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13.As in the previous editions of the Manual, an attempt has been made to make R&D surveys consistent with the principles laid down in the System of National Accounts (SNA). As far as possible, complementary data should be collected that allow for bridging Frascati Manual-type data with SNA-type data. For this reason, recommendations for the breakdown of sources of funds and of extramural R&D expenditures are quite detailed and a recommendation has been introduced to collect data on software investments related to R&D. Annex 3 discusses the relation between R&D surveys and national accounts in more detail.

1.4.R&D input and output

14.This Manual is devoted to measuring R&D inputs. R&D covers both formal R&D in R&D units and informal or occasional R&D in other units. However, interest in R&D depends more on the new knowledge and innovations and the economic and social effects that result than on the activity itself. Unfortunately, while indicators of R&D output are clearly needed to complement input statistics, they are far more difficult to define and produce.

15.The output of R&D or science and technology (S&T) in general can be measured in several ways. Innovation surveys are an attempt to measure outputs and the effects of the innovation process in which R&D plays an important role. A manual on innovation surveys has been issued and revised once (OECD, 1997a).

16.Another option is to use existing data sources. A substantial amount of methodological work was required before recommending international standard practice for using existing sources to derive S&T indicators. Manuals on the technology balance of payments and on the use of patents as S&T indicators have been published (OECD 1990, 1994b). Guidelines are also available on bibliometrics and on the analysis of trade data in terms of the “technology intensity” of the products or industries concerned (see Table 1.1). These manuals and guidelines differ from this Manual in that they focus more on problems of interpretation; the data used are not collected for the purpose of S&T analysis but are extracted from existing sources and rearranged for this purpose (for further details, see Annex 7).

1.5.R&D and related activities

1.5.1.Research and experimental development (R&D)

17. This Manual deals only with the measurement of research and experimental development (comprising basic research, applied research and experimental development). A full definition can be found in Chapter 2.

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18.R&D is an activity related to a number of others with a scientific and technological basis. Although these other activities are often very closely linked to R&D, through flows of information and in terms of operations, institutions and personnel, they must be excluded when measuring R&D. R&D and these related activities may be considered under two headings: the family of scientific and technological activities (STA) and the process of scientific and technological innovation.

1.5.2. Scientific and technological activities (STA)

19.UNESCO developed the broader concept of STA and included it in its “Recommendation concerning the International Standardisation of Statistics on Science and Technology” (UNESCO, 1978). In addition to R&D, scientific and technological activities comprise scientific and technical education and training (STET) and scientific and technological services (STS). The latter services include, for example, S&T activities of libraries and museums, translation and editing of S&T literature, surveying and prospecting, data collection on socio-economic phenomena, testing, standardisation and quality control, client counselling and advisory services, patent and licensing activities by public bodies.

20.R&D (defined similarly by UNESCO and the OECD) is thus to be distinguished from both STET and STS.

1.5.3. R&D and technological innovation

21.Technological innovation activities are all of the scientific, technological, organisational, financial and commercial steps, including investments in new knowledge, which actually, or are intended to, lead to the implementation of technologically new or improved products and processes. R&D is only one of these activities and may be carried out at different phases of the innovation process. It may act not only as the original source of inventive ideas but also as a means of problem solving which can be called upon at any point up to implementation.

22.Besides R&D, other forms of innovative activities may be distinguished in the innovation process. According to the Oslo Manual (OECD, 1997a), these are “acquisition of disembodied technology and know-how, acquisition of embodied technology, tooling up and industrial engineering, industrial design n.e.c., other capital acquisition, production start-up and marketing for new or improved products”.

23.Furthermore, in the case of innovations based on government R&D programmes, the process may include a significant demonstration stage. “A demonstration is a project involving an innovation operated at or near full scale in a realistic environment for the purpose of: i) formulating national

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policy; or ii) promoting the use of innovation” (Glennan et al., 1978). It should be noted that the data collected and published by the International Energy Agency at the OECD cover research, development and demonstration (“R, D and D”).

24. Possibly the greatest source of error in measuring R&D is the difficulty of locating the cut-off point between experimental development and the related activities required to realise an innovation. Errors in this respect are particularly significant: while many innovations may require costly R&D, the costs of preparing for production are often higher still. Sections 2.3.4 and 2.4.1 of Chapter 2 are devoted to guidelines and conventions for dealing with these problems and give examples. They provide guidelines on this borderline as it relates to the development of computer software and large-scale projects, notably for defence. Supplementary guidance on treating large-scale projects is given in Annex 10, with examples distinguishing between R&D and preproduction development.

1.5.4. The identification of R&D in software, social sciences and service activities

25. In recent years, the desire for better information on R&D in service activities has been expressed. The basic definitions in this Manual were originally developed for manufacturing industry and research in the natural sciences and engineering. Specific problems therefore arise for applying them to service activities, which often involve software applications and research in the social sciences. In Chapter 2, a new section (2.4) is devoted to a discussion of these problems.

1.5.5. R&D administration and other supporting activities

26. To carry out the R&D activities described above, funds must be provided and the project and its financing must be managed. The R&D funding activities of policy agencies, such as ministries of science and technology or research councils, do not constitute R&D. In the case of in-house management of R&D projects and their financing, a distinction is made between direct support for R&D by persons such as R&D managers closely associated with individual projects, who are included in both the personnel and expenditure series, and persons such as financial directors, whose support is indirect or auxiliary and who are included in the expenditure series only as an element of overheads. Auxiliary support by catering or transport services is also included in overheads. These distinctions are discussed further in Chapters 2, 5 and 6.

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