Summary and future work

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150. This study finds that R&D has a significant impact on the economy in terms of the level of GDP, although it has little impact on the growth rate. Reliable data are available from within Statistics Canada to produce these estimates. The proposed methodologies follow the emerging international guidelines although there are still some issues to be resolved in particular with the calculation of operating surplus and the asset boundaries of R&D.

151. There are five main outstanding issues that need to be resolved before implementing the expanded treatment of R&D within the SNA. The first involves the issue of the definition of R&D. Although the FM definition has been adopted, exclusions from this definition of R&D that do not provide economic benefits are not clearly defined and measurement issues exist. Secondly, the issue of the valuation of R&D also remains. In particular, the consideration of the addition of a rate of return for own-account R&D. Thirdly, estimating obsolescence via depreciation of R&D is also challenging as there is no information available on service lives of the R&D assets. A possible solution to this data gap is to survey R&D producers on their expectations of the service lives of their R&D. A fourth issue is that of trade, particularly across boundaries, and the possible impact this has on level of stocks of R&D capital. Movement within multi-national enterprises across borders is a particular concern. Lastly, since much R&D is done on own-account, prices are difficult to obtain. Input prices can be used as alternatives but these do not include any adjustment for productivity improvements.

152. An international agreement to adopt and further study the notion of R&D as an asset through satellite accounts has been accepted. As countries work towards implementing the change of treatment into their accounts, it will be important to investigate the similarities and differences amongst the various approaches taken. Based on the findings of other countries and the discussions within Canada, further work may be required before implementation into the core accounts.

153. Despite the difficulties of measuring R&D, it is interesting to note that the results from most countries that have produced a satellite account are very similar with respect to the impact of the inclusion of R&D on GDP. Also, the impact on growth rates at the total economy level is negligible for most years. As we move into the future, these intangible capital assets will continue to increase in economic importance. The inclusion of R&D in a satellite account is a good first step towards incorporation of these economic phenomena in the core accounts.