This report examines the research and development (R&D) funding of U.S. firms in foreign countries, discussing the available statistical data and describing the reasons for and location of foreign R&D programs undertaken by these companies. Expenditures of U.S. firms for R&D performed abroad reached $1.5 billion, increasing 41% from 1974 to 1977, compared to a 32% increase for industrial R&D performed within the U.S. R&D directors gave meeting local market conditions as the most frequent reason for locating or expanding R&D activities in foreign countries. Only an estimated 15% of the major U.S. industrial R&D performers spend any portion of their company funds outside the U.S. (Author/BB)