The document provides an overview of accounting for science and technology (S&T) and measuring S&T output. It discusses the challenges in quantifying S&T outputs and different indicators used, including R&D expenditures, patents, publications, citations and more. It also notes limitations of various indicators and the need to use multiple complementary measures to fully assess S&T activities and impacts.

1. Lecture 5 Accounting for S&T

2. Outline of Presentation Accounting for S&T Nature of the Science system Measuring output of S&T

3. When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind" (Lord Kelvin)

4. "Not everything that can be counted counts and not everything that counts can be counted." (Albert Einstein)

5. What are S&T Indicators for? Describe the S&T performances of organisations, regions and countries and their dynamics; used as a starting point for exploring possible areas of best practice in S&T policy.

6. Examples of indicators include: indicators of human resources in S&T, such as the number of researchers, indicators of countries' financial efforts in research, such as R&D expenditure,

7. indicators on scientific and technological performance, such as publications and patents, indicators of the economic significance of S&T such as high tech employment or export of high tech products.

8. Why S&T Indicators? L egitimisation : demonstrate support for existing policies/programmes A ccountability : information on how well funds have been utilised as well as performance of S&T system M onitoring : performance of existing policies/programmes A wareness : information on understanding and performance of the S&T system Towards enhanced management of STI

9. A Cautionary Note on Indicators No magic bullets – variety of indicators needed ( input; output; outcome; impact; linkage etc.). Each indicator by itself is incomplete Need to consider complementary information from case studies, evaluation studies for more complete picture/assessment;

10. S&T Indicators: What are they? Input indicators expenditures on R&D; expenditures on education, training, S&T infrastructure no. researchers, scientists and engineers (RSEs);

11. Output indicators patents; technology licences/sales; royalties; papers citations no. of start-up companies

12. Linkage Indicators -number of collaborative research projects; -number of co-authored papers; -level of funding by industry;

13. In the context of National System of Innovation, we need to measure knowledge flows such as - technology transfer; -technological alliances -machinery diffusion

14. Knowledge creation/absorptive Capacity Input Indicators -e.g. % GDP spent on GDP; researchers per 10,000 labour force; R&D grants Knowledge Acquisition Acquisition indicators – e.g. imports in tech. balance of payments; no. of regional offices; no. of firms acquired; Knowledge infrastructure capacity Infrastructure indicators e.g. expenditure on capital items; ratings on facilities; no. of PRIs; Knowledge Dissemination Capacity Diffusion indicators e.g. % budget allocated for diffusion activities; no. of tech. fairs; Knowledge Application Capacity Application indicators e.g. % of workforce with university education; % of RSEs; Knowledge Output Output indicators e.g. no. of papers; no. of S&T graduates/post-graduates from universities; no. of patents Knowledge Impact Impact indicators e.g. No. of university spin-off companies; no. of companies exited from incubators; No of cited papers; Increase in exports/reduction in imports Knowledge Linkages Linkage indicators e.g. no of joint projects; no of co-papers; % industry sponsored funding; Knowledge Society Awareness indicators e.g. awareness on S&T issues; acceptance of S&T; internet penetration; PC adoption; Knowledge governance Governance indicators e.g. industry involvement in management of PRIs; univ; regulations favouring autonomy ASSESSING SCIENCE, TECHNOLOGY & INNOVATION IN MALAYSIA Conceptual Framework of Indicators for Assessing Science, Technology and Innovation in Malaysia

15. The Science System The science system or scientific infrastructure may be defined in terms of those institutions and social structures whose activities mainly consist in the discovery, articulation and propagation of scientific and technological knowledge .

16. GOVT. Indu-stry Acad-emia Society S&T System

17. Scientific accounting should be thought of more in terms of the ways in which resources are allocated over different categories of scientific expenditures rather than in input/output terms. The main reason for this is that scientific and technological expenditures are measured at cost since outputs are much more difficult to quantify.

18. Unlike social accounting, scientific expenditures have to be divided between (a) sector of source of funds; and (b) sector of performance .

19. Measuring Output of S&T The main reason why it is hard to assess the output of S&T activity is because much output realises its value mainly within the context of later productive activity. Thus, it is impossible to place an unambiguous value on the scientific output itself since the value of final product is the result of a combination of many inputs of which scientific research is only one.

