FOR ECONOMIC CO-OPERATION
to Article 1 of the Convention signed in Paris on 14th December 1960, and which
came into force on 30th September 1961, the Organisation for Economic
Co-operation and Development (OECD) shall promote
To achieve the highest sustainable economic growth and employment and a rising
standard of living in Member countries, while maintaining financial stability,
and thus to contribute to the development of the world economy.
To contribute to sound economic expansion in Member as well as non-member
countries in the process of economic development. And
To contribute to the expansion of world trade on a multilateral,
non-discriminatory basis in accordance with international obligations.
original Member countries of the OECD are Austria, Belgium, Canada, Denmark,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the
United States. The following countries became Members subsequently through
accession at the dates indicated hereafter: Japan (28th April 1964), Finland
(28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995),
Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996)
and the Slovak Republic (14th December 2000).
© OECD 2001
is a clear trend
the OECD area towards
ability to create, distribute and exploit knowledge is increasingly
to competitive advantage, wealth creation and better standards of
The STI Scoreboard 2001 presents the latest OECD indicators on the
economy. Many are new, and they are brought together for
first time in one publication. As a range of new indicators show, the
of OECD economies is increasing. Investment in
particularly in R&D and software, is rising, as is investment in ICT.
the composition of investment is changing, particularly in R&D
a growing proportion is funded by business. Knowledge flows within
across OECD economies are increasing as well, as shown by growing
in science and innovation, greater international mobility of
workers and continued globalisation of trade and investment.
and communications technologies are also spreading quickly and
more rapid knowledge creation and diffusion.
which is reflected in the
of certain OECD
knowledge-based economy is also reflected in the economic
of several OECD countries. High-technology sectors contribute
more rapid growth in some, and the share of these sectors – both in
and services – continues to grow. Moreover, the overall
of capital and labour has increased in some OECD countries in the
partly owing to more rapid technological progress. Indicators of
confirm the swift pace of innovation.
mark the move towards
the overall trends are clear, large differences remain within the
area. The Nordic countries, notably Finland and Sweden, and the
States appear to be in the lead in the transition to a knowledge-based
as high investment in knowledge, rapid innovation and the pace of
of ICT indicate. Countries such as Japan and several large European
appear to lag in important areas, including investment in
innovation and growth of a high-skilled workforce. For certain
countries, openness to international knowledge flows also seems to
This suggests scope for further progress. However, the transition to a
economy requires progress in many areas, and even
that are ahead in many of them lag in others.
indicators show that the knowledge-intensity of OECD economies
growing more rapidly than
in knowledge, defined as public and private spending on
education, expenditure on research and development (R&D) and
in software, accounts for about 4.7% of OECD-wide GDP. It would
10% of GDP if education expenditure for all levels was included. By
measure, Sweden, the United States, Korea and Finland are the four most
economies. During the 1990s, investment in knowledge
by 3.4% annually in the OECD area, while investment in fixed
increased by 2.2%.
STI Scoreboard 2001
and ICT has been the most
hardware and software have been the most dynamic area for
The available data show that it rose from less than 15% of total
investment in the business sector in the early 1980s to
15% and 35% in 1999. Investment in software accounted for 25-40% of
contribution of ICT to overall investment growth.
in education and
underpins the growth of
and skills, which underpin the growth of a skilled workforce,
for the bulk of investment in knowledge. In 1999, 65% of the
aged 25-64 in the OECD area had completed upper secondary
The share is more than 20 percentage points higher in the United
and Japan than in the European Union. In 1999, 14% of the OECD-area
aged 25-64 had university-level education.
resources in science
1999, there were about 38 million workers (about 25% of the labour
in highly skilled S&T-related occupations in the European Union. The
was highest – about one-third – in the Nordic countries (Sweden,
Finland) and in the Netherlands, Germany and Belgium. Human
in science and technology (HRST) grew significantly between 1995
1999 in southern Europe, Ireland and Finland. The growth rate of HRST was
in European Union countries and the United States (about 3% annually).
as is expenditure for R&D.
