The shift toward greater R&D expenditures in Asia is also reflected in R&D flows between MNCs and their overseas affiliates in which they hold majority ownership (figure
Overseas R&D expenditures by U.S.-based MNCs ($28.5 billion in 2006) shifted toward emerging Asian markets whose combined share, excluding Japan, increased from 5% to 14% from 1995 to 2006. This change was driven by U.S. affiliates in China, South Korea, and Singapore. In 1995, about 90% of all overseas R&D by U.S.-headquartered MNCs took place in developed European economies, in Canada, and in Japan; by 2006, the combined percentage of these economies had declined to 80%.
In the United States, affiliates of foreign-headquartered MNCs spent $34.3 billion on R&D in 2006. Their R&D expenditures represented about 14% of total U.S. business R&D performance, up from less than 10% in the 1980s.