Of the central government even if the statistical

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of the central government, even if the statistical units are smaller entities such as ministries. 4.139 Transactions across different extra-budgetary units and other government-controlled non-profit institutions (NPIs) in the Government sector and between central or state governments should be reported as extramural funding, because these are separate institutions with their own accounts. 4.140 For example, R&D funds received by agency Z of a state government from a central government ministry X should be reported as external funds for agency Z’s intramural R&D. For central government ministry X that provides (is the source of) those R&D funds, they are to be reported as funds for extramural performance. 4.141 For the Higher education sector, the institutional unit of interest for such funds/funding classifications is the type of institution (e.g. universities, research institutes, university hospitals, etc.). Therefore, R&D funds received, for example, by an economics department of university A from the engineering department of university A should be reported as the intramural R&D of the economics department of university A and should not be reported as funds for extramural R&D from the engineering department of university A. The source of the funds, for university A, is the originating source from which the engineering department received the funds. Problems in tracking flows of R&D funds 4.142 There are a number of potential difficulties in accurately collecting R&D funding flows, whether as a component of a unit’s intramural R&D or as part of their funding totals for extramural R&D performance. 4.143 Problems may arise when funds pass through (flow within and across) several units before reaching the performer. This may occur when R&D is sub-contracted, as may happen particularly in the Business enterprise sector. This also may occur when an R&D grant has sub-awards and R&D funds are passed through to other recipients, as may happen particularly in the Higher education sector. The performer should report costs only for R&D projects actually conducted rather than as inputs into some other unit’s R&D, and indicate, to the extent possible, the original source of the funds for R&D. For example, a large pharmaceuticals company (pharma) may engage the services of a biomedical contract research organisation (CRO) to undertake a phase 3 clinical trial for a new drug it has developed. The CRO provides funds to multiple hospitals for patient recruitment and testing in order to confirm the drug’s effectiveness and monitor side effects. Although the hospital may provide technical reports on their clinical findings to the CRO, it is the CRO that measures the effectiveness of the drug and reports the results to the
I-4. MEASUREMENT OF R&D EXPENDITURES: PERFORMANCE AND SOURCES OF FUNDS 141 FRASCATI MANUAL 2015 © OECD 2015 pharma company. In this example, the funds provided by pharma are funds for extramural R&D paid to the CRO. All of the phase 3 costs are CRO’s intramural

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