Gross Domestic Expenditure on Research and Development

Gross domestic expenditure on research and development, or GERD, measures the total spending on R&D performed within a country during a specified period. It covers intramural R&D expenditure, irrespective of whether the funding originates domestically or from abroad.

What GERD includes

GERD aggregates the expenditure incurred by all institutional sectors on R&D actually performed within the domestic territory.

• It includes current expenditure, such as researchers' compensation and operating costs directly associated with R&D.
• It includes capital expenditure on fixed assets used for R&D during the reference period.
• It covers R&D performed by the business enterprise, government, higher education and private non-profit sectors.
• Foreign-financed R&D performed domestically is included, while domestically financed R&D performed abroad is excluded.

How the measure is interpreted

GERD measures the resources devoted to undertaking R&D, not the resulting innovations, patents or productivity gains.

• GERD as a percentage of GDP, commonly called R&D intensity, enables comparison across economies and over time.
• Sector-wise GERD shows where R&D is performed, while source-of-funds data show who finances it.
• The distinction matters because a business may perform publicly funded research, while businesses may also finance research performed by universities or government institutions.

Relevance to private R&D investment

The business enterprise component indicates the scale of R&D performed within firms, but it should not automatically be treated as wholly private financing.

• Assessing private participation requires examining both the performing sector and the funding sector.
• GERD therefore helps evaluate whether an economy's research effort is concentrated in government institutions, higher education or enterprises.

How UPSC asks this