Handbook on Deriving Capital Measures of IPPs

1. Handbook on Deriving Capital Measures of IPPs Charles Aspden, OECD

2. Introduction • Recognition of R&D as a fixed asset is one of the major changes in the new SNA • OECD and EU task forces created to promote its implementation quickly, efficiently, and accurately , while achieving international comparability • New OECD handbook to provide guidance on compiling estimates of intellectual property products (IPP)

3. OECD R&D TFObjective • Complete handbook on deriving capital measures of intellectual property products by the end of 2008, encompasses: • Software and databases • R&D • Mineral exploration and evaluation • Literary and artistic originals

4. Composition of TF • US (chair Brent Moulton plus 5 others) • Canada (1) • France (2) • Germany (4) • Israel (2) • Korea (2) • Netherlands (1) • Switzerland (1) • UK (1) • OECD (2) • Australia and New Zealand partial members

5. Five sub groups • SG A: R&D service lives (Soli Peleg) • SG B: R&D output price indices (Denis Fixler) • SG C: R&D GFCF boundary (Dirk van den Bergen) • SG D: R&D international trade (Francisco Moris) • SG E: Software (Charles Aspden) • 5-9 people in each SG • Each SG has its own work plan

6. Meetings and communications in 2008 • First meeting in Geneva, 24-25 April • Second meeting Paris-Washington, 21-22 July • Third meeting Paris-Washington-Winnipeg, 16-17 October • SGs communicate by email.

7. SG A: R&D service livesActivities • Overview of existing methods • Econometric • Patent renewal • Possibility of using enterprise surveys – i.e. asking the head of R&D for the firm’s expectations • Possibility of seeking expert opinions, e.g. experts in venture capital companies • Israel, Germany and UK have undertaken pilot surveys. The results are encouraging, but more refinement of survey methods is needed.

8. SG B: R&D output price indicesActivities • Considered a proposal for a pseudo output price index at the meeting in July. • Will consider refinements to the proposal this week.

9. SG C: R&D GFCF boundaryActivities • Clarifying where asset boundary for R&D should be drawn in concept, i.e. what’s in and what’s out. • Testing to what extent basic R&D performed by government and academia results in economic benefits to the owners • Investigation of available data to implement (1) conditional on (2) • Socio-economic objectives appears to provide the best means to make the discrimination • Also considered double counting

10. SG D: R&D international tradeActivities • Defining R&D exports and imports: identifying the transactors and transactions; identifying data sources for them • Developing guidelines for source data and capitalization • SITS (source data for services in BPM6 and EBOPS) • Analysis of draft BPM6 and development of proposals for revised MSITS and EBOPS • R&D surveys, i.e. funding and extramural expenditures • Combining data from different sources

11. SG E: SoftwareActivities • Identify changes to SNA • Identify changes to classifications and document relationships between old and new. • Conduct a survey to identify methodological advances since 2003 • Amend recommendations accordingly

12. Other IPPs • Mining exploration and evaluation – based on ABS paper presented to Canberra II Group in 2007 • Entertainment, literary and artistic originals based on EU TF report in 2003

13. Next steps • Conclude remaining outstanding issues at this week’s meeting • Surveys on service lives and use of innovation survey data • Practicalities of using socio-economic objective data to identify R&D GFCF by non-market producers • Further consideration of trade data and MNCs • Review the draft Handbook • Finalise draft Handbook