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483.Countries may need to develop a set of coefficients according to discipline, institution, other criteria or a mixture of these in order to determine the proportion of R&D in non-exclusive budget items like GUF but also for a range of institutions which also perform activities other than R&D. As far as possible, these coefficients should be consistent with what is reported by these institutions as R&D in performer-based surveys.

8.5.Definition of government

484.“Government” should cover central (or federal), provincial (or state) and local government (see Chapter 3, Section 3.5). Public enterprises are excluded, as they are treated as part of the business enterprise sector. For the purposes of GBAORD, however, it is recommended that:

●Central or federal government should always be included.

●Provincial or state government should be included when its contribution is significant.

●Local government funds (i.e. those raised by local taxes) should be excluded.

8.6.Coverage of government budget appropriations and outlays

8.6.1.Intramural and extramural expenditures

485.

GBAORD covers not only government-financed R&D performed in government establishments but also government-financed R&D in the other three national sectors (business enterprise, private non-profit, higher education) as well as abroad (including international organisations).

8.6.2. Funding and performer-based reporting

486. R&D expenditures can be reported either by the agency providing the money (funding) or by the agency actually performing the R&D. In general, this Manual recommends the second approach, which is used in the standard tables in OECD surveys. However, the first approach is preferred for the GBAORD series.

GBAORD data should be based on the funder rather than the performer.

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8.6.3. Budgetary funds

487.

GBAORD clearly includes all outlays to be met from taxation or other government revenue within the budget.

488. A problem arises for appropriations for R&D performed by government institutions but expected to be financed from other sources. In some countries, these may be included in the government budget, on the grounds that the agency concerned needs government permission to spend them (gross approach). In others they may be excluded (net approach). When dealing with these government funds, a distinction should be made between:

–Contracts or grants from other sectors for the performance of R&D by government institutions.

–Other government funds, such as the retained receipts of government laboratories, receipts from levies, etc.

Net budgetary appropriations

489.

Appropriations for which corresponding revenue is expected either from other government sources or other sectors should be excluded from GBAORD according to the net principle.

490. If an R&D institute has a total gross budget of 10 million (including 3 million for externally financed contract research), for example, only 7 million should be counted as net budgetary appropriations for the institute, as the 3 million is on the budget of the funder of the contract research.

Other government funds

491. No specific guidelines can be suggested, but other government funds should generally be included in GBAORD if they are in the budget. This also concerns social security funds, if they are voted on in the parliament during the budgetary process.

8.6.4. Direct and indirect funding

Treatment of public general university funds

492.

GBAORD includes public general university funds (GUF).

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Loans and indirect funding of industrial R&D

493. As far as possible, instructions regarding both loans and indirect funding apply (Chapter 6, Section 6.3.2). Thus, loans that may be forgiven should be included in GBAORD, but loans that are to be repaid and indirect support of industrial R&D via tax rebates, etc., should in principle be excluded. Nevertheless, when such indirect support programmes are undertaken as part of an integrated R&D policy (for example, when the sources are documented and are included in inter-ministerial discussions of a science budget), they may be included in GBAORD. However, indirect funding should always be declared separately so that it can be excluded when making certain international comparisons.

8.6.5. Types of expenditure

General coverage

494.

GBAORD includes both current costs and capital expenditure.

Money carried forward

495. In some countries it is budgetary practice to carry forward large sums from one year to the next, sometimes including them in sums voted in successive years.

Multi-annual projects budgeted in only one year or over several should be allocated to the GBAORD of the year(s) in which they are budgeted, not in the years of performance. Multi-annual programmes that are authorised at some stage but budgeted over several years should be allocated to the years in which they are budgeted, not the year of authorisation.

8.6.6. GBAORD going to R&D abroad

496. Only contributions to international R&D programmes or organisations solely or mainly concerned with R&D should be included. Contributions of a general nature (like those to the UN, the OECD, the EU, etc.) should be excluded. Appropriations to the following institutions should be included:

–CERN (European Organisation for Nuclear Research).

–ESA (European Space Agency).

–CGIAR (Consultative Group on International Agricultural Research).

–ESRF (European Synchrotron Radiation Facility).

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–EMBO (European Molecular Biology Organisation), including EMBL, EMBC.

–IAEA (International Atomic Energy Agency).

–COST (Co-operation in Scientific and Technical Research, EU programme accessible to non-members).

–EUREKA (European Network for Market-Oriented Industrial R&D).

8.7.Distribution by socio-economic objectives

8.7.1. Criteria for distribution

Purpose or content

497. Two approaches to distribution are possible:

– According to the purpose of the R&D programme or project.

– According to the general content of the R&D programme or project.

498. The difference between the two is illustrated by the following examples:

–A research project on the effects on human body functions of various chemicals which could be used as weapons: the purpose is “defence” but the R&D content is “human health”.

–A research project to develop fuel cells to provide power in remote forest locations financed by the Ministry of Agriculture: the purpose is “agriculture, forestry and fishing” but the R&D content is “energy”.

Purpose is more fundamental from the viewpoint of government policy, and this approach is used in principle for the collection of GBAORD by socio-economic objective.

Primary and secondary objectives

499. Though some government-supported R&D programmes have only one purpose, others may have several. For example, a government may commit money to an aircraft project primarily for military reasons but also to encourage export sales by the aerospace industry and even to assist spin-offs to civil aviation. However, in reports to the OECD, R&D should be classified according to its primary objective.

Identifying primary objectives

500. Where there are problems in identifying the primary purpose of the funder of the R&D or where there seem to be differences between the “purpose” and the “content” of a programme, two principles originally

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