The Higher education sector, because of its policy relevance, is unique to the manual and has no counterpart in the System of National Accounts (SNA). This chapter defines the Higher education sector and in doing this, draws upon existing definitions of tertiary education programmes, and of formal education. As the objective of the definition is to capture all research and experimental development (R&D) activity in the sector, the definition includes all research institutes, centres, experimental stations and clinics that have their R&D activities under the direct control of, or administered by, tertiary education institutions. The Higher education sector differs across countries so the first task is to identify the institutions belonging to the sector and then to collect and report the R&D statistics in such a way as to support international comparison. The chapter provides guidance on identifying institutions in the sector and on measuring R&D expenditures, flows between institutions within and external to the sector and the human resources committed to R&D in the sector.