Joint UNECE/Eurostat/OECD Meeting on National accounts, Geneva 22-24 April

1. Agenda item 4 Invited paper 5 Joint UNECE/Eurostat/OECD Meeting on National accounts, Geneva 22-24 April HANDBOOK ON DERIVING CAPITAL MEASURES OF INTELLECTUAL PROPERTY PRODUCTS

2. 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

3. 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

4. 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 2008. Possibly to be updated in a few years with the benefit of experience and further developments

5. 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

6. 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

7. 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

8. 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?

9. 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

10. 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.

11. 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.

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