Globalisation is quickly reshaping the international economic landscape, resulting in an increasing global supply of science and technology (S&T) resources and capabilities. China and India, for example, have taken their place as important players with a growing capacity for research and innovation. As global competition intensifies and innovation becomes riskier and more costly, the business sector is internationalising knowledge-intensive corporate functions, including R&D. Firms increasingly offshore R&D activities to other countries to sense new market and technology trends worldwide. Overall, the internationalisation of a firm's R&D promises substantial benefits (cost efficiency, learning potential, etc) but also creates serious challenges for many countries (such as the loss of R&D jobs and knowledge). This report brings together the empirical evidence on the internationalisation of business R&D. It analyses trends in the offshoring of R&D, examines its drivers and motivations, and identifies implications for innovation policy.It examines the internationalisation of R&D through foreign direct investment (FDI) by multinational enterprises (MNEs), which account for the bulk of business R&D in the OECD area. It also discusses complementary aspects of the global innovation landscape, such as the internationalisation of science, the growing importance of international technology co-operation and the growing international mobility of researchers.