20. Social /Cost Benefit Analysis conceptually, the most complete evaluative technique; used normally in the appraisal of large investment projects where the decision choice depends upon the costs and benefits likely to accrue and where there are limited investment funds available. Also, used to evaluate past projects so as to help determine the extent to which the project has paid off

21. But because scientific investigation is highly uncertain both in terms of technology and commercial viability, application of this technique to scientific expenditures must be treated with caution

22. Patents widely used as a measure of inventive/innovative output; reflect capacity to generate change and improvement; Adv : using patents - statistics are readily available;

23. Disadvantages Major intersectoral differences in relative importance of patenting; provide quantitative indices but no economic value attached to them; tend to reflect inventive rather than innovative output;

24. international comparisons using patent data are hazardous because of variations in patent law. Sometimes inventors do not patent since to do so would draw the attention of potential imitators;

25. Counts of Innovations innovations may be defined as the first commercial introduction of a new product or process; indicator which more truly reflects the actual economic output of R&D activity; disadvantage of this indicator is that there are few existing series of innovations; This method does not capture process innovations

26. Licences a measure of technological output frequently used in the assessment of international flows of technology; licence is defined as the right on the part of one firm to make commercial use of a proprietary technology;

27. Adv : statistics on licence payments are readily available; Disadv : licence fees are not the only form of payment in which suppliers of technology receive payment. Hence data on licencing fees need to be interpreted with caution.

28. Scientific and Technical Papers This is the main means through which scientists communicate to their peers and to the outside world; However, there are variations across scientific fields as regards to publication and in some cases it is often impossible to publish at all. Also, journals vary in quality. To deal with this problem some authors have suggested the use of citation - that is counting the number of times over a given period, that a particular paper is cited by other authors either in its original field or in other fields .

29. Other Measures of Scientific Output counts of major discoveries; peer evaluation surveys/interviews case studies models of knowledge flows; models of productivity spillovers Measures of scientific output should assist policy analysts in focussing not only on productivity of funding but whether resources have been directed in the right areas.

30. R&D Expenditure as a % of GDP Year % of GDP Indonesia 1995 0.20 Philippines 1997 0.22 Malaysia 2004 0.63 Singapore 2000 1.89 UK 1998 1.83 Taiwan 1999 2.05 US 1999 2.65

31. No of researchers per 10,000 labour force Year Number Indonesia 1991 3.0 Philippines 1991 3.0 Malaysia 2004 21 Singapore 2000 83.5 UK 1995 95.0 Japan 1999 136.0 US 1999 74.0

32. Malaysia ranked 52 nd among 179 countries in terms of output of ISI publications for period of 2001-2005. We produced 5,688 publications or 0.14% of total for the period under review; Among ASEAN countries: Singapore – 35 th ranking; 0.61% Thailand - 45 th ranking; 0.45% Indonesia – 67 th ranking; 0.06% Philippines – 70 th ranking; 0.05%

35. In terms of citations, Malaysia is ranked 57 th with total of 10,667 citations ; Other ASEAN countries: Singapore – 37 th ; 76,666; Thailand – 43 rd ; 26,626; Vietnam – 64 th ; 7080; Indonesia – 65 th ; 6989; Philippines – 71 st ; 5765

36. US Utility Patents granted to Selected Countries, 1977-2004 55.6 1,725,549 United States 2.7 83,991 United Kingdom 0.01 348 Thailand 1.19 36,802 Switzerland 1.15 35,673 South Korea 0.09 2,719 Singapore 0.91 28,256 Netherlands 0.02 547 MALAYSIA 18.5 574,865 Japan 0.4 12,348 Israel 0.05 1,843 Ireland 0.06 1,921 India 0.3 10,802 Finland 0.08 2,593 China 2.1 63,944 Canada 0.5 15,876 Australia % of Total US Patents granted, 1977-2004 Country

37. US Utility Patents granted to Selected Countries, 1977-2004

38. Limitations of OECD Indicators Based on input-output analysis-not able to represent technology as a stock – does not take into account accumulated scientific/technological knowledge;

39. R&D expenditure captures only a part of the expenditure on innovation . It does not reflect the development effort. Activities like marketing are also not reflected though they are critical in innovation.

