Architecture of R&D satellite account

The research satellite account is compiled in several steps Domestic R&D expenditure (DRDE) Supply-and-use table for market research Summary of financing and performance

Domestic R&D expenditure (DRDE) The first stage is to analyze research resources in the national-accounting classifications of activities and institutional sectors (table 8.1). We disregard any data on inter-unit research transactions. The measurement variables used are domestic expenditures and human resources. These provide two sets of tables: DRDE by institutional sector performing the expenditure and DRDE by research industry ("total R&D" in table 8.1) and activity industry ("activity total" in table 8.1). DRDE is defined as follows: "Sum of domestic expenditures of units resident on national territory, irrespective of their financial sourcing. Measures without double counting the aggregate cost of R&D performed in France in a given year." Domestic expenditures incurred by producers comprise current expenditures and capital expenditures ("capital" in table 8.1) such as acquisitions of fixed assets.

Table 8.1 DRDE by institutional sector and by industry

Supply-and-use table for market research The second step largely consists in analyzing the flows of R&D between units and between the institutional sectors in which the units are classified. Resources and uses are compiled for the flows in each sector, yielding the market research "supply-and-use" tables in the national accounts (table 8.2). The "Market R&D" industry (NAP83) comprises homogeneous units of production of market research services whose resources are mostly derived from external financing such as research contracts. Resources also comprise “R&D transfers." These are sales of R&D services by homogeneous research units incorporated into homogeneous units of production in manufacturing or other industries. Such research units occasionally sell their R&D activity or, more generally, receive external financing for it. In the accounts, their sold output is kept aggregated with the output of the homogeneous unit of production to which they belong, but it is transferred into distributed output of market research services

Table 8.2 Research performed on behalf of third parties and research supply-and-use table

Summary of financing and performance The third step merges the results of the first two steps through two breakdowns of expenditure financing and performance, one by institutional sector, the other by activity industry. Both tabulations provide a bridge between DRDE and national R&D expenditure (NRDE). This analysis yields the two summary tables shown below: R&D financing and performance by institutional sector (table8.4) and R&D financing and performance by activity industry (table 8.5). The "performance/financing" table—an extension of the supply-and-use tables—is a crucial element in this step. The financing sectors are tabulated in columns and the performing sectors in rows. The amount shown in a cell represents the financing of the row by the column. The sum of each row constitutes the research performed by the institutional sector, that is, its domestic expenditures. Total domestic expenditures equal DRDE. Total financing represents NRDE.

Summary of financing and performance (following) To obtain the financing-performance table from the supply-and-use table of market research, two adjustments are required. The first concerns financing: we add the financing items other than intermediate consumption, such as subsidies, reimbursable advances, and financing granted to international organizations (table 8.3). In the second correction, we incorporate expenditures for own account. Table 8.3 Research performed on behalf of third parties and other financing not linked to production

Summary of financing and performance (following) Next, we calculate national expenditure (NRDE). This aggregate consists of total R&D financing by national economic agents during the year. It is calculated not directly from the amounts reported by the financing units but indirectly from DRDE, minus non-resident financing of domestic expenditure, plus financing for research work to non-residents in the rest of the world. This yields the basic equivalence in the research satellite account :   NRDE = DRDE + R&D financing to the rest of the world - R&D financing from the rest of the world.

Table 8.4 R&D financing and performance by institutional sector Note: figures followed by * are calculated as balancing items

Summary of financing and performance (end) The final table of the research satellite account (table 8.5) classifies research financing and performance by activity industry. The net financing of each industry measures the financial contribution of the industry's units to the national research effort, i.e., NRDE. This aggregate is defined as DRDE plus external research expenditures or intermediate consumption of the "market research" product. Resources may also include subsidies.   The resulting aggregate is the "research budget"—that is, the sum of domestic and external research expenditures.

Summary of financing and performance (end) By construction, the research budget for a specified set of units double-counts the research cross-flows between the units, first as domestic expenditures and then as external expenditures under intermediate consumption. This procedure eliminates the financing received. In this connection, it should be emphasized that the financing concept used in the research account is broader than intermediate consumption in the national accounts.   The satellite definition includes not only the sales of research services (output, research transfers, and incidental sales), but also subsidies and reimbursable advances, plus financing of international organizations and public organizations located abroad. The accounting adjustment is added as a resource to imports of research services, which become financing to the rest of the world

Table 8.5 R&D financing and performance by activity industry Note: figures followed by * are calculated as balancing items