Research and Development Intensity

Gross domestic expenditure on research and development (GERD) as a percentage of GDP, commonly called R&D intensity, measures the share of an economy’s total output devoted to R&D performed within its territory. It is an economy-wide indicator of the resources committed to R&D during a specified period, irrespective of whether the funding is domestic or foreign.

Meaning and calculation

R&D intensity is calculated by dividing GERD by gross domestic product for the same period and multiplying the result by 100.

• R&D intensity (%) = (GERD ÷ GDP) × 100.
• The numerator measures expenditure on R&D performed within the domestic territory.
• The denominator relates this expenditure to the overall size of the economy, enabling comparison across economies and over time.

What GERD covers

• GERD includes current and capital expenditure on intramural R&D, meaning R&D carried out within the reporting unit or sector.
• It covers R&D performed by business enterprises, government, higher-education institutions and private non-profit institutions.
• It includes domestically performed R&D financed from abroad because classification is based on where the R&D is performed.
• Funds sent abroad for R&D performed outside the domestic territory are not included in GERD.

Interpretation and limitations

A higher ratio generally indicates that an economy devotes a larger proportion of its resources to R&D, but the indicator measures expenditure rather than research performance.

• It does not directly measure the quality, efficiency or social relevance of R&D.
• It does not directly measure outputs such as discoveries, patents, publications or commercially successful technologies.
• Economies with the same R&D intensity may differ substantially in the absolute amount spent because their GDPs differ.
• Cross-country comparisons require consistent definitions, sectoral coverage and statistical methods.

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