40. Impacts of R&D are partly captured in input-output balance sheets. In reality these impacts are exceedingly complex. Utility of patents weakened by : - differing patent laws and procedures; -patents issued for inventions of unequal value; -many patents issued for invention which are never used long after the patent is issued -patent applications governed by market pull as well as by technology push – lower tendency to patent in small markets

41. OECD S&T output indicators not generally applicable in the developing countries. Technological balance of payments relevant only to payments incurred in formal contracts of tech. transfer between countries.

42. Malaysian Science and Technology Indicators Report 2006 DRAFT FINAL REPORT DECEMBER 2006

43. Objective of this Presentation Findings What the findings are telling us Scoreboard To inform and obtain feedback from MASTIC and members of Technical Committee on:

44. Scope of this presentation Education in STI Human Resources for STI R&D Activities Public Support for STI Innovation in the Manufacturing Sector Trade in Technology Publications and Citations Patenting in Malaysia ICT Profile of Malaysia Awareness, Knowledge and Attitude towards STI Our STI Scorecard and Way Forward

45. Increase in student registration for science and mathematics at SPM and STPM levels

46. Enrolment in Doctoral Degree Courses at Public Educational Institutions by fields of study, 2002-2005 Significant increase in postgraduate enrolment during past 3 years; More enrolment in Arts than that of Science or Technical courses at postgraduate level in public universities Enrolment in Master’s Degree Courses at Public Educational Institutions by fields of study, 2002-2005 100 34,704 100 27,316 100 25,527 Total All Fields 10.62 3,686 10.37 2,834 13.01 3,321 Technical 29.41 10,208 32.90 8,986 31.59 8,064 Science 59.96 20,810 56.73 15,496 55.40 14,142 Art Percentage Number of students Percentage Number of students Percentage Number of students 2004/2005 2003/2004 2002/2003 Academic Year Field of Study 100 6,452 100 5,068 100 3,882 Total All Fields 14.43 931 10.26 520 11.31 439 Technical 33.48 2160 40.13 2034 37.82 1468 Science 52.09 3361 49.61 2514 50.88 1975 Art Percentage Number of students Percentage Number of students Percentage Number of students 2004/2005 2003/2004 2002/2003 Academic Year Field of Study

47. Graduations in First Degree Courses in Public Universities by fields of Study, 2004/2005 More students are graduating from Arts disciplines than the Sciences-but % Arts graduates declining; Also, more female graduates than males in both the Arts and the Sciences 100 43,826 27,739 16,087 Total 16.85 7,405 5,571 1,625 309 2,962 2,043 769 150 4,443 3,528 756 159 Technical Engineering Architecture, Town Planning and Survey Others 28.75 12,589 1,506 465 5,160 4,328 1,130 8,196 1,015 307 3,458 2,672 744 4,393 481 158 1,702 1,656 386 Science Medicine and Dentistry Agricultural Sciences Natural Sciences IT and Computer Sci Others 54.50 23,832 6,800 13,910 1,209 1,913 16,581 4,815 9,710 738 1,318 7,251 1,985 4,200 471 595 Arts Arts and Humanities Economics & Business Law Others Total Female Male Percentage Number of Graduates Course

48. Stocktake 1: Education in STI Increase in students registration for science and mathematics at SPM and STPM levels; Decline in proportion of Arts students in first-degree enrolment in public IHLs Sharp increase in postgraduate enrolment and graduation where Arts students predominate. Ratio of PG to UG enrolment increased from 1: 14 (1994) to 1: 6.7 in 2004; First degree enrolment at private HEIs almost 50% that of public IHLs; More women enrolment and graduates at first-degree level in both Arts and Sciences

49. Significant increase in R&D personnel from 24,937 to 30,983 in 2004 due to increase in R&D personnel in IHLs and industry. Also, substantial increase in FTE . Ratio of FTE to headcount increased to 0.55 in 2004 (0.43 in 2002); No. of support staff and technicians static in recent years Rising trend in number of R&D personnel in terms of headcount and FTE (a) Number

50. Stocktake 2: R&D Manpower Substantial increase in RSEs both in headcount and in FTE. However, numbers of support staff static; Increasing representation of women research personnel; Trend of increasing qualification among researchers;

