knowledge, based on R&D, on supply chains: extraction firms can sell or buy R&D services related to extraction.

POLICY RELEVANCE

NCSES’s indicators are already used to inform many policy issues. Since 1953, the National Science Foundation (NSF) has published statistics on industrial R&D, including: R&D expenditures and performance by industrial sector, state and government agency; and company R&D performed outside the United States.1 These data are useful for informing federal budget decisions, including measurements of R&D budgets at federal agencies (defense and nondefense) and comparisons of federal spending on physical and biological sciences.

Still missing from these statistics, however, are some important measures of R&D and related spillover effects that would help to determine the effects of scientific investment on socioeconomic outcomes. Policy makers would benefit from statistics that address such questions as: What effect does federal spending on R&D have on innovation and economic health, and over what time frame? What is the international balance of trade in R&D services? How much R&D do U.S. multinational companies carry out outside the United States, and how much R&D do foreign multinational companies carry out in the United States? In this report, we focus on ways of improving measurement of R&D services; the panel expects to offer recommendations on other enhancements to NCSES’s R&D indicators in our final report.

CURRENT AND NEEDED DATA

Currently, R&D services (sometimes called knowledge-intensive services) and foreign direct investment of R&D performed by affiliates are published in the biennial report of the National Science Board, Science and Engineering Indicators (SEI). For these reports, IHS Global Insight provides the tabulations on the trade balance in commercial knowledge-intensive services, while the Bureau of Economic Analysis (BEA) provides the data on international trade in research, development, and testing services. It would be useful if NCSES could include questions on its 2011 BRDIS that allow the development of comparable estimates to those that were historically developed by other agencies.

The surveys on international transactions done by BEA and R&D surveys done by NCSES follow different guidance: BEA follows the International Monetary Fund (IMF) (2011) Balance of Payments (BOP) Manual and NCSES follows the Frascati Manual (Organisation for Economic Co-operation and Development, 2002). However, the two approaches are not far apart. The BOP Manual includes some R&D and intellectual property elements that are consistent with the Frascati Manual. Therefore, geographic and ownership scope of the BEA’s international transactions surveys and BRDIS are conceptually close. For example, BEA’s international transactions surveys cover any company with activities in the United States, regardless of ownership. Transaction surveys cover transaction of U.S.-located units of foreign multinational enterprises with entities outside the United States, including transactions with their own foreign parents, and affiliated and unaffiliated trade. Similarly, for the United States, the survey covers affiliated and unaffiliated trade and transactions by purely domestic companies (no relationship with any multinational enterprise). BRDIS also covers any company with activities in the United

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1For a useful catalog of these data tables, see the Industrial Research and Development Data System, available at http://www.nsf.gov/statistics/iris/history_data.cfm [December 2011].



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