expenditure on R&D has increased considerably over the
two decades. It has grown by almost 4% a year and has accelerated since
mid-1990s. Most of the increase between 1994 and 1999 was due to the
States. During the 1990s, R&D expenditure grew by more than 13%
in Ireland, Mexico and Iceland. In 1999, OECD countries allocated
USD 553 billion to R&D, or approximately 2.2% of overall GDP. Since the
R&D intensity has increased continuously in Japan and the United
and has remained more or less stable in the European Union.
relies also on
a recent slowdown, venture capital remains a major source of
for new technology-based firms. Between 1995 and 1999, it amounted
0.21% of GDP in the United States and 0.16% of GDP in Canada and the
for early and expansion stages. Almost half of venture capital
in the OECD area is for ICT, representing more than 67% in the
States and over 53% in Ireland and Norway. Biotechnology is also of
importance, accounting for the bulk of venture capital investments in
and about 15% in the United States.
role of business in R&D is increasing
is the main source of
spending on R&D.
business sector is the major source of R&D financing. In 1999, it
more than 60% of domestic R&D funding in OECD countries, a slight
from 1990. Over the decade, the business sector’s share increased
57% to 67% of total R&D funding in the United States; it remained stable
Japan at around 72% and increased from 52% to 55% in the European Union.
most countries, government’s role in funding R&D declined over the 1990s.
R&D spending is
countries spent a higher share of GDP on basic research in 1998-99 than
the early 1980s. Since 1995, the ratio of expenditure on basic research to GDP
been flat in the United States, but it has grown in Japan, France and Italy.
to GDP, Switzerland allocates close to 0.8% of GDP to basic research,
twice as much as the United States or Japan. In Korea, Japan and Ireland, around
one-third of basic research is performed by the business sector.
with less going to defence…
the 1990s, the share of defence R&D budgets relative to GDP
in most countries, largely owing to the overall reduction in military
France, the United States and Sweden experienced the strongest
Nonetheless, more than half of the US government R&D budget is
to defence, as is around a third of the total R&D budget in the
Kingdom and around a quarter in France and Spain.
and more to health…
the 1990s, government support for health-related R&D rose
in Japan (10%) and the United States (8%), with growth rates about
that in the European Union (5%). Compared to the European Union
Japan, government support for health R&D is high in the United States.
2000, it represented about 0.2% of GDP, far above the figures for the
Union (0.05% in 1998) and Japan (0.03%). This difference is partly
to institutional differences. When appropriate adjustments are made,
Finland, Austria and the Netherlands have health R&D budgets
to GDP similar to that of the United States. The difference in
support for health R&D between the United States and the
Union also narrows sharply.
with a growing share
significant and increasing part of health R&D concerns biotechnology.
for biotechnology R&D are currently only available for 20 OECD
and do not include the United States and Japan. They show that,
1997, public funding of biotechnology R&D amounted to approximately
3.4 billion. Germany (USD 1.0 bi llion), the United Kingdom
0.7 billion) and France (USD 0.6 billion) account for the bulk of it.
and Canada have the highest ratio of biotechnology R&D to total
budget appropriations for R&D (14% and 10%, respectively).
in the ICT sector also
also accounts for a growing share of overall R&D. Data for 19 OECD
indicate that, in 1998, R&D expenditure for ICT manufacturing was
USD 96 billion; for the ICT services industries, data for
OECD countries show expenditure of USD 18 billion. In 1998, Finland was
only country to allocate more than 1% of GDP to ICT-related manufacturing
ICT-related R&D intensities of the large European economies are well
those of the United States and Japan. In the 1990s, the United Kingdom
the only large European country where ICT-related R&D increased slightly
manufacturing and services industries (by 1% and 3% a year, respectively).
manufacturing, ICT-related R&D decreased in Germany, France and Italy by
2% and 0.5%, respectively.
flows within and across economies take on greater importance
co-operation between firms
use and generation of knowledge depend not only on the creation of
but also on flows of knowledge within and among economies.
