1. Motivation / Objectives This report aims at answering what countries can actually do to maximise the benefits of the globalisation of R&D. Three issues that are discussed in the research are: policies towards attracting R&D units from abroad, governments’ measures to link domestic firms to knowledge from abroad and policies towards the mobility of human resources. Methodology The aim of this research was to investigate a well researched phenomenon (internationalization of R&D) in a new environment (China and India ). An empirical, quantitative approach was applied so as to gather the real data for analysis. Business R&D Expenditure by Affiliates Abroad as % of Domestic R&D Approach We attempted to study the international innovation carried on by Indo- China companies but received only 28 valid questionnaires out of 279 sent out. With response rates this low, it seemed more fruitful to focus on the top Indo- China companies (Lenovo, Huawei, Haier, Kelon, Infosys, Tata and Reliance) and conduct in-depth research. Data for this research was thus collected mostly by personal research interviews, and complemented by database research. Only the first three of these companies operate international R&D units, while the last three did not posses foreign R&D presence as of the end of 2008. Research reports were sent back to the interview partners and feedback was requested to correct erroneous interpretations, to ensure greater validity of the data. The collected R&D data was compared to an international database of R&D locations and investment hosted by the Research Center for Global R&D Management at Tsinghua University in Beijing. Results The Indo- Chinese firms in the studied sample operated 77 R&D units, 30 in China, 16 in India and a surprisingly high number of 31 abroad. The 26 R&D units in advanced countries were predominantly located in the US (11) and Europe (11). 11 of those 37 foreign R&D units (just under one third) are located in developing countries themselves. Gross Domestic Expenditure on R&D Policy implications The internationalization of R&D has left deep impact on the policies of developing countries (India & China). Some of the changes are listed below:  The building up of world-class science systems including excellent human capital as well as special talent;  The establishment of competence centres enhancing industry-science linkages in order to achieve agglomeration effects, and  The opening-up of national technology programmes based on the principle of nondiscrimination. Next steps / The way forward FDI is attracted into countries for different reasons -- resource seeking, market seeking, efficiency seeking or strategic-asset seeking. Nonetheless, at a general level, in order for a country to be more attractive to investors there is a need to conduct investment promotion activities and provide financial incentives so that an enabling environment to conduct business can be suitably created. Beyond Borders: Internationalization of R&D and Policy Implications for Small Open Economies Ujjwal Kacker Contact Ujjwal Kacker Gujarat National Law University E-4 GIDC, Electronics Estate, Gujarat, INDIA Tel. +91-9824928142 E-mail: ujjwalkacker@gmail.com CountryGERD (in 100 million USD in 2008 ) GERD/GDP (in %) USA3,4372.61 UK3961.78 China3771.42 Brazil730.82 India490.61