A New Geography of Innovation - China and India Rising

With some delay, the internationalization of business research and development (R&D) is following the globalization of production. Starting on a small scale during the 1970s and 1980s, the emergence of globally distributed R&D networks of multinational enterprises (MNEs) accelerated rapidly in the 1990s. This paper analyzes the ways in which the "globalization of innovation" was facilitated and driven by a complex set of factors, including changes in trade and investment governance, improved intellectual property rights through the World Trade Organization's (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights, the growing ease and falling cost of communicating and traveling around the globe, and the concomitant vertical industry specialization and unbundling of value chains.