3.1.2

3.1.2 R&D in the Industrial, Academic and Government Sectors

  Although the R&D system of an entire country is made up of various activities, the most general classifications are based on the public sector and the private sector. From there, the sectors can be further divided into four sectors: the university sector (or the academic sector with facilities connected to universities), the industrial sector and the nonprofit, private sector, which are part of the private sector. (Refer to "The Classification of Organizations within the R&D Statistics of the Major Countries"). This book makes comparisons on the conditions in each country based on this division of sectors. The R&D conditions of each sector and the international comparisons of those conditions are dealt with in separate chapters or sections. Here, we pay attention to the source of distribution of R&D funding to each sector, and make a comparison between the R&D systems of each country.
  For the breakdown of R&D expenditures by sector, there is an important indicator which shows the characteristics of the R&D system of an entire country. With this indicator, it is necessary to consider not only the R&D expenditures associated with the sectors using the funds, but also the sectors responsible for providing the funds. Figure 3-1-7 shows the R&D expenditures broken down into the source and usage ratios by sector. With regard to the source of R&D expenditures, there are many cases which include a foreign source in addition to the four sectors mentioned above. This source has been included in "Other" here. However, for the U.S. statistics, there is no distinction for foreign sources.
  In every country, the industrial sector accounts for the largest portion of both the source and use of research funds. The current data clearly shows that industry is the greatest driving force behind technology. This is clearly shown by examining the R&D expenditures from the usage side (i.e. the sector implementing R&D) given that the usage ratio for the industrial sector exceeds 60% in each country.

Figure 3-1-7 Ratio of R&D expenditures by sources and performers in selected countries

Note: Refer to boxed items "The Classification of Organizations in the R&D Statistics of selected countries"
Source: Japan, U.S. and Germany - Same as Figure 3-1-1,
France - "Basic Science and Technology Statistics 1999",
U.K. - "White Paper on Science and Technology"
See: appendix table 3-1-7

  In comparison, there are apparent differences between the countries with regard to the industrial sector's position as the provider of R&D funds. While there is not a big difference between the provision and usage of funds by the industrial sector in the U.S. and Japan, there is a big difference in France and the U.K. The reason for this is that industry in France and the U.K. receive a large amount of R&D funds from the government and from abroad. This point is expressed in greater detail in Figure 3-1-8. Japan's industrial sector is the only one among the 5 countries which provides a larger percentage of funds (68.3%) than it uses (66.9%).
  There are significant differences between countries in the ratio of funds provided and used by governments. The ratio of funds provided by the Japanese government is the smallest among the five countries, while it uses the second to least funds, after the U.S. These ratios are a source of debate with regards to R&D expenditures by the government, especially in Japan, where it is frequently the point at issue for policy formation.
  The ratio of funds used by Japanese universities is the highest among the five countries. This is partly because of the overestimation which occurs due to the Full Time Equivalent problem mentioned above. Although the data for appropriately implementing the estimation of Full Time Equivalent for R&D expenditures is inadequate, based on the estimated Full Time Equivalent values used in Figure 3-1-6, the percentage of funds used by Japanese universities is 16.3%(4). Since the estimated values are probably lower than the actual values, the percentage of funds used by Japanese universities is not insignificant from an international perspective. Nonetheless, a conclusion cannot be easily drawn, and more complete methods for statistics and comparisons are desirable.
  Another characteristic of Japanese universities is that they provide 9.1% of R&D funds | the highest among the five countries. Even in the U.S., which ranks second behind Japan, this ratio does not exceed 3.2%. The majority of the funds provided by Japanese universities come from private universities.
  Following is a comparison of the flow of R&D expenditures for each sector, in each of the five countries, as an indicator of the relationships between the sectors. These relationships appear in Figure 3-1-8, and show the flow of funds from the sectors providing the funds to the sectors using them, depicting the R&D system of each country in more detail.
  In Japan, the meager flow between the different sectors is an overall feature of the system. This is especially true for the flow of funds from the government, most of which are concentrated in government facilities and universities. The percentage of expenditures flowing to the industrial sector is small compared to the other countries. In addition, the majority of funds from the government to the universities go to government facilities in the national universities, with few expenditures going to the other sectors. In comparison to its function in providing funds to other sectors, the Japanese government plays a stronger role in carrying out R&D functions. From this perspective, the government's position within the R&D system has a slightly different character than that in other countries.
  The enormous flow of funds within the Japanese industrial sector can be seen from the graph. This is the most common feature of all the countries: within the flow of research funds between each of the sectors, the flow from industry to industry is the largest. In the case of Japanese industry, the R&D funds received by industry from other sectors is the smallest among the five countries. On the other hand, the flow of R&D expenditures from industry to other sectors is relatively large. Further, the R&D funds flowing from the industrial sector to privately operated research facilities is comparatively large. However, when making this comparison between countries, it is important to be aware of differences in classification. In other countries, these facilities are classified as nonprofit facilities, as opposed to being "privately operated research facilities" in Japan.

