15 December 2010
A National Statistics Publication for Scotland
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BUSINESS ENTERPRISE RESEARCH AND DEVELOPMENT SCOTLAND 2009
This publication presents information on research and development (R&D) performed by businesses operating in Scotland in 2009 as well as revisions to previously published data for 2007 and 2008. The data presented in this release are sourced from the Business Enterprise R&D survey conducted by the Office for National Statistics (ONS).
Note that this publication presents the latest statistics for private Business Enterprise R&D (BERD) only. Statistics on Gross Expenditure on R&D in 2009, of which BERD expenditure is a component, will become available in 2011.
BUSINESS ENTERPRISE RESEARCH AND DEVELOPMENT (BERD)
Expenditure and employment
The value of Business Enterprise Research and Development (BERD) undertaken in Scotland in 2009 was £644 million, 4.1% of the UK total and 0.56% of Scottish GDP. Expenditure increased from £557 million in the previous year (a 13.7% increase in real terms).
BERD expenditure in Scotland is dominated by the manufacturing sector, followed by the services sector and then other sectors, such as extractive industries. Since 1999 overall BERD expenditure has increased by 28.2% in real terms. When this increase is broken down to the three sectors of R&D expenditure it shows that manufacturing expenditure has increased by 11.6%, services expenditure has increased by 45.6% and expenditure in other sectors has more than quadrupled since 1999. The large increase in expenditure in other sectors can be traced back to the low level of expenditure in 1999. In the short term, expenditure in all three of the R&D sectors increased in real terms between 2008 and 2009. Expenditure on manufacturing R&D increased by 6.5% (£27 million), expenditure on services R&D increased by 28.0% (£26 million) and expenditure on R&D in other sectors increased by 49.2% (£24 million) ( Table 1B).
Despite the recent growth in the services sector and other sectors, over 40% of Scottish BERD expenditure was supported in just two product groups in the manufacturing sector: 'pharmaceuticals' (26.1%) and 'computer, electronic and optical products; photographic equipment' 1 (15.3%) ( Table 2). Businesses in Scotland employed 6,905 R&D staff in 2009, up from 6,648 in 2008. Over half (56%) of R&D staff are scientists and engineers ( Table 14).
1. This product group was previously entitled 'precision instruments'.
Scottish regional comparisons
In 2009 nearly two thirds (65.6%) of BERD expenditure was undertaken by businesses located in just six local authority areas: The City of Edinburgh (21.5%), North Lanarkshire (16.8%), West Lothian (7.2%), Dundee City (6.9%), Glasgow City (6.8%) and Aberdeen City (6.4%) ( Table 9). As with the overall expenditure pattern for Scotland manufacturing R&D expenditure dominates within the top four local authority areas, but less so in Glasgow City and Aberdeen City. Within Aberdeen City almost half (48.6%) of R&D expenditure was undertaken in other sectors ( Table 10 2009), which includes extractive industries. Over the longer term, the majority of R&D expenditure has been concentrated in a small number of local authorities.
UK regional and international comparisons
In 2009 BERD expenditure was equivalent to 0.56% of GDP in Scotland compared to 1.11% of GDP in the UK.
In 2009 the average BERD spend per head of population was £124 in Scotland compared to £253 per head of population in the UK ( Table 11).
Within the UK, the bulk of BERD expenditure takes place within the East of England (24.9%) and the South East (23.0%) regions. In terms of expenditure as a percentage of GDP, Scotland ranked tenth out of the 12 UK regions in 2009 ( Table 12).
BERD expenditure as a percentage of GDP has historically been lower in Scotland than in most competitor countries. The BERD expenditure as a percentage of GDP figures for 2009 are currently not available for the majority of countries and as a result the EU average for 2009 is not yet available. From the limited international data available for 2009 it can still be seen that leading countries have expenditure levels more than five times higher than Scotland (e.g. 2.94% of GDP in Finland) ( Table 13).