51. Slight increase (RM 340 million) in national R&D expenditure from 2002 - RM 2.84 billion in 2004. However, the research intensity (GERD/GDP ratio) has declined from 0.69 in 2002 to 0.63 in 2004 due to faster expansion in national GDP during same period Research expenditure small when compared to China (RM 69 billion). S’pore – RM 10.0 billion (2005) (a) Overall

52. National R&D Expenditure by Sector (1996 – 2004) 1996 1998 2000 2002 2004 R&D Expenditure Total GERD (RM million) 549.3 1127.0 1,671.5 2,500. 6 2,843.7 Total GDP (RM million) 253,732.0 283,243.0 340,706.0 360,658.0 449,609.0 Ratio GERD/GDP (Research Intensity) 0.22 0.39 0.50 0.69 0.63 GRI (RM million) 108.7 247.3 417.5 507.1 296.9 IHL (RM million) 40.4 133.6 286.1 360.4 513.3 Private Sector (RM million) 400.1 746.1 967.9 1,633.1 2,033.5 Proportion of R&D Expenditure GRI(%) 19.8 21.9 25.0 20.3 10.4 IHL(%) 7.4 11.9 17.1 14.4 18.1 Private Sector (%) 72.8 66.2 57.9 65.3 71.5

53. National R&D Manpower (Headcount)

54. NUMBER OF RESEARCHERS PER 10,000 LABOUR FORCE (1992-2004) Researcher per 10,000 labour force has increased to 21.3 in 2004 from 18 in 2002 – …but well below that of developed countries

55. Stocktake 3: R&D Expenditure Slight decline in research intensity (0.69% to 0.63%); Industry leads in R&D expenditure. Most R&D expenditure by large firms; Most expenditure devoted to applied research; Foreign firms accounted for 44% of total industry R&D expenditure Bulk of R&D conducted in Malaysia

57. Increasing importance of pre-packaged incentives

58. Stocktake 4: Public Support for S&T The total amount of R&D grant approved under the various grant incentives declined in 2004; Sharp increase in amount granted under double-deduction tax relief; Increasing investments by foreign companies in provision of R&D services; Need to address grouses of industry when applying for incentives

59. Radio, television and communication equipment Coke, refined petroleum and nuclear fuel Office, accounting and computing machinery Scientific equipment, watches and clocks Motor vehicles, trailers and semi-trailers Figure 5.2: Incidence of Innovation by Industry 67 43 50 71 67 76 57 63 47 56 58 32 62 57 25 41 56 55 62 29 73 46 33 57 50 29 33 24 43 37 53 44 42 68 38 43 75 59 44 45 38 71 27 54 0 10 20 30 40 50 60 70 80 90 100 Recycling Furniture Other transport equipment Electrical machinery Other machinery and equipment Fabricated metals Basic metals Non-metallic mineral Rubber and plastics Chemical Publishing and printing Paper Wood Wearing apparel Textiles Food and beverages Percent (%) Innovating Non-Innovating Tanning and dressing of leather Source: Mastic

60. Innovatin g Figure 6.3: Incidence of Innovation by Size, Manufacturing 0 10 20 30 40 50 <20 20-49 50-249 >249 Non-Innovating

61. Stocktake 5: Innovation in the Manufacturing Sector Improvements in incidence of innovation over previous periods; Dominance of large firms reporting innovation. Decline in local firms; Decline in firms reporting new product development. Also, increase in firms reporting falling innovation-related expenditure; Low incidence of intellectual property registration Most firms reported favourable environment particularly role of universities and government support;

62. Stocktake 6: Trade in Technology Despite some improvements services account continues to be negative with the deficits remaining high. The high deficits in royalty payments for intellectual property suggests that Malaysia is still a net technological learner typical of economies still located low in the technological ladder. There is thus a need to strengthen government policy to quicken further learning and innovation in firms in Malaysia. The growth in surplus involving construction and engineering involving other economies also suggests that the government should encourage diversification of service markets .

