The OECD delegation examined the issue of R&D in the computing services industry in Israel

The R&D and the CBS are not afraid of the OECD test. The existence of the R&D evaluation system is one of the most important elements in Israel's activities with the OECD and the importance of the system will increase when Israel joins the OECD as a full member.

A delegation of experts from the OECD on research and development in the software services industry visited Israel at the beginning of December last year. The delegation was invited by the National Research and Development Council (NRDC), headed by Prof. Oded Abramski, in coordination with the Central Bureau of Statistics (CBS), under the direction of Prof. Shlomo Itzhaki, the Ministry of Science and Technology and the Chief Scientist of the Ministry of Industry, Trade and Employment. The delegation was invited to examine the statistics on R&D in the computing services industry in Israel, this in light of the recommendations of the Halfman Committee (2005) regarding the method of estimating R&D. The total national expenditure on R&D in Israel amounts to about 4.9% of the gross domestic product, the highest rate than in any other country in the world. The weight of investments in R&D in the computing services industry from the total expenditure on R&D is also particularly high in Israel (27% in 2007) and is beyond the weight found in developed countries. The goal was therefore to understand the nature of these investments and the ways of measuring the R&D activity in these industries.

The delegation was composed of senior experts in R&D measurement from the USA, Canada, Finland, and from the Secretariat for Science, Technology and Industry of the OECD. These days the delegation submitted a detailed report containing the findings of the inspection they conducted, their conclusions and their recommendations. Below is a summary of the main conclusions and recommendations:

1. The definition of research and development in the field of software

In the questionnaire of the Central Bureau of Statistics for companies in the software industry, the research and development activity was defined in an inclusive way and different from the definitions of the OECD. In addition, this field is special in two characteristics: (a) its size in relation to the business sector - this R&D-intensive industry constitutes 5.8% of the business product in Israel, (a percentage that probably has no equal in the OECD countries); (b) The high concentration of international R&D centers included in it - close to half of the R&D expenditures of the computing services industry in Israel in 2007 were concentrated in international R&D centers (this is also probably a unique phenomenon for Israel). The delegation recommends that certain changes be made to the questionnaire and to the process of conducting the survey on business R&D in the future, but finds no reason to dispute the estimates of the national expenditure on civilian R&D and it is doubtful whether narrowing the definition will significantly affect the results.

2. The inclusion of defense R&D in the total national R&D expenditure

The estimate of the national expenditure for research and development should be expanded and include the expenses on security R&D in general and the computing services industry in particular.

3. Access to the CBS database

Researchers must be allowed access to the individual databases of the Central Bureau of Statistics under the limitations required by the Statistics Ordinance.

4. Multi-year funding for the business R&D survey

Multi-year funding of the business R&D survey must be guaranteed, which will allow the Central Bureau of Statistics to introduce the necessary changes in its execution process.

5. Reporting to the OECD

Since the issue of R&D in the field of software is of interest to all OECD countries, the Central Bureau of Statistics must report on the progress of the issue in the group of experts of this organization for the development of indicators of science and technology (NESTI).

The full report was submitted these days for the perusal of the invitees and soon there will be a discussion on its conclusions and recommendations. This action is done as part of a focused effort by the National Research and Development Council to improve, expand, and develop the national data set on R&D. The existence of this system is one of the most important elements in Israel's activities with the OECD and the importance of the system will increase when Israel joins the OECD as a full member.