Description: The updated Frascati Manual (7th ed., OECD 2015) provides the definition of research and experimental development (R&D) and of its components, basic research, applied research, and experimental development. These definitions are essentially unchanged from those in previous editions of the manual. Where there are differences, they reflect changes in culture and the use of language. To provide guidance on what is and what is not an R&D activity, five criteria are provided requiring the activity to be novel, creative, uncertain in its outcome, systematic, and transferable and/or reproducible.

Definition:

2.5 Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of humankind, culture and society—and to devise new applications of available knowledge.

2.6 A set of common features identifies R&D activities, even if these are carried out by different performers. R&D activities may be aimed at achieving either specific or general objectives. R&D is always aimed at new findings, based on original concepts (and their interpretation) or hypotheses. It is largely uncertain about its final outcome (or at least about the quantity of time and resources needed to achieve it), it is planned for and budgeted (even when carried out by individuals), and it is aimed at producing results that could be either freely transferred or traded in a marketplace. For an activity to be an R&D activity, it must satisfy five core criteria.

2.7 The activity must be:

2.8 All five criteria are to be met, at least in principle, every time an R&D activity is undertaken whether on a continuous or occasional basis. The definition of R&D just given is consistent with the definition of R&D used in the previous editions of the Frascati Manual and covers the same range of activities.

2.9 The term R&D covers three types of activity: basic research, applied research and experimental development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

Distribution by type of R&D

2.23 A breakdown by type of R&D is recommended for use in all four of the sectors used in this manual [Business enterprise; Higher education; Government; and Private nonprofit].

2.24 There are three types of R&D:

Basic research

2.25 Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.

Applied research

2.29 Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective.

Experimental development

2.32 Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

Source: OECD, Frascati Manual 7.0, Chapter 2. The full Frascati Manual and current and upcoming online Annexes are available at http://oe.cd/frascati.