There is a complex interplay between the public and private sectors in the funding and performance of R&D. Governments choose among various tools to leverage business sector R&D. Traditionally, they fund R&D activities directly via grants or procurement. More than 15% of business R&D (BERD) is funded directly by government in the Russian Federation, South Africa, Spain, Hungary and Turkey. In the OECD area, the government funds nearly 7% of total BERD, down from nearly 9% in 1999.

Funding of business enterprise research and development (BERD) may be national or foreign. It may originate from private business, public institutions (government and higher education), or international organisations. Research and development (R&D) funding from abroad includes, for instance, R&D performed by affiliates of foreign-owned companies, R&D undertaken under contract on behalf of companies based abroad or research grants from international organisations. On average, R&D funding from abroad plays quite an important role in the funding of business R&D. In the EU, it represented around 10% of total business enterprise R&D in 2008. The weight of foreign multinationals in the economy and in the domestic production of technology appears to matter. For Austria, Ireland, the Slovak Republic and the United Kingdom, funds from abroad represented 20% or more of total business enterprise R&D.

Publications in top journals provide a measure of “qualityadjusted” research output. Switzerland has the highest rate of high-quality publications on a per capita basis among OECD and BRIICS (Brazil, the Russian Federation, India, Indonesia, China, South Africa) countries, followed by Sweden and Denmark. In absolute numbers, the United States is the leading producer of publications in top journals, followed by the United Kingdom. If total publications are considered, independently of quality, the United States remains the leader but China takes the second position. The share of emerging economy publications in the world total is rising fast although the percentage published in top quartile journals is below the world average.

The degree to which applied technological developments, in the form of patented inventions, are linked to basic science is difficult to determine. However, most patent applications include a list of references – citations – to earlier patents and to non-patent literature (NPL), e.g. scientific papers, that set the boundaries of patents’ claims for novelty, inventive activity and industrial applicability. References are added by the applicant or the patent examiner to reflect the “prior art” that inventions have built upon. Backward citations to NPL can show how close a patented invention is to scientific knowledge, whereas forward patent citations can show the importance of a patent for the development of other technologies.

Higher education and research systems have become more internationalised over the past decades. The internationalisation of higher education can be gauged by the international mobility of students and that of research systems by internationally mobile holders of doctorates. During their studies and afterwards, the latter contribute to the advancement of research in the host country. When returning home, they bring back new competences and connections with international research networks.

Interaction and learning within firms enable human resources in science and technology (HRST) to share information, challenge existing patterns, and experiment and collaborate to improve products and processes. “Brain circulation” across jobs, firms and sectors of activity can stimulate knowledge transfer, application of knowledge to new problems, and lead to the adoption of best practices, greater openness, creativity and innovation. It may also involve a loss of human capital for companies that invest in developing their workers’ skills.

Innovation is a complex process and often involves many actors and linkages. One way to capture its systemic dimension is to examine which information sources firms use for their innovation activities. Internal sources are often reported as the most important for innovation, but in some countries external market sources predominate. Institutional sources play a much smaller role: generally, less than 10% of innovating firms rank them as “highly important”.

During 2006-08, in the great majority of countries, large firms were significantly more likely to collaborate on innovation than small and medium-sized enterprises (SMEs). Among SMEs, the rate of collaboration is between 25% and 40% of innovative firms in half of the countries surveyed, but it varies widely for large firms. More than 70% of large innovative firms collaborated on innovation in Denmark, Slovenia, Finland, Belgium, the United Kingdom and Austria, while less than one-third did so in China, Brazil and Mexico.

Collaboration with foreign partners can play an important role in the innovation process by allowing firms to gain access to a broader pool of resources and knowledge at lower cost and to share the risks. It can take a variety of forms and levels of interaction ranging from simple one-way information flows to highly interactive and formal arrangements.

Technology receipts from patents and licences and payments for R&D services are the main source of information on disembodied technology diffusion and indicate the internationalisation of technology flows.