Doubts about Europe's ability to maintain its technological edge against stiff global competition gave rise to the Lisbon goals and the EU's commitment to reverse the trend. But in areas ranging from biotechnology and pharmaceuticals to consumer electronics, some of Europe's major industrial groups have been outsourcing R&D beyond the frontiers of the EU. Is this a global phenomenon, or a particularly thorny European one? What policy counter-measures are being, or should be, used to tackle it?