a regional R&D strategy, so understanding your competitive position regionally is key Innovation-driven investors can have a major impact on the economy. Microsoft estimates 1 job it creates leads to 30 spin-off jobs compared to a 1:3 ratio typical in manufacturing To attract R&D investors requires a combination of available skills, markets, clusters, and universities Most investment still comes from the developed economies, although major EM companies are playing a bigger role Major corporations dominate R&D investment, but still 1 in 10 R&D projects come from SMEs often linked to new VC Implications

17. Contacts Dr Henry Loewendahl VP North America, Representing fDi Intelligence, Financial Times Ltd Managing Director, WAVTEQ Ltd E-mail: henry.loewendahl@wavteq.comhenry.loewendahl@wavteq.com Skype/MSN: hloewendahl Linkedin: Henry Loewendahl Twitter: @hloewendahl Skype: +44 (0) 203 239 3224 (redirects to my current phone) W: www.fdiintelligence.com / www.wavteq.comwww.fdiintelligence.comwww.wavteq.com