Brain power makes all the difference to where companies site research and development facilities, agreed panellists at a recent gathering of investment promotion agencies.

The panel at the World Association of Investment Promotion Agencies annual conference focused on the factors influencing the location of FDI in R&D and on the implications for IPAs.

There was strong consensus that human capital played a major role in the international allocation of corporate R&D. Tom Lantzsch, executive vice-president of corporate development at semi-conductor intellectual property supplier ARM, said that the main component of R&D location decisions is “the search for the smartest people around the world”. 

An obvious policy implication is the need to improve education and achieve a better match between education programmes and private sector needs. IPAs targeting FDI in R&D are becoming increasingly involved in improving the conditions to attract foreign talent.

Stewart Laing, director of Scottish Development International, described the TalentScotland initiative, which provides support to highly skilled workers willing to immigrate into Scotland and to foreign investors searching for researchers and highly skilled employees.

Collaboration with world-class universities abroad is another factor that is becoming more important as companies embrace an ‘open innovation’ model.

John Bell, head of strategy and partnerships at Philips Research, a technological innovations firm, provided examples of emerging modes of collaboration in R&D between multinationals and universities. “Another trend is the co-location of our teams of researchers within the premises of hospitals and universities that we collaborate with,” he said.

Brian Quinn, research manager at Intel Labs Europe, a network of R&D, product and innovation laboratories, emphasised the importance of a country’s ability to react quickly to new technological trends and changes in the global FDI landscape. This requires responsive institutions, efficient IPAs and flexible universities. n