Definition: Capital expenditures for innovation

Category: R & D - Oslo Manual

Capital expenditures for innovations are composed of gross expenditures on land and buildings, on instruments and equipment and on computer software. Capital expenditures that are part of R&D are included in intramural R&D, while non-R&D capital expenditures linked to product and process innovations are included in acquisition of machinery, equipment and other capital goods. Non-R&D capital expenditures specifically linked to marketing or organisational innovations are included in preparations for marketing innovations and preparations for organisational innovations, respectively. The remaining categories of innovation activity consist solely of current expenditure (Third edition).

Capital expenditures for innovation are the annual gross expenditures on fixed assets used for the TPP innovation activities of the firm.  They should be reported in full for the period when they took place and not be shown as a depreciation item.  They are composed of expenditures on land and buildings, on instruments and equipment and, in line with the revised System of National Accounts (SNA), on computer software, which is a component of intangible investment and considered as capital formation:

· Land and buildings includes the acquisition of land and buildings for TPP innovation activities including major improvements, modifications and repairs.
· Instruments and equipment includes major instruments and equipment acquired for use in the TPP innovation activities of the firm.
· Computer software, in line with the revised SNA, includes computer software, program descriptions and supporting materials for both systems and applications software for use in the TPP innovation activities of the firm.  Included are purchased software and software developed on own account (if the expenditure is large) for TPP innovation activities.  Large expenditure on the purchase, development or extension of computer databases that are expected to be used for more than one year, whether marketed or not, for use in the TPP innovation activities of the firm are also included (Second Edition). http://ec.europa.eu/eurostat/ramon/statmanuals/files/9205111E.pdf Oslo Manual, Second Edition (1997)