on the funder rather than the performer. This essentially involves identifying all the budget
items involving R&D and measuring or estimating their R&D content in terms of funding.
Budget-based data are officially referred to as “government budget appropriations or outlays for
R&D” (GBAORD).
Even though the Frascati manual recommends measuring the performer and not the funder, I find
it appropriate to adduce some critical points. First of all, an institution wanting to carry out
research will be able to outsource the task to another institution. The government may for
example outsource some of its research to a private company or vice versa. If a governmental
institution outsources a task to the private sector and the investment is registered as a private
investment an important thing is overlooked. When the government invests in R&D (whether it
is registered or not in the statistical databases) public spending increases, which presents a tax
distortion irrespective of whether it is financed by higher taxes, or lower expenditure elsewhere
as it needs to be financed. Therefore, when focusing on higher growth through investments in
R&D the picture is not that simple and trade-offs exist. Because of this, using the GBAORD
data might be a good alternative to the GERD data recommended by the OECD, even in spite of
the fact that the data is collected from budgets and thereby are more imprecise than the GERD
data.
Figure 3 - Total government R&D budgets, 1990-20010,00,20,40,60,81,01,21,41,61990 1992 1994 1996 1998 20000,00,20,40,60,81,01,21,41,6USA, GBAORD EU15, GBAORD EU15, GERD USA, GER% o f G D P % o f G DPSource: OECD, STI 2003.Not surprisingly, the data differs, cf. figure 3. As described, the main reason is that government-
financed GERD and GERD objectives data are based on reports by R&D performers, whereas
GBAORD is based on reports by funders. Second, the GERD-based series cover only R&D
performed on national territory, whereas GBAORD also includes payments to foreign
performers, including international organizations.
Furthermore, differences may also occur because the periods covered are different (calendar or
fiscal years), because the money is finally spent by the performer in a later year than the one in
which it was committed by the funder, and because the performer may have a different and more
accurate idea of the R&D content of the project concerned.
One can also examine the data by looking at how much of the R&D performed in the business
sector is financed by the government and vice versa, cf. figure 4. Since the two sectors do not