Analytically, research and development are distinguished as follows: (1) Development involves improvement of a technology whose dimensions are known; in research, unknown. (2) Development generally involves the ultimate production of a marketable product; research does not. Development generally takes place in and is financed by the private sector; research, by the public sector. The institutional arrangements in the private sector may not lead to a sufficient amount of development in total or a proper mix of projects, but satisfactory remedies are hard to find. Also to what extent is the rate of development a function of the rate of spending? RAND's methodology has determined this for jet engines and it may be applicable to biomedical development. Since research is publicly financed on a cost-reimbursement basis, methods are necessary to ensure efficiency, but no easy solutions exist. Finally, the links between R&D, widely presumed to exist, are only beginning to be estimated empirically. 25 pp. Bibliog.