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Definition

Definition

Research and development (R&D) is defined according to the OECD Frascati Manual (2002) as "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications."

A R&D activity is characterised by originality. It has investigation as a primary objective, the outcome of which is new knowledge, with or without a specific practical application, or new or improved materials, products, devices, processes, or services. R&D ends when work is no longer primarily investigative.

Operational issues

As indicated in the Frascati Manual, and as experience has shown, there are difficulties in delineating the point which clearly separates the culmination of research and development (R&D) investigative work and the beginning of the implementation phase of the innovations or recommendations resulting from R&D. Errors at this point are particularly significant because, although R&D programmes require large outlays of resources, the costs of implementing innovations or recommendations resulting from R&D may also be as high, or higher in many instances.

There is also a wide range of scientific and related activities that are not R&D, but that are closely linked to R&D in terms of organisation, resource allocation, institutional affiliation, and the use or flow of information. However, activities conducted solely or primarily for the purposes of R&D support are included in R&D.

The activities which do not have clear boundaries with R&D are listed below.

(a) Education and training of personnel and students

Postgraduate research, including supervision of the research, is considered to be R&D. The development of new teaching methods is also regarded as R&D. However, teaching and training students using established methods and subject knowledge is excluded.

(b) Specialised scientific and technical information services

Specialised scientific and technical information services which are undertaken solely in support of R&D are regarded as R&D. Examples of these are scientific data collection, coding, recording, classification, dissemination, translation, analysis, and bibliographic services.

These specialised services are excluded if they are undertaken independently and not solely in support of R&D.

(c) General purpose or routine data collection

Collecting data in support of R&D work is included in R&D.

However, data collection of a general nature is excluded. This is normally carried out by government agencies to record natural, biological, economic, or social phenomena of general public or government interest. Examples are national population censuses, surveys of unemployment, topographical mapping, and routine geographical or environmental surveys.

(d) Maintenance of national and international standards

Routine testing and analysis of, for example, materials, components, products, processes, soils, and atmospheres, etc. for standard compliance is excluded from R&D.

(e) Feasibility studies

Feasibility studies undertaken in support of R&D are included. However, a feasibility study that involves gathering information about existing conditions, for use in deciding whether or not to implement a project is excluded – for example, a study to determine the viability of a petrochemical complex in a particular location.

(f) Specialised medical care

R&D includes the development of new treatments and procedures, including such developments in conjunction with advanced medical care and examinations usually carried out by university hospitals.

However, routine investigations or normal application of specialised medical knowledge, techniques, or equipment are excluded from R&D. Examples of these are pathology, forensic, and post-mortem procedures.

(g) Clinical trials

Phase 1, 2, and 3 clinical trials are included in R&D. Phase 4 clinical trials are excluded from R&D, unless they bring about further scientific or technological advance.

(h) Patent and licence work

Patent work connected directly with R&D projects is included in R&D. However, commercial, administrative, and legal work associated with patenting, copywriting, and licensing, is excluded.

(i) Policy related studies

The boundary between certain policy-related studies, as described in the Frascati Manual and R&D, is complex. In the Frascati Manual, policy-related studies cover, activities such as the “analysis and assessment of existing programmes, continued analysis and monitoring of external phenomena (e.g. defence and security analysis), legislative inquiry concerned with general government departmental policy or operations”. Rigour is required to separate policy-related studies that are not R&D from true R&D policy work.

Studies to determine the effects of a specific national policy to a particular economic or social condition or social group may have elements of R&D. Routine management studies or efficiency studies are excluded.

(j) Routine software development

Software development is an integral part of many projects which in themselves may have no element of R&D. The software development component of such projects, however, may be classified as R&D if it leads to an advance in the area of computer software.

For a software development to be considered as R&D, its completion must be dependent on a scientific or technological advance, and the aim of the project must be the systematic resolution of a scientific and/or technological uncertainty.

The following are examples of software development which are considered to be R&D:

  • development of internet technology
  • research into methods of designing, developing, deploying, or maintaining software
  • R&D on software tools or technologies in specialised areas of computing (e.g. image processing, artificial intelligence, character recognition)
  • R&D producing new theorems and algorithms in the field of theoretical computer science.

The following are examples of software developments which are not considered to be R&D:

  • routine computer and software maintenance
  • business application software and information system development using known methods and existing software
  • adding user functionality to application languages
  • adaptation of or support for existing software.

(k) Marketing and market studies

Market research and opinion polls are excluded from R&D.

(l) Mineral exploration

The development of new or vastly improved methods of data acquisition, processing, and interpretation of data is included as R&D. Surveying undertaken as an integral part of an R&D project to observe geological phenomena is also regarded as R&D. However, the search for minerals using existing methods is excluded from R&D.

(m) Prototypes and pilot plants

The design, construction, and testing of prototypes generally falls within the scope of R&D. However, trial production and copying of prototypes are excluded from R&D.

The construction and operation of pilot plants is part of R&D provided that these are used to obtain experience or new data for evaluating hypotheses.

Pilot plants are excluded from R&D as soon as the experimental phase is over, or as soon as they are used as normal commercial production units, even if they continue to be described as 'pilot plants'.

If a pilot plant is used for combined operations, the component used for R&D is to be estimated.

(n) Other activities

All other activities that are ancillary or consequential to R&D are excluded. Examples of these are interpretative commentary using existing data, forecasting, operations research as contributing to decision making, and the use of standard techniques in applied psychology to classify or diagnose human characteristics

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