R&D funding and size & ownership of R&D performing businesses
Over two thirds (68%) of R&D undertaken by businesses in Scotland was funded by businesses operating in the UK, 9% was funded by the government and 23% came from overseas ( Table 7). In terms of business size, the largest companies (400 employees and over) accounted for 58% of total BERD expenditure. However, within the services sector companies employing 0 to 99 employees accounted for 53% of services BERD expenditure ( Table 18 2009). USA owned firms undertook 44% of BERD expenditure in Scotland, followed by Scottish based firms (26%) ( Table 22 2009).
Sampling and Regional Estimates
1. The majority of the data presented in this release are sourced from the Business Enterprise R&D (BERD) survey conducted by the Office for National Statistics (ONS). The ONS BERD survey is an annual sample survey based on a continually updated register of R&D performers. The ONS 2009 BERD Statistical Bulletin is available at: http://www.statistics.gov.uk/pdfdir/berd1210.pdf
2. In 2009, approximately 5,000 questionnaires were sent to businesses in the UK known to perform R&D; this included around 400 of the largest R&D spenders. Smaller R&D performers and others believed to be performing R&D are sampled. Industry product group and business employment size were the stratification variables. Completed questionnaires were returned by 4,685 businesses representing a response rate of 94 per cent.
3. The largest R&D performers account for approximately 80% of the total UK expenditure. Each of these large R&D performers is asked to name all the sites at which the business performed R&D and to estimate the R&D spend at that site, this expenditure is then allocated to the appropriate region. Regional data for the smaller R&D performers are estimated from sample returns.
4. A summary quality report for the ONS BERD survey is available at: http://www.ons.gov.uk/about-statistics/methodology-and-quality/quality/qual-info-economic-social-and-bus-stats/quality-reports-for-business-statistics/index.html.
5. BERD includes business enterprise R&D performed in Scotland irrespective of the residence of the ultimate owner.
6. BERD excludes R&D funded by Scottish businesses that is performed overseas.
7. BERD excludes R&D carried out by higher education or government (including government departments, agencies and non-departmental public bodies; local authorities; and private non-profit organisations). Public corporations are counted as business enterprises.
8. Gross expenditure on R&D in Scotland in 2009 performed by all sectors of the economy (i.e. business, higher education and government) will be reported separately in 2011.
9. For the smaller R&D performers, no product group data are collected in the BERD survey. However, the businesses' Standard Industrial Classification (SIC) codes are known from the Inter-Departmental Business Register (IDBR) and the assumption is made that the R&D expenditure is for the detailed product group corresponding to that SIC. This approach must be regarded as approximate since, in practice, an individual business can perform R&D for a range of product groups.
10. The introduction of SIC 2007 for the 2009 survey has resulted in some businesses' R&D moving to a different product group than previously published. The largest impact has been for businesses with Publishing activities as these have moved out of the manufacturing sector and are now included under Miscellaneous business activities, which is in the services sector. There has been an increase in the Other manufacturing product group due to businesses being reclassified from Textiles, clothing and leather products, Pulp and paper products, Rubber and plastic products, Fabricated metal products, Machinery and equipment and Computer, electronic and optical products.
11. The titles of the detailed product groups have been updated in this publication to reflect the introduction of SIC 2007 for the 2009 survey. A full list of the titles of the detailed product groups can be seen in Table A. The titles of two detailed product groups have been changed completely. Precision instruments is now entitled Computer, electronic and optical products; photographic equipment and Recycling is now entitled Sewerage, waste management, remediation activities.