63. ISI-based publications in the field of Biotechnology and Applied Microbiology in ASEAN (2001-2005)

64. Comparison of selected top research fields for selected ASEAN countries (2001-2005)

65. Publication and Citations in Malaysia by selected IHLs (2001-2005) Top 10 individual Scientists by No. of Papers (2001-2005)

66. Countries that collaborated with Malaysian-based authors sorted by number of publications (2001-2005)

67. Stocktake 7: Publications and Citations Malaysia’s contribution to global scientific publications is low – both in terms of output as well as quality; stagnant global share (0.09%); growth in output for some strategic fields such as Applied Physics/Condensed Matter/Materials Science and Material Science & Engineering as well as in Biotechnology and Applied Microbiology; Huge gap in publishing between IHLs and GRIs; Publishing in top journals is minimal.

68. Patent Applications Filed in Malaysia by Malaysians and Non-Malaysians for period 1996 – 2000 and 2001 – 2005 1996-2000 2001-2005 Variation (Percentage increase or decrease during the two 5-year period under review) Malaysians 1,017 2,013 + 97.9% Non-Malaysians 29,039 25,648 - 11.7% Total applications 30,056 27,661 -8%

69. Patents Granted to Malaysians and Non-Malaysians by the Intellectual Property Corporation of Malaysia (MyIPO) for period 1996 – 2000 and 2001 – 2005 1996 - 2000 2001 - 2005 Variation (Percentage increase or decrease during the two 5-year period under review) Malaysians 215 142 - 34% Non-Malaysians 4,067 9,253 +127% Total granted 4,282 9,395 +119%

70. Time Taken For Obtaining a Patent in Selected Countries Source: Manual For the Handling of Applications for Patents, Designs and Trade Marks Throughout the World, Kluwer Law International, 2005 and Guide For Applicants Issued by the Various National Patent Offices Applicant must provide the US Patent Office all the disclosures in order to expedite grant . 3-4 years United States Request for examination must be filed within 2 years from the filing date of the UK Patent application. 4 years United Kingdom Request for examination must be filed within 2 years from the filing date of the Singapore Patent application 2-4 years Singapore Request for examination must be filed within 2 years from the filing date of the Malaysian Patent application 4-5 years Malaysia Request for examination can be filed up to 7 years from the filing date of the Japanese Patent application 7-12 years Japan Request for examination must be filed within 2 years from the filing date of the European Patent application 7 – 8 years European Patent Office Remarks Time Taken Country

71. Stocktake 8: Patents 119% increase in patents granted for period 2001-2005 over previous 5 year period Declining number (142) of patents granted to Malaysians although applications have increased; Patenting activity abroad insignificant; Time taken for obtaining a patent (4 - 5 years) behind that of Korea, Singapore and US

72. Number of Computer per 1000 people in Malaysia and Selected Countries, 2004 Source: Computer Industry Almanac, IMD World Competitiveness Report 2005 Computer ownership in Malaysia highest in ASEAN (after Singapore) but well below that of developed countries

73. Number of Internet Users per 1000 people in Malaysia and Selected Countries, 2004 Source: Computer Industry Almanac, IMD World Competitiveness Report 2005

74. ICT spending in Malaysia reached US$3,261 million in 2005 and forecasted to grow at CAGR of over 12% from 2004 to 2009; Highest percentage of ICT spending in the field of hardware; IT services (25.2%), and packaged software. IT Spending by Hardware, Software, and Services 2004-2009

75. Stocktake 9: ICT Surge in cellular phone subscription while decline in DEL segment; Steady increase in Internet usage although largely (88%) through dial-up; Similar upward trend in computer ownership; Expansion in e-commerce transactions; Malaysia’s declining share of global ICT market

76. Stocktake 10: Public Awareness of Science and Technology Malaysia . Attitude of Malaysians towards S&T has improved appreciably over the years. An analysis of trends from 1998 to 2004 revealed that interest of Malaysian public towards S&T has remained relatively constant Malaysians have a relatively good understanding of scientific concepts and knowledge but poor on questions that require higher order scientific knowledge. Also, we do not fare well on questions that impinge on religious sensitivities

77. What are the findings telling us? Increasing Gross Expenditure R&D; Increasing no. of researchers; Increasing science enrolment both at first degree and post-graduate levels; Expanding range and scope of incentives for STI; Attracting foreign investments in R&D Increasing incidence of innovation ; PROGRESS in