(4) From the beginning, the personnel expenses for each type of R&D occupation (researchers, assistant researchers, etc.) should be calculated by taking advantage of the individual R&D employment rates. However, since the breakdown of personnel expenditures or the employment rates of those engaged in R&D (other than researchers) are not clear, we have based the employment rates of researchers (the values used for the estimates in Figure 3-1-6) on the personnel expenditures for all those engaged in research.

  Next, we describe the characteristics of the other countries. In the U.S., the flow of R&D expenditures from the government to the industrial sector is large, and accounts for a large percentage of government expenditures and of funds received by the industrial sector.
  In Germany, there is a sizeable flow from the government to universities. Moreover, the government sector and nonprofit private sector in Germany are grouped together, with the flows within this sector accounting for a comparatively large percentage of the total. The majority of nonprofit, privately operated research facilities in Germany are mainly funded by government, and play the same role as the government research facilities in other countries.
  In France, R&D expenditures by the government account for a relatively large percentage of the expenditures used by research facilities in each sector. Of particular note is the flow from the government to the government, which exceeds the amount flowing to universities. In the U.K., the government provides roughly the same amount of funds to universities and government research facilities. Moreover, flows to the industrial sector are relatively large. A large amount of funding is also received from abroad.

Figure 3-1-8 R&D expenditures Flow in selected country

(A) Japan (1998) [100 million Yen]

(B) U.S. (1999) [100 million Yen]

(D) France (1997) [100 million Yen]

(E) U.K. (1997) [100 million Yen]

Note: 1) Research and development costs other than Japan were converted into Japanese currency (Yen) using the purchasing power parity of OECD. It omitted about the less than 10 billion en flow by a diagram, and the dotted line showed the less than 50 billion yen flow of 10 billion yen or more
2) About the organization classification of each country, it is referring to the boxed item "an organization classification in research-and-development statistics of a major power".
Source: same as figure 3-1-7
See: appendix table 3-1-8

  The R&D expenditures by sector show more changes over time. Here, we examine the changes in the position of each sector by country, according to changes in the percentages of R&D expenditures for each sector. Changes in the percentages of funds provided by each sector will be left to a later analysis of the governments (in Section 3.2) and universities (in Chapter 4).
  If we look at the breakdown of R&D expenditures by sector in Japan (Figure 3-1-9), the ratio for the industrial sector increased during the 1980s. Conversely, there was a downward trend in the ratio for university and government research facilities. In contrast to the ratio for industry falling from 1992, and leveling off after that, there was a slight upward trend of the ratio for university and government research facilities in the 1990s.
In the U.S., there is an obvious long-term reduction in the ratio for the government research facilities. On the contrary, the ratio for universities shows an upward trend over the long term, showing a growing influence in the R&D sector. Further, despite a large increase in the actual amount of R&D expenditures by the industrial sector, (see Figure 5-1-1 in chapter 5), there was not a particularly large change in the usage ratio.
  In Germany, France and the U.K., the changes are relatively small compared to Japan and the U.S. The ratio for universities in all three countries rose slightly. In Germany and the U.K., the ratio for industry decreased in the 1990s compared to the 1980s. On the other hand, the ratio for industry rose in France, while the ratio for government research facilities showed a downward trend.

Figure 3-1-9 Trends in R&D expenditures and ratio by performing sector in selected countries

(A) Japan

(B) U.S.

(D) France

(E) U.K.

Note: Data are the total natural science and humanities/social science. Data for Japan include software industry since FY1996
The numerical value in 1998 of France is assumption value. Germany is contained in the federal government
Source: Japan, U.S. - same as Figure 3-1-1
Germany - "Faktenberidht 1998"
France, U.K. - "Main S&T Indicators 1999/2, "Basic Science and Technology Statistics 1998"
See: appendix table 3-1-9

  If we look at the percentage of researchers by sector for the selected countries, we can see that the industrial sector has the highest percentage in every country, just as it does for R&D expenditures. This is followed by universities and then government research facilities (Figure 3-1-10). However, there are differences between countries in the statistics for the number of researchers by sector. The accuracy of the ratios shown here is difficult to guarantee, and should only be used for as a guide.
  The ratio for Japanese universities is relatively high, while that of the government research facilities is the lowest of the five countries. Because the Full Time Equivalent values are not used in Japan, we have calculated the various ratios based on estimated Full Time Equivalent values. This gives a ratio of 28% for universities, which is lower than France and the U.K., but about the same as Germany (see Table 3-1-6).
  The ratio for the American industrial sector is the highest of the five countries, while the ratio for universities is the lowest. However, as mentioned earlier, in the U.S. case it is believed that the number of university researchers is underestimated, in contrast to Japan. Therefore, it can be assumed that the actual ratio is greater than the ratio shown here.

Figure 3-1-10 Number of R&D scientists and engineers by sector in selected countries

Note: Japan R&D scientists and engineer are not FTE
Source: Japan, U.S. & Germany - same as figure 3-1-1
France - OECD, "Main S&T Indicate 1999/2"
U.K. - OCED, "Basic Science and Technology Statistics 1998"
See: appendix table 3-1-10