between business and non-business entities is rising, and the
of R&D performed by the higher education and government sectors and
by the business sector is increasing. It represented 6.1% and 4.1% of
education and government research, respectively, in 1998. Data from
surveys show that firms with co-operation arrangements with higher
or government institutes account for around 10% of total employment.
of scientific research and technological know-how also
depends on research conducted in other countries. In the mid-
27% of scientific publications in the OECD area were the work of
teams and 7% of patents were the result of international
research. In smaller European countries, such as Belgium,
and Austria, over 40% of scientific publications have a foreign
When intra-EU co-operation is factored out, researchers in the
States and the European Union have a similar propensity to
with foreign researchers; in Japan, instead, international
in science and technology is quite limited.
as is cross-border
and more technology is owned by firms from a country other than
inventor’s country of residence. In the mid-1990s, an average of 14% of all
in any OECD country were owned or co-owned by a foreign
Likewise, OECD countries owned around 15% of inventions made
Foreign ownership of domestic inventions is high in several small
countries, but also in Canada and the United Kingdom, where US
own a large share of inventions. Domestic ownership of foreign
is also high in small countries; 39% of all inventions owned by
residents were invented abroad. In the United States, the share of
inventions in the patent portfolio is only 13%. Japan and Korea are the
internationalised in this respect.
mobility supports the
of knowledge across borders…
flows also result from migration. In the United States, for
the largest number of scientists and engineers (S&Es) with S&E
who were born elsewhere in the OECD area are from the United
and Canada; relatively few are from Germany or Japan. However,
times as many foreign-born scientists are from China and twice as many
India as from the United Kingdom. In 1998, for the 14 European countries
a whole, non-national HRST amounted to only 3%. However, European
differ widely; Luxembourg employs by far the largest share of
(33%), followed by Austria, Belgium and the United Kingdom.
as does student mobility.
mobility of students also represents a potential flow of
workers. Five countries are host to more than 70% of all foreign
in OECD countries. The United States attracts 29% of foreign
followed by the United Kingdom (14%) and Germany (12%).
countries account for over 50% of the OECD total. In
Australia, Austria, Belgium and the United Kingdom, foreign
represent more than 10% of total enrolments. In Korea, Mexico and
they account for less than 1%.
globalisation of the
in the rapid growth
economies also integrate in other ways. Financial transactions
direct investment and portfolio investment) constitute the fastest growing
of international transactions. The upsurge in direct
and portfolio investment was especially rapid in the second half
the 1990s. However, such investment flows have proven highly volatile. The
of trade and non-trade tariff barriers has also contributed to a steady
in international trade.
is growing rapidly,
share of trade in international transactions has remained persistently
averaging 15% of OECD GDP in the 1990s. That of trade in goods is four
that of trade in services, despite the acceleration of the latter. In the
half of the 1990s, international trade in services as a share of GDP
up slightly, partly as the result of the growing tradability of certain
e.g. software, financial services and accounting. The trade-to-GDP
is only around 10% for the United States, Japan and the European Union
intra-EU trade flows are excluded. During the 1990s, the international
ratio grew on average about 2% in the European Union and the
States but declined slightly in Japan.
and foreign direct
in recent years...
of foreign direct investment (FDI) have surged in recent years,
to renewed dynamism in the world economy and a favourable
investment environment. FDI flows as a percentage of GDP are
for Belgium-Luxembourg, New Zealand, Sweden, the Netherlands,
and the United Kingdom. They remain small in Turkey, Korea,
and Italy. In Germany, Japan and the United Kingdom, outward
greatly exceeds inward investment, while Australia, Hungary,
and Spain receive more foreign capital than they invest abroad.
