Methodology

1. What is R&D?

Research and experimental development (R&D), as defined by the OECD Frascati Manual, comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge.

For an activity to be an R&D activity, it must satisfy five core criteria. The activity must be:

• Novel (to be aimed at new findings)
• Creative (to be based on original, not obvious,  concepts and hypotheses)
• Uncertain (to be uncertain about the final outcome)
• Systematic (to be planned and budgeted)
• Transferable and/or reproducible (to lead to results that could be possibly reproduced).

2. What is excluded from R&D?

Activities to be excluded from R&D include:

• Education and training (however, research by students at the PhD and master’s levels carried out at universities should be counted, whenever possible, as a part of R&D);
• Other related scientific and technological activities;
• Other industrial activities; and
• Administration and other supporting activities.

3. Where can I find the Frascati Manual?

Frascati Manual 2015 lays down the main definitions and guidelines for collecting R&D data. The 7th edition of the manual was published by the OECD in 2015

4. Which are the basic R&D indicators?

Personnel data measure the resources going directly to R&D activities. Expenditure data measure the total cost of carrying out the R&D concerned, including indirect support (ancillary) activities.

5. Which are the sectors of performance?

To facilitate the collection of data, the description of institutional flows of R&D funds, and the analysis and interpretation of R&D data, statistical unit(s) should be grouped by sectors of the economy, following as closely as possible standard classifications of economic activities. R&D data can be classified into four sectors of performance:

• Business enterprise:
  • All resident corporations, including not only legally incorporated enterprises, regardless of the residence of their shareholders. This group also includes all other types of quasi-corporations, i.e.  units capable of generating a profit or other financial gain for their owners, recognised by law as separate legal entities from their owners, and set up for purposes of engaging in market production at prices that are economically significant.
  • The unincorporated branches of non-resident enterprises are deemed to be resident because they are engaged in production on the economic territory on a long-term basis.
  • All resident non-profit institutions (NPIs) that are market producers of goods or services or serve business.
  • This sector comprises both private and public enterprises.
• Government:
  • All units of central (federal), regional (state) or local (municipal) government, including social security funds, except those units that provide higher education services or fit the description of higher education institutions provided below.
  • All non-market NPIs that are controlled by government units that are not part of the Higher education sector.
• Higher education:
  • All universities, colleges of technology and other institutions providing formal tertiary education programmes (i.e. ISCED levels 5, 6, 7, or 8), whatever their source of finance or legal status.
  • All research institutes, centres, experimental stations and clinics that have their R&D activities under the direct control of, or are administered by, tertiary education institutions.
• Private non-profit:
  • All non-profit institutions serving households (NPISH), except those classified as part of the Higher education sector.
  • Households and private individuals engaged or not engaged in market activities.

6. Which are the sources of funds?

To facilitate the collection of data, the description of institutional flows of R&D funds, and the analysis and interpretation of R&D data, statistical unit(s) should be grouped by sectors of the economy, following as closely as possible standard classifications of economic activities. R&D data can be classified into five sources of funds:

• Business enterprise:
  • All resident corporations, including not only legally incorporated enterprises, regardless of the residence of their shareholders. This group also includes all other types of quasi-corporations, i.e.  units capable of generating a profit or other financial gain for their owners, recognised by law as separate legal entities from their owners, and set up for purposes of engaging in market production at prices that are economically significant.
  • The unincorporated branches of non-resident enterprises are deemed to be resident because they are engaged in production on the economic territory on a long-term basis.
  • All resident non-profit institutions (NPIs) that are market producers of goods or services or serve business.
  • This sector comprises both private and public enterprises.
• Government:
  • All units of central (federal), regional (state) or local (municipal) government, including social security funds, except those units that provide higher education services or fit the description of higher education institutions provided below.
  • All non-market NPIs that are controlled by government units that are not part of the Higher education sector.
• Higher education:
  • All universities, colleges of technology and other institutions providing formal tertiary education programmes (i.e. ISCED levels 5, 6, 7, or 8), whatever their source of finance or legal status.
  • All research institutes, centres, experimental stations and clinics that have their R&D activities under the direct control of, or are administered by, tertiary education institutions.
• Private non-profit:
  • All non-profit institutions serving households (NPISH), except those classified as part of the Higher education sector.
  • Households and private individuals engaged or not engaged in market activities.
• Rest of the world (formerly referred to as ‘Abroad’):
  • All institutions and individuals without a location, place of production or premises within the economic territory on which or from which the unit engages and intends to continue engaging, either indefinitely or over a finite but long period of time, in economic activities and transactions on a significant scale.
  • All international organisations and supranational entities including facilities and operations within the country’s borders.