78. Reducing deficit in technology balance; Reducing time for patent to be granted; Increasing internet and computer access; Increase in publications in selected fields; Increase in attitudes towards STI

79. BUT , we need to address the following: Education in STI need to increase science and engineering PG enrolment to boost research activity ; Need to strengthen postgraduate education in private HEIs

80. R&D Manpower need to address problem of static growth of supporting staff and technicians Anecdotal evidence suggest exodus of senior researchers over next 2-3 years – succession planning/mentoring must be in place

81. R&D expenditure Our R&D spending is increasing steadily but our competitors are investing more in R&D – need to enhance returns from our R&D investments; Our IHLs and PRIs are overly dependent on public funding for R&D – expand joint/collaborative efforts; Most R&D undertaken by large firms - Need to ensure more SMEs engage in R&D – issues pertaining to strengthening absorptive capabilities of SMEs have to be addressed;

82. Public Support for STI Noticeable decline in R&D grant approved under the various grant schemes since 2004 – does not bode well for industry to seek such funding. Efforts must be made to encourage more firms to apply for these incentives as well as to enhance the administrative machinery governing the approval of these grants;

83. Innovation in the Manufacturing Sector Importance of innovation recognised but mainly undertakan by large firms – Need to support SMEs; Also, need to address: -Declining number of firms reporting increase in new product development and increase in firms reporting falling innovation-related expenditure

84. Trade in Technology Despite some improvements services account continues to be negative with the deficits remaining high. There is thus a need to strengthen government policy to quicken further learning and innovation in firms in Malaysia. The growth in surplus involving construction and engineering involving other economies also suggests that the government should encourage diversification of service markets .

85. Patenting Low patenting call for : Enhancing awareness of patenting among firms (SMEs) and public institutions; Provision of funds/incentives to encourage patenting; Strict enforcement of patent rights

86. Publications Our scientific publication performance is low . We are even losing out to our ASEAN neighbours in terms of citations; Our record of publishing in high impact journals is also poor; Low publication performance by GRIs

87. Public Awareness Our lower scores on understanding of S&T necessitates more proactive measures to increase public awareness of S&T, and to review the effectiveness of the programs.

88. STI Performance Scorecard 2006 US (79); Europe (67); US(45); Europe (53) +ve 62.3; - 63.7; 71.9; 47 Attitude towards S&T # Index of Scientific Promise # ; Index of Scientific Reservation # NA - 2.32 2.22 Mean Score of perceived knowledge in S&T NA - 2.41 2.40 Mean Score of perceived interest in S&T S&T Knowledge, Understanding and Awareness > 60 18 +ve 36.9 56.5 Cellular phone subscription per 100 inhabitants > 60 17 +ve 31.9 38.2 Internet users per 100 population > 500 16 +ve 137 192 No. of computer per 1000 people Knowledge Infrastructure and Diffusion 152 15 +ve 2.5 3.6 No of USPTO patents granted per million population > 6,300 14 -ve 32 24 No. of patents granted (Malaysians) > 10,000 13 +ve 322 522 No of patents applied (Malaysians) 37,502 12 -ve 2716 1360 Total Citations (2001-2005) 16,628 11 +ve 938 1179 Total number of publications in ISI-indexed journals, (1981-2005) Outputs and Outcomes >10 10 - NA 2.0 % of public R&D financed by industry/external funds Interaction and Cooperation 27 9 +ve 33.7 35.8 Women researchers as proportion of total researchers (%) 1:11.6 8 +ve 1:8.4 1: 6.6 Proportion of postgraduate enrolment to undergraduate enrolment 32.4 7 -ve 44.2 40.6 Science and engineering enrolment as % of total post-graduate enrolment 44.6 6 -ve 51.8 48.2 Science and engineering enrolment as % of total first degree enrolment 0.74 5 +ve 0.40 0.55 Total FTE per researcher 61 4 +ve 18.0 21.3 Researchers per 10,000 labour force > 100,000 3 +ve 24,937 30,983 Total R&D Personnel (Headcount) Human Resources > 62 2 +ve 65.3 71.5 Industry R&D expenditure as % of GERD 2.33 1 -ve 0.69 0.63 Overall R&D Intensity R&D Investments and expenditure Average/Selected OECD Trend Year 2002 Year 2004 Indicator Category