partly owing to increases in
and acquisitions are the most common form of FDI. During the
cross-border mergers and acquisitions increased more than five-fold
on a value basis. The United States was the main target during the
period, attracting on average four times as many deals in terms of
than the United Kingdom, the second target country. Germany and
took third and fourth place. During the 1990s, the most active sectors
global level were oil, automotive equipment, banking, finance and
for a growing share of
in many countries…
share of turnover under foreign control in the manufacturing sector
from about 70% in Hungary and Ireland to under 2% in Japan. In the
1995-98, the shares of foreign affiliates in manufacturing turnover rose
everywhere. In terms of manufacturing employment, their shares range
around 50% in Ireland, Luxembourg, and Hungary to 1% in Japan. In the
half of the 1990s, when manufacturing employment typically declined
national firms, it rose in foreign affiliates in all countries except Germany
Netherlands. In most cases, this reflected changes of ownership owing to
the services sector
share of turnover under foreign control in the services sector is over
for Hungary, Belgium, Ireland and Italy. In terms of employment, the
of foreign affiliates ranges from 19% in Belgium and around 14% in
and Ireland to less than 1% in Japan. In all countries except Norway
Finland, the share of turnover of foreign affiliates was greater for
than for services.
and communications technologies are diffusing rapidly
accompanied by the rapid diffusion of ICT,
diffusion of information and communications technology is a key
of the knowledge-based economy. Access to ICT has grown rapidly
the past years. At the end of 1999, OECD countries had more than one
access channel for every two inhabitants and several countries had
than one access channel per inhabitant. The Nordic countries maintain a
lead over the rest of the OECD area when connectivity provided by
networks is taken into account. Internet technologies are diffusing
rapidly. At the end of 1999, there were nearly 50 million Internet
in the United States, close to 11 million in Japan and in Korea,
million in Germany, 7.4 million in the United Kingdom and 6.2 million in
A ranking of countries in terms of Internet subscribers per
population shows high levels of take-up in Korea, Sweden, Denmark,
the United States, Netherlands, Iceland and Norway.
to the Internet is
in most countries…
computers are still the main device used by households to access
Internet. In most countries for which data are available, more than half of all
now have computers. In 2000, there was a noticeable gap between
European countries such as the Netherlands (69%), Denmark (65%) and Sweden (60%)
and southern European countries such as Italy (28%), France (27%) and Turkey
(12%). Internet access in households is soaring everywhere, especially in Italy
where the access rate grew by 144% between 1999 and 2000, as well as in the
United Kingdom (75%), Japan (74%) and France (73%).
as is its use, but Internet
share of adults using the Internet from any location is also increasing
More than half of the adult population now uses the Internet in
(68%), Denmark (62%), Finland (54%) and Canada (53%). The Internet
still mostly used to search for information, and the propensity to carry out
over the Internet varies widely. In Sweden, 43% of Internet users
over the Internet, followed by the United Kingdom (33%), the
States (30%) and Denmark (29%). Business use of the Internet is
very rapidly. Internet penetration in businesses with ten or more
has reached 80-90% in the Nordic countries, Australia, Canada, the
and the United Kingdom. In the Nordic countries, over 40% of
use the Internet in their daily work. The use of the Internet to
transactions, although rising fast, is limited. The value of Internet
in 2000 ranged between 0.4% and 2% of total sales, while electronic sales
those over all computer-mediated networks) reached almost 6% in
rate of diffusion differs
users and across
penetration in households is strongly affected by household
The difference between Internet access in households belonging to the
and highest income quartiles is highest in the United States and lowest in
Internet usage rates are much higher in large than in small enterprises
vary in different economic sectors. The most intensive business users are
firms in finance and insurance, business services and wholesale trade.
partly owing to differences
key determinant of cross-country differences in the diffusion of the
and electronic commerce is access cost. There are large differences
prices of leased lines, which provide the infrastructure for business-tobusiness
commerce. The Nordic countries have the lowest charges,
about one-fifth the OECD average. Differences in Internet access cost for
are even more marked. At peak times, countries which
have had unmetered local calls – Australia, Canada, Mexico, New
the United States – are among the least expensive.
structure of OECD economies and of trade reflects the increasing role
knowledge has grown in
so has the share of
the end of the 1990s, high- and medium-high technology
accounted for about 9% of total OECD value added. The
of high- and medium-high technology industries was largest in
where they accounted for over 16% of value added, and in Korea
Among the G7 countries, Germany and Japan had the largest shares
such industries, at 11.7% and 10.7% of total value added, respectively. In
OECD countries, including the United States, this sector has grown
over the 1990s.