Table A: Detailed Product Group Titles
|Previous Title||New Title|
|Agriculture, hunting and forestry; Fishing||Agriculture, hunting and forestry; Fishing|
|Extractive industries||Extractive industries|
|Food Products and beverages; Tobacco products||Food products and beverages; Tobacco products|
|Textiles, clothing and leather products||Textiles, clothing and leather products|
|Pulp, paper and paper products; Printing and publishing; Wood and straw products||Pulp, paper and paper products; Printing; Wood and straw products|
|Refined petroleum products and coke oven products; Processing of nuclear fuel||Refined petroleum products and coke oven products|
|Chemicals, man-made fibres||Chemicals and chemical products|
|Pharmaceuticals, medical chemicals and botanical products||Pharmaceuticals|
|Rubber and plastic products||Rubber and plastic products|
|Other non-metallic mineral products||Other non-metallic mineral products|
|Casting of iron and steel||Casting of iron and steel|
|Non-ferrous metals||Non-ferrous metals|
|Fabricated metal products||Fabricated metal products except machinery and equipment|
|Machinery and equipment||Machinery and equipment|
|Office machinery and computers||Office machinery and computers|
|Electrical machinery and apparatus||Electrical equipment|
|Radio, television and communication equipment||Radio, television and communication equipment|
|Precision instruments||Computer, electronic and optical products; photographic equipment|
|Motor vehicles and parts||Motor vehicles and parts|
|Other transport equipment||Other transport equipment|
|Shipbuilding and repairs||Shipbuilding|
|Furniture; Other manufactured goods||Other manufactured goods|
|Recycling||Sewerage, waste management, remediation activities|
|Electricity, gas and water supply||Electricity, gas and water supply|
|Wholesale and retail trade||Wholesale and retail trade|
|Transport and storage||Transport and storage, incl. postal and courier activities|
|Post and telecommunications||Telecommunications|
|Miscellaneous business activities; Technical testing and analysis||Miscellaneous business activities; Technical testing and analysis|
|Computer and related activities||Computer and related activities|
|Research and development services||Research and development services|
|Public administration||Public administration|
12. The broad product groups, which consist of aggregations of the detailed product groups, were refined and expanded in 2002 in order to more accurately categorise the data within the manufacturing and service sectors. Their titles have been updated in this publication to reflect the changes to the detailed product group titles. Services' broad product group includes R&D consultancy and other services in support of the manufacturing industry.
Discontinuities in the data
13. On 1 July 2001, the government research agency, the Defence Evaluation and Research Agency (DERA) was disestablished and two new organisations were created. Around a quarter of DERA remained within the Ministry of Defence (MOD) as a government agency whilst the remaining three-quarters became a private limited company (PLC). As a PLC, its R&D activities from 2001 are classified and included within the Business Enterprise sector.
14. The BERD survey questionnaire was redesigned from the 2007 survey to better reflect user needs and to address concerns about data quality and difficulty in completion. While the changes are an improvement, they could have an impact on the comparability of the data returned, as businesses better understand what is required and quality improves.
Definition of R&D
17. The ONS BERD survey follows the definition of research and development proposed by the Organisation for Economic Cooperation and Development (OECD) and published in the 'Frascati' Manual. According to the manual, R&D is defined as:
"Creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of the stock of knowledge to devise new applications."
16. The definition therefore excludes activities such as market research, most software development, routine testing and quality control and artistic design work.
17. Employment is calculated by respondents to the ONS BERD survey on the basis of 'full-time equivalent' staff averaged over the year. The categories of employment used are:
- Researchers - engaged in the conception or creation of new knowledge, products, methods and systems.
- Technicians - perform scientific and technical tasks normally under the supervision of researchers.
- Others - support staff including skilled and unskilled craftsmen, secretarial and clerical staff participating in R&D projects.
18. The cash values are converted to real terms using Treasury GDP deflators. The deflators are available at: http://www.hm-treasury.gov.uk/data_gdp_index.htm
Time period for which the results relate
19. Respondent to the ONS BERD survey were asked to make a return for the calendar year 2009 or the nearest 12 month period for which figures were available.
20. BERD Scotland follows the Revisions Policy for the ONS BERD results - the latest (year t) results are provisional until two years later (year t+2).
21. The 2007 and 2008 data have been revised to take account of company misreporting and late returns.
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