How much is science worth to the UK?
A report examining the economic and societal impact of public investment in science in the UK was released earlier this week. Commissioned by the Campaign for Science and Engineering (CaSE), ‘The Economic Significance of the UK Science Base’ was compiled by economists Jonathan Haskel, Alan Hughes, and Elif Bascavusoglu-Moreau. Building on previous studies by assessing the impact of the UK science base to industry, universities, and researchers, the report provides sound evidence that public investment in science leads to economic growth through an increase in private sector productivity.
To assess the impact of publicly funding research on the private sector, the report focuses on three main questions:
1. How does public sector funding of the science base affect private involvement?
2. How does public science funding affect private sector productivity?
3. What is the role of the UK science base in influencing location decisions of UK and foreign R&D business managers to invest in the UK?
Public funding of science can impact the performance and output of a private firm in three main ways:
- Direct impact – funding universities in the UK can lead to direct knowledge creation which may benefit firms;
- Location – firms may decide to move to the UK based on availability of a skilled workforce and knowledge hubs;
- Knowledge absorption – publicly funded knowledge transfer activities may help the firm to absorb knowledge.
When looking at whether public funding affects private sector involvement, it is clear that there is a strong positive correlation between public funding and private involvement in research for both universities and individual researchers. Essentially, the more public sector funding universities have, the more they can leverage through private sources (e.g. charities and industry). The report also shows that individual scientists with Research Council funding are more likely than non-grant holders to be ’outward-facing’ i.e. having better interactions with wider society and being more likely to engage with the private sector.
The report highlights the impact that public funding of science has in terms of increasing private sector productivity. Interactions of the public science base with the private sector raises productivity, generating economic growth. This effect is greatest in industries that carry out a large amount of research and development work where publicly funded research may be more applicable.
Public investment in the science base may influence decisions of firms to invest in the UK. This week’s report shows that investment from overseas is affected by the quality of the research base, and public investment draws the private sector in. Analysis highlights that multinational pharmaceutical firms locate their laboratories near to highly-rated university chemistry departments in the UK.
Science and research is shown to be a high-quality investment by the report’s analysis – for every £1 spent by government on R&D in the UK, the private sector R&D output increases by 20p per year. This increase in output is in perpetuity due to the raised level of knowledge R&D gives.
The findings from this report are clear – public spending on science is beneficial both in terms of economic growth and in boosting interaction between publicly funded researchers and private sector firms. As the authors point out, the Government can boost economic growth by investing in the science base in the UK. Public expenditure on science is an investment and needs to be treated as one. Developments in knowledge through research have wide-ranging impacts that can be built on year after year. Despite its international outputs, spend on R&D in the UK is lower than its competitors, and continues to fall behind each year. This lack of investment is a potential vulnerability that may lead to long-term effects.
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