Diane Coyle

Does it matter that the UK is below average among OECD countries in the share of GDP spent on research and development? Is it reasonable to be below not only France and China but also Iceland and Slovenia in this particular league table? And if that ranking feels uncomfortable, why, and what conclusions can we draw for the UK’s research and innovation system in the two or three decades ahead?

Research and innovation are important because they are the source of progