JOINT UNECE/EUROSTAT/OECD MEETING ON NATIONAL ACCOUNTS, GENEVA APRIL HANDBOOK ON DERIVING CAPITAL MEASURES OF INTELLECTUAL PROPERTY PRODUCTS Agenda item 4 Invited paper 5

OECD Task Force on R&D and other Intellectual Property Products UNSC approved the change in the SNA to recognize R&D as a fixed asset, BUT noted that there were significant obstacles to be overcome before this recommendation could be satisfactorily implemented OECD task force objective is to overcome these obstacles as quickly as possible to support the development of satellite accounts and the incorporation of R&D assets in the core accounts

Relationship with Eurostat task force on R&D The two TFs are addressing much the same issues but their objectives are a little different. The principal objective of the EU TF is to prepare templates for supplementary tables of R&D to be completed by EU countries, with the long-term aim of enabling the capitalization of R&D in the core accounts. An important element in this is a high degree of consistency in the methods used by EU countries. The objective of the OECD TF is to develop a handbook that provides guidelines for deriving capital measures for all intellectual property products (IPP), and it is unlikely that the OECD handbook will be as prescriptive as the EU templates. The two TFs should work closely together

Handbook on Intellectual Property Products Recognition of R&D as a fixed asset – Need to provide guidance to promote rapid implementation of accurate and internationally comparable statistics in satellite accounts and core accounts – Overcome some of the outstanding problems in a co-ordinated way Other changes in the SNA and other manuals impinge on the recommendations of the 2001 OECD Software Task Force and other IPPs to some extent Promote best practices for the compilation of the other IPPs To be completed in Possibly to be updated in a few years with the benefit of experience and further developments

Changes to SNA and other manuals R&D as a fixed asset Licences to use and reproduce Databases – broadened, clarified, separately identified Mineral exploration and EVALUATION Inclusion of a return to capital when summing costs to measure own account capital formation by market producers Changes to BPM classifications Changes to ISIC, CPC, HS and CPA that impinge on the measurement of software GFCF in particular

R&D Estimates of R&D GFCF are to be largely derived using data from R&D surveys conducted in accordance with the Frascati Manual Transformation of FM to SNA is well understood and changes to FM surveys that would make things better have been identified Outstanding issues now being tackled by the task force

R&D issues being addressed by OECD task force Identifying those R&D expenditures that should be recorded as GFCF – R&D undertaken with no expectation of economic benefits to the owner, or an affiliated unit, should be recorded as intermediate consumption, not GFCF – Probably nearly all R&D acquired by market producers should be recorded as GFCF. – But probably not all R&D acquired by non-market producers should be recorded as GFCF. Avoiding double counting with other fixed assets

R&D issues being addressed by OECD task force Deriving estimates of service lives of R&D to support the use of the PIM to derive estimates of capital stock, capital services and consumption of fixed capital Price indices for R&D – is it possible to derive satisfactory pseudo output price indices or do we have to use input price indices?

R&D issues being addressed by OECD task force Measuring international trade in R&D, including between affiliated units – FM funding data can provide estimates of imports by performers and the exports of performers – Need to be supplemented and reconciled using Trade in services data Foreign direct investment data – If possible, develop means of measuring trade between affiliated units at market prices: survey MNCs? Co-ordination with other globalisation initiatives

Software and database issues Updating the recommendations of the 2001 OECD Software Task Force – Changes to the SNA – Changes to other manuals – Double counting with R&D – Developments in methods: a survey of OECD members and accession countries has been conducted.

Mineral exploration and evaluation The ABS has drafted text for this asset category and it was presented at the meeting of the OECD WPNA in October 2007.

Entertainment, literary or artistic originals Base the guidelines on the report of 2003 Eurostat task force.