The internationalisation of UK R&D

Policies to promote research and development (R&D) are high on the governme nt's agenda. R&D and innovation are seen as key drivers of economic growth and important for raising UK productivity. This paper considers recent tren ds in UK R&D performance. We show that UK R&D is more internationalised tha n that of other G5 countries and is becoming increasingly so at a faster ra te. A rising share of UK R&D is funded from abroad and UK firms are underta king more of their R&D overseas. Using an international panel of countries, we show that R&D in one country responds to a change in the price in anoth er 'competitor' country, This suggests that UK innovation policies could pl ay an important role in determining whether increasingly footloose R&D loca tes in the UK or moves overseas.