China, India attracting offshore R&D
Study: Corporations drawn not only by lower costs but also by opportunity to work with universities.

NEW YORK ( - China and India will keep up their new role as magnets for corporate research in coming years not just because of their lower costs, but also because their universities are easy to partner with, a study said Thursday.

Emerging markets remain attractive locations for corporate R&D, despite their weak protection of intellectual property rights, according to the study sponsored by the Kauffman Foundation, an organization that promotes entrepreneurship.

The study surveyed more than 200 multinational companies, mostly headquartered in the United States and Western Europe, in 15 industries.

More than half of the U.S. companies in the study said they had either recently expanded or planned to locate research facilities in China and India, whereas one-fifth of the European companies surveyed by the study said they planned on expanding or locating new R&D facilities to the U.S.

While lower costs in developing countries have long been considered a major driver behind outsourcing, the study finds that collaboration with universities and intellectual capital also are key factors companies consider when deciding where to locate their operations.

The study comes amid concerns that the U.S. is losing its innovative edge as corporations move their research activities elsewhere. There are also concerns that American companies will seek critical research partners at foreign universities rather than at home.

"Industry and universities must be alert to removing obstacles to joint research, or emerging countries will overtake us in innovation breakthroughs, and the burst of discovery that has been driving our economy for the past half-century will be over," Lesa Mitchell of the Kauffman Foundation, said in a statement accompanying the study's release.

China and India will keep benefiting from R&D expansion over the next three years, the study said. But companies are still keeping their most cutting-edge research in developed countries, with only 22 percent of corporate research in emerging markets devoted to new science.

In a small, separate development that suggests university collaboration is still alive and well in the United States, Santa Clara, Calif.-based Sun Microsystems said it was working with the City University of New York to provide a platform that allows students and educators to communicate and interact online.


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