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Nuclear Research (CERN), or informally, via multilateral and bilateral agreements. There is a clear need for more information on these trends.

40.The present edition of the Frascati Manual takes the globalisation process into account by suggesting more detailed breakdowns of sources of funds for R&D and extramural R&D for transactions with units abroad. Further information on the need for indicators of technological globalisation will be found in a substantial review of different aspects of measuring globalisation (Manual of Economic Globalisation Indicators, provisional title, forthcoming). As the R&D activities of multinational groups of enterprises are usually organised, managed and financed at group level or group division level, it is sometimes very difficult, if not impossible, to identify R&D performed in units of the group in different countries and to obtain information on R&D flows between these units.

41.R&D co-operation is an area that is not traditionally covered in R&D surveys. More information on R&D co-operation would be highly desirable for policy makers. However, owing to lack of sufficient experience in member countries, it has not been possible to include recommendations for data collection on R&D co-operation in this edition of the Manual. There is some relevant information on R&D flows between different kinds of institutions. Experience with innovation surveys has shown that it is possible to ask different types of units in different geographical regions a simple question on co-operation. This could be tried in R&D surveys as well, so that, in future, it may be possible to make explicit recommendations.

1.9.Classification systems for R&D

42.To understand R&D activity and its role, one must examine it in terms of the organisations performing and funding R&D (institutional classification) and in terms of the nature of the R&D programmes themselves (functional distribution).

43.It is usual to use basic institutional classifications in national (and international) R&D surveys, as they facilitate the survey process, and combine them with functional distributions to obtain a fuller understanding of the situation described by the statistics.

1.9.1. Institutional classifications

44. In the institutional approach, attention focuses on the characteristic properties of the performing or funding institutions. All units are classified according to their principal (economic) activity. In this approach, all of the R&D resources of the statistical unit are allocated to one class or sub-class. The advantage is that R&D data are generally collected within the same framework as regular economic statistics; this simplifies surveying and

FRASCATI MANUAL 2002 – ISBN 92-64-19903-9 – © OECD 2002

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facilitates comparisons between R&D and other economic data. The main disadvantage is that it does not exactly describe the R&D activities of the unit, which may not always be directly related to its “official” activity.

45. Chapter 3 of the Manual deals with the institutional classifications used. In order to ensure maximum comparability with regular economic or social statistics, these are, as far as possible, based on existing UN classifications. The main institutional classification of national R&D efforts is by sector. Five sectors are identified: business enterprise, government, private non-profit (PNP), higher education and abroad. Sub-classifications are given for three of the four national sectors (business enterprise, PNP and higher education) and additional institutional classifications, designed to reveal national differences in sectoring, are suggested.

1.9.2. Functional distribution

46.In the functional approach, discussed in Chapter 4, attention focuses on the character of the R&D itself. The nature of the R&D activities performed by the unit is examined, and these are broken down in various ways to show their distribution by type of R&D, product field, objective, field of science, etc. Thus, the functional approach provides data that are more detailed and, since international differences in institutional patterns have less influence, they are theoretically more internationally comparable than those resulting from institutional classification. This approach is, however, sometimes difficult to apply in practice. This is particularly true for analysis by type of R&D (basic research, applied research, experimental development) which is, on the one hand, of undoubted science policy interest but, on the other, is based on an oversimplified model of the workings of the scientific and technological system. It also involves an important element of subjective assessment by the respondent. This question is discussed in Chapter 4, Section 4.2.3.

47.The distinction between military and civil R&D is considered as an important functional breakdown of the national R&D effort. In most OECD countries, defence R&D plays a relatively minor role. However, in a few countries that perform a high level of R&D, defence R&D expenditure approaches or exceeds half of total government R&D expenditure. As a result, international comparisons differ, depending on whether defence R&D is or is not included. The demand for defence R&D fluctuates with changing political situations, and therefore its long-term trend varies differently from that of civil R&D. This means that, within the overall picture of national R&D effort, it will always be necessary to separate the two categories of R&D expenditure. Defence R&D is further discussed in Annex 10.

48.While these functional distributions are more detailed than the institutional classifications, they are still not detailed enough to be of use to one

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