R&D Satellite Accounts in the Netherlands 2008 World Congress on National Accounts and Economic Performance Measures for Nations May 12-17, 2008 Washington D.C. Session 4A: R&D and Capital Myriam van Rooijen-Horsten Murat Tanriseven Mark de Haan

R&D satellite account (part of knowledge module) R&D satellite account (part of knowledge module): Recording of R&D expenditure as gross fixed capital formation, including measurement of:  R&D capital stocks  R&D consumption of fixed capital  R&D capital services Uses: → Quantifying effects on macro aggregates → Knowledge economy indicators (knowledge investment) → Growth accounting

Points of attention Points of attention: ► Use of Frascati R&D statistics ► R&D prices In this paper: ►Measurement international R&D flows ► Service lives & efficiency (or profitability) patterns

Internationalisation of R&D Research: 8 companies ≈ 46% of BERD (2005) ▪ their activities in the Netherlands: → 13% of all employees → 34% of R&D personnel ▪ 1 company reports 90% R&D export share (R&D financed by foreign affiliates) ▪ other 7 report no R&D export

Internationalisation of R&D Research con’d: Interviews with 5 companies ≈ 33% of BERD (2005) ▪ Organisation and financing of R&D differ considerably between companies → location → financing ▪ Legal ownership at company level, Economic ownership in hands of business units ▪ Company balance sheets do not include R&D

Internationalisation of R&D Conclusions:  For multinationals international R&D service flows are being underreported → Export: Indeed! → Import: ?  This complicates measurement of R&D investment Possible solutions:  Introducing survey questions on R&D sales and purchases of R&D services  Custom made surveying of largest companies

R&D service lives  Using age distribution of patents as proxy for all knowledge capital  Two averages ▪ unweighted ≈ 7 years ▪ weighted by patent values ≈ 18 years  Outcome: average service life of 12.5 years Exceptions ▪ Chemical industry: 15.5 years ▪ Electro technical industry: 9.5 years

Summary of results GFCF in R&D bln € Adjustment of GFCF in % % Adjustment of GDP in % % Volume-index (1998=100) GFCF in R&D GFCF Adjusted GFCF Changes national accounts aggregates, the Netherlands

Summary of results Computer software and databases1.4 % Innovative property R&D1.9% Mineral exploration0.1% Other (e.g. artistic originals)1.1% Economic competencies Brand equity2.7% Firm-specific human capital1.2% Organizational structure1.3% Total 9.6% Importance of R&D and other intangible capital in the Netherlands as % of GDP