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Chapter 4. Research and Development: National Trends and International Comparisons


Affiliate: A company or business enterprise located in one country but owned or controlled (in terms of 10% or more of voting securities or equivalent) by a parent company in another country; may be either incorporated or unincorporated.

Applied research: The objective of applied research is to gain knowledge or understanding to meet a specific, recognized need. In industry, applied research includes investigations to discover new scientific knowledge that has specific commercial objectives with respect to products, processes, or services.

Basic research: The objective of basic research is to gain more comprehensive knowledge or understanding of the subject under study without specific applications in mind. Although basic research may not have specific applications as its goal, it can be directed in fields of present or potential interest. This is often the case with basic research performed by industry or mission-driven federal agencies.

Development: Development is the systematic use of the knowledge or understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including the design and development of prototypes and processes.

European Union (EU): As of June 2013, the EU comprised 27 member nations: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. Croatia joined the EU in July 2013. Unless otherwise noted, Organisation for Economic Co-operation and Development data on the EU include all 28 members; data on the EU from other sources are limited to the 27 nations that were members as of June 2013.

Federally funded research and development center (FFRDC): R&D-performing organizations that are exclusively or substantially financed by the federal government either to meet a particular R&D objective or, in some instances, to provide major facilities at universities for research and associated training purposes. Each FFRDC is administered by an industrial firm, a university, or a nonprofit institution.

Foreign affiliate: Company located outside the United States but owned by a U.S. parent company.

Foreign direct investment (FDI): Ownership or control of 10% or more of the voting securities (or equivalent) of a business located outside the home country.

Gross domestic product (GDP): The market value of goods and services produced within a country. It is one of the main measures in the national income and product accounts.

G20: Group of Twenty brings together finance ministers and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the EU.

Innovation: The introduction of new or significantly improved products (goods or services), processes, organizational methods, and marketing methods in internal business practices or in the open marketplace (OECD/Eurostat 2005).

Majority-owned affiliate: Company owned or controlled, by more than 50% of the voting securities (or equivalent), by its parent company.

Multinational company (MNC): A parent company and its foreign affiliates.

National income and product accounts (NIPA): The economic accounts of a country that display the value and composition of national output and the distribution of incomes generated in this production.

Organisation for Economic Co-operation and Development (OECD): An international organization of 34 countries, headquartered in Paris, France. The member countries are Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. Among its many activities, the OECD compiles social, economic, and science and technology statistics for all member and selected nonmember countries.

R&D: Research and development, also called research and experimental development; comprises creative work undertaken on a systematic basis to increase the stock of knowledge—including knowledge of man, culture, and society—and its use to devise new applications (OECD 2002).

R&D intensity: A measure of R&D expenditures relative to size, production, financial, or other characteristic for a given R&D-performing unit (e.g., country, sector, company). Examples include R&D-to-GDP ratio and R&D value-added ratio.

Technology transfer: The process by which technology or knowledge developed in one place or for one purpose is applied and exploited in another place for some other purpose. In the federal setting, technology transfer is the process by which existing knowledge, facilities, or capabilities developed under federal research and development funding are utilized to fulfill public and private needs.

U.S. affiliate: Company located in the United States but owned by a foreign parent.