“market” services accounted for 18% of total value added
the OECD area. Post and telecommunications, finance and insurance and
services are typically the most intensive technology users among
services. These sectors accounted for almost 25% of total value added in
Among the G7 countries, the United States and the United Kingdom
the largest knowledge-intensive services sector. In Mexico and Greece, this
accounted only for about 10% of value added. If knowledge-intensive
services (education and health) are included, knowledge-intensive
account for about 29% of total value added in the OECD area.
OECD economies is also
in business R&D.
have a much smaller share in R&D than in GDP. In 1998, they
for about 17% of total business sector R&D in the OECD area, an
of 2% from 1992. Countries differ widely, however. In Norway, 48% of
business R&D is carried out in the services sector, 37% in Denmark and
in the United States. Although the share of services R&D increased over
1990s in Germany, France and Japan, these countries still have the lowest
of services R&D (less than 10%).
ICT sector has grown very
in several OECD countries.
ICT sector makes a substantial contribution to the economy. In 1999, ICT
added represented between 5% and 14% of business sector value added in OECD
countries. The importance of ICT supply has been increasing, not only in
countries like Hungary, the Czech Republic and Mexico, which are catching up in
terms of infrastructure, but also in Finland, Sweden, Norway, the Netherlands
and the United Kingdom. In Finland, the ICT sector’s share of value added
increased by 4.7 percentage points over the 1995-99 period. It now represents
over 13% of total business sector value added. The ICT sector is a major source
of employment growth. OECD employment in the sector grew by over 12% in the
period, i.e. an average annual rate of over 3% a year, double that of
overall business sector employment. ICT services are driving this growth.
also rising rapidly…
growing importance of knowledge-intensive industries is also visible
the structure of OECD manufacturing trade. The share of high-technology
in total OECD trade increased from 18% in 1990 to one-quarter
1999. The highest growth rates in OECD manufacturing trade in the 1990s
in high-technology industries: pharmaceuticals, radio, television and
equipment and computers. The shares of medium-low- and
industries have gradually declined.
although only a few OECD
have a strong comparative advantage in
spite of the growing importance of high-technology industries in overall
few OECD countries specialise in high- and medium-high-technology
In 1999, the structural surplus in these industries represented more
15% of total manufacturing trade for Japan, about 7.5% for Switzerland and
5% for Germany, Mexico and the United States. A considerable number of OECD
countries still have a strong comparative advantage in medium-low technology and
low-technology industries. The structural surplus of Turkey, New
and Iceland in these industries accounted for more than 20% of total
trade. For most OECD countries, these specialisation patterns
changed little over the past decade.
and innovation increasingly underpin economic performance
is a key driver
patterns show that knowledge and innovation make a large
to growth. A high share of investment in fixed capital goes for ICT.
the overall efficiency of the use of capital and labour in the
process, or multi-factor productivity (MFP), increased rapidly in
Finland, Australia, Canada and the United States in the second half of
1990s. More rapid MFP growth points to faster technological progress.
rapid productivity growth in high-technology sectors such as ICT
contributed strongly to growth in several countries.
and patenting is
of patenting confirm the brisk pace of technological progress.
the 1990-97 period, patent applications at the European Patent Office
annually by 5.7% for the European Union, 4.8% for the United States
1.1% for Japan. During the 1990s, growth rates for patents in ICT (8%) and
(10%) for the OECD area were almost twice that of total patent
(5%). Indicators of patent families – patents taken at the European
Office, the US Patent and Trademark Office and the Japanese Patent
to protect a single invention – show that there were about 32 000 patent
in the OECD area in 1995. The United States accounted for about 35%,
by the European Union (32%) and Japan (27%). When population size
taken into account, Switzerland patents the most by far in the OECD area. In
there were close to 100 patent families per million population in
far above Sweden (74) and Japan (69).