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PPPs for policy making: a visual guide to using data from the ICP - Chapter 9: Infrastructure

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Research and development

Investment in research and development (R&D) and encouraging innovation can enable knowledge-based economic development and growth. Through Sustainable Development Goal (SDG) 9, countries have pledged to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. SDG target 9.5 seeks to encourage innovation and substantially increase the number of researchers, as well as public and private spending on research and experimental development.

Expressing expenditures on R&D and its components in PPP terms allows comparisons between sectors, countries, and over time. The United Nations Educational Scientific and Cultural Organisation (UNESCO) provides several PPP-based indicators to support policy making to achieve this target (figure 9.6 and map 9.3). These are made available by sector and by source of financing (business enterprise, government, higher education, and private nonprofit), and by field (natural sciences, engineering and technology, medical and health sciences, agricultural and veterinary sciences, social sciences, and humanities and the arts).

The Organisation for Economic Co-operation and Development (OECD) Main Science and Technology Indicators database provides indicators that reflect the level and structure of efforts in the field of science and technology. The database includes PPP-based expenditures on research and development by performing sector (figure 9.7).

The aim of the Global Innovation Index (GII), published by Cornell University, Institut Européen d'Administration des Affaires (INSEAD), and the World Intellectual Property Organization (WIPO), is to provide insightful data on innovation and, in turn, assist countries in evaluating their innovation performance and making informed innovation policy considerations. Many of the index’s metrics are measured per unit of PPP-based GDP. These include management systems certificates awarded, venture capital deals, joint ventures and strategic alliances, patents, applications and trademarks, global downloads of mobile apps, and the number of scientific and technical journal articles. Additional inputs include the growth rate of PPP-based GDP per person employed, the gross capital formation share of PPP-based GDP, PPP-based GDP per unit of energy use, and domestic market scale as measured by PPP-based GDP. Figure 9.8 shows the GII score against PPP-based GDP per capita for countries. 

The Agricultural Science and Technology Indicators (ASTI) database from the International Food Policy Research Institute (IFPRI) collects data on agricultural research expenditure in low- and middle-income countries to assist policy makers in understanding the contribution of agricultural science and technology to agricultural growth and help them in formulating policy, setting priorities, and undertaking strategic planning, monitoring, and evaluation (map 9.4). The largest components of a country’s agricultural R&D expenditures are staff salaries and local operating costs, and thus PPPs are chosen over market exchange rates to compare expenditures across countries and with other sectoral R&D expenditures.