Barbara M. Fraumeni Muskie School of Public Service, USM, Portland, ME & the National Bureau of Economic Research, USA Conference of European Statisticians Joint UNECE/Eurostat/OECD Meeting on National Accounts Geneva, Switzerland April 23, 2008 Measurement of R&D in National Accounts Muskie School of Public Service Ph.D. Program in Public Policy Agenda item 4

Consistency in Overall Results Nominal $ increase in GDP –Norway 1% 2004, 2% 2005 –Netherlands 1.2% –United States % Volume increase in GDP –Norway.2% –United States.2% Muskie School of Public Service Ph.D. Program in Public Policy

Questions About All R&D Satellite Accounts Quarterly Estimates Lags Muskie School of Public Service Ph.D. Program in Public Policy

United States Output prices Rates of return Muskie School of Public Service Ph.D. Program in Public Policy

Output Prices Use the average of 13 R&D intensive industry output prices OR Use an input price index Muskie School of Public Service Ph.D. Program in Public Policy

Rates of Return Purchased R&D Specific to industry? Or the ratio of net operating surplus to gross output for misc. professional, scientific, & technical services Muskie School of Public Service Ph.D. Program in Public Policy

Questions Particularly for the international information, how will series be extended back through time? How are output prices done (by BLS?) What more specific data is available on rates of return? Muskie School of Public Service Ph.D. Program in Public Policy

Norway Intermediate Consumption Two Problems to be Solved Muskie School of Public Service Ph.D. Program in Public Policy

Intermediate Consumption Exclude basic research of higher education & research institutes sectors –Publishing attracts students, but this may result in something called goodwill or marketing assets, not R&D assets Private business & research institutes asked about purchases, but can’t tell how much is for R&D input to R&D output Muskie School of Public Service Ph.D. Program in Public Policy

Two Problems to be Solved Large discrepancy between R&D reported in foreign trade statistics & national accounts figures from mid- 1990’s to 2004 When R&D is sold, counted as investment for final user –Benefits from R&D could be received by producer also Muskie School of Public Service Ph.D. Program in Public Policy

Questions Huge increase in market R&D investment from Negative operating surplus for NACE73 (which produces services of R&D) –Why, including a historical analysis Muskie School of Public Service Ph.D. Program in Public Policy

Netherlands International Aspects Service Lives Muskie School of Public Service Ph.D. Program in Public Policy

International Aspects Questions about imports, exports (& purchases and sales) need to be in surveys Problem of transferred R&D within MNCs without $ flows Talked to 8 (5) Multinational Companies (MNCs) The 8 represent 46% of BERD in 2005 Muskie School of Public Service Ph.D. Program in Public Policy

International Survey Limitations Concentration of R&D employees and expenditures suggest some concentration of R&D activities in the Netherlands R&D exports appear to be under- reported as the 8 MNCs report a small $ volume of R&D exports Muskie School of Public Service Ph.D. Program in Public Policy

International Transferal of R&D w/in MNCs Organization of R&D differed considerably among the 5 MNCs Businesses using a direct invoice method would greatly benefit creation of R&D accounts Muskie School of Public Service Ph.D. Program in Public Policy

Service Lives Used the average of an unweighted patent life and a value weighted patent life The resulting average is 12.5 years Exception chemicals and electro technical manufacturing Muskie School of Public Service Ph.D. Program in Public Policy

Questions Could (would) businesses report on invoice method if asked? Non-market R&D excluded? External factors during when rate of growth assumed to be constant? Muskie School of Public Service Ph.D. Program in Public Policy

OECD Handbook on Deriving Capital Measures of Intellectual Property Rights Two “New” Surveys Needed Basic Research Issue Plan of Action Muskie School of Public Service Ph.D. Program in Public Policy

Two “New” Surveys Needed Survey of large MNCs Non-performers Muskie School of Public Service Ph.D. Program in Public Policy

Issue of Basic Research What to do with it? Could be large Muskie School of Public Service Ph.D. Program in Public Policy

Plan of Action Foundations exist for the “other” chapters: Software & databases, mineral exploration & evaluation, & entertainment, literary or artistic originals Target is October 2008 OECD Working Party on National Accounts Muskie School of Public Service Ph.D. Program in Public Policy

Questions Differences in methodologies could increase noncomparability Other chapters? Provisions for a second edition? Muskie School of Public Service Ph.D. Program in Public Policy

Israel Lags Service Life Composition of Main Type Contact Person Muskie School of Public Service Ph.D. Program in Public Policy

Lags Gestation Application Muskie School of Public Service Ph.D. Program in Public Policy

Service Lives How long income is received? Rate of return varies over time Muskie School of Public Service Ph.D. Program in Public Policy

Composition by Main Types Seemed important Well-defined by respondents Muskie School of Public Service Ph.D. Program in Public Policy

Contact Person Vice-President of R&D or Chief Technical Officer Financial Managers? Muskie School of Public Service Ph.D. Program in Public Policy

Pilot Study But Seemed to Work Well & Was Valuable Muskie School of Public Service Ph.D. Program in Public Policy

Substantial Progress Complement statistical offices and international organizations Funders Muskie School of Public Service Ph.D. Program in Public Policy