7.What are the types of R&D activity?

R&D covers three activities: basic research, applied research and experimental development.

• Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view.

• Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective.

• Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

R&D covers both formal R&D in R&D units and informal or occasional R&D in other units.

8. Which are the fields of R&D?

R&D data can be classified by fields of R&D, using the OECD fields of research and development (FORD) classification (presented in the Frascati Manual 2015), as shown in Table 1.

Table 1. Fields of R&D classification in the Frascati Manual

9. Who are R&D personnel?

R&D personnel are all persons engaged directly in R&D as well as those providing direct services for the R&D activities (such as R&D managers, administrators, technicians and clerical staff). Persons providing indirect support and ancillary services, such as canteen, maintenance, administrative and security staff, should be excluded, even though their wages and salaries are included as an overhead cost when measuring expenditure.

10. How are R&D personnel classified by function?

R&D personnel can be classified according to their R&D function:

• Researchers: professionals engaged in the conception or creation of new knowledge. They conduct research and improve or develop concepts, theories, models, techniques, instrumentation, software or operational methods.
• Technicians: persons whose main tasks require technical knowledge and experience in one or more fields of engineering, the physical and life sciences (technicians), or the social sciences, humanities and the arts (equivalent staff). They participate in R&D by performing scientific and technical tasks involving the application of concepts, operational methods and the use of research equipment, normally under the supervision of researchers.
• Other supporting staff: includes skilled and unskilled craftsmen, and secretarial and clerical staff participating in R&D projects or directly associated with such projects.

11. How are R&D personnel classified by level of formal qualification?

ISCED provides the basis for classifying R&D personnel by formal qualification. Five classes are recommended for the purposes of R&D statistics. They are defined exclusively by level of education, regardless of the field in which personnel are qualified.

• ISCED level 8 – Doctoral or equivalent level. Programmes at ISCED level 8 are designed primarily to lead to an advanced research qualification. Programmes at this ISCED level are devoted to advanced study and original research and are typically offered only by research-oriented tertiary educational institutions such as universities. Doctoral programmes exist in both academic and professional fields.
• ISCED level 7 – Master’s or equivalent level. Programmes at ISCED level 7 are often designed to provide participants with advanced academic and/or professional knowledge, skills and competencies, leading to a second degree or equivalent qualification. Programmes at this level may have a substantial research component but do not yet lead to the award of a doctoral qualification. Typically, programmes at this level are theoretically-based but may include practical components and are informed by state-of-the-art research and/or best professional practice. They are traditionally offered by universities and other tertiary educational institutions.
• ISCED level 6 – Bachelor’s or equivalent level. Programmes at ISCED level 6 are often designed to provide participants with intermediate academic and/or professional knowledge, skills and competencies, leading to a first degree or equivalent qualification. Programmes at this level are typically theoretically-based but may include practical components and are informed by state-of-the-art research and/or best professional practice. They are traditionally offered by universities and equivalent tertiary educational institutions. First degree programmes at this level typically have a duration of three to four years of full-time study at the tertiary level.
• ISCED level 5 – Short-cycle tertiary education. Programmes at ISCED level 5 are often designed to provide participants with professional knowledge, skills and competencies. Typically, they are practically-based, occupationally-specific and prepare students to enter the labour market. However, these programmes may also provide a pathway to other tertiary education programmes. Academic tertiary education programmes below the level of a Bachelor’s programme or equivalent are also classified as ISCED level 5.
• ISCED level 4 or below. This includes ISCED 4 (post-secondary non-tertiary education), ISCED 3 (upper secondary education) and below.

Full details of ISCED can be found on the UIS website at: http://www.uis.unesco.org/education/pages/international-standard-classification-of-education.aspx

12. What is gender parity?

Gender parity is achieved when the share of females in the total stand between 45% and 55% for an indicator.

13. What are headcount data?

The measurement of personnel employed in R&D can be done in headcounts and in full-time equivalence (person-years).

The headcount (HC) of R&D personnel is defined as the total number of individuals contributing to intramural R&D, at the level of a statistical unit or at an aggregate level, during a specific reference period (usually a calendar year). That means headcount data reflect the total number of persons who are mainly or partially employed in R&D. Headcount data are the most appropriate measure for collecting additional information about R&D personnel, such as age, gender or national origin.

14. What are full-time equivalent data?

The measurement of personnel employed in R&D can be done in headcounts and in full-time equivalence (person-years).

The Full-time equivalent (FTE) of R&D personnel is defined as the ratio of working hours actually spent on R&D during a specific reference period (usually a calendar year) divided by the total number of hours conventionally worked in the same period by an individual or by a group. Series based on the number of full-time equivalent staff are considered to be a true measure of the volume of R&D.

R&D may be the primary function of some persons (e.g. workers in an R&D laboratory) or it may be a secondary function (e.g. members of a design and testing establishment). It may also be a significant part-time activity (e.g. university teachers or postgraduate students). To count only persons whose primary function is R&D would result in an underestimate of the effort devoted to R&D; to do a headcount of everyone spending some time on R&D would lead to an overestimate. The number of persons engaged in R&D should, therefore, also be expressed in full-time equivalents on R&D activities.

One full-time equivalent may be thought of as one person-year. Thus, a person who normally spends 30% of his/her time on R&D and the rest on other activities (such as teaching, university administration and student counselling) should be considered as 0.3 FTE. Similarly, if a full-time R&D worker is employed at an R&D unit for only six months, this results in an FTE of 0.5. Therefore, it is measured by combining two variables: actual involvement in R&D activities and formal engagement on the basis of normative/statutory working hours.

The following formula can be used to calculate R&D personnel in FTE:

FTE = (dedication to the employment: FT/PT) x (portion of the year active on R&D) x (time or portion spent on R&D)

15. What are the possible breakdowns of R&D personnel?

R&D personnel can be broken down by:

• Sector of performance
• Function
• Level of formal qualification
• Field of R&D
• Age
• Type of activity
• Seniority level

These breakdowns can be calculated in headcount and full-time equivalence, and can be further disaggregated by gender.

16. Which indicators are usually calculated for R&D personnel?

The following indicators are usually calculated for R&D personnel:

• R&D personnel per million population
• Researchers per million population
• R&D personnel per 1,000 employment
• Researchers per 1,000 employment
• R&D personnel per 1,000 labour force
• Researchers per 1,000 labour force

17.How is R&D expenditure measured?

The basic measure of R&D expenditure is “intramural expenditures”.

Intramural R&D expenditures are all current expenditures plus gross fixed capital expenditures for R&D performed within a statistical unit during a specific reference period, whatever the source of funds.

The most important national total is gross domestic expenditure on R&D (GERD), which is defined as total intramural expenditure on R&D performed in the national territory during a specific reference period.

Extramural expenditures cover payments for R&D performed outside the statistical unit or sector of the economy.

R&D expenditure refers to resources actually spent on R&D activities, rather than only what is budgeted. Therefore, the way to obtain sound data is to rely on responses of R&D performers, rather than funding agencies.

18. What is GERD?

GERD refers to gross domestic expenditure on R&D.

19. What are the possible breakdowns of R&D expenditure?

R&D expenditure can be broken down by:

• Sector of performance
• Source of funds
• Type of activity
• Field of R&D
• Type of cost (current vs. capital cost)
• Socio-economic breakdown

20. Which indicators are usually calculated for R&D expenditure?

The following indicators are usually calculated for R&D expenditure:

• Gross domestic expenditure on R&D as a percentage of GDP
• Gross domestic expenditure on R&D in current national currency
• Gross domestic expenditure on R&D in constant national currency
• Gross domestic expenditure on R&D in current US$ purchasing power parities
• Gross domestic expenditure on R&D in constant US$ purchasing power parities
• Gross domestic expenditure on R&D per capita
• Gross domestic expenditure on R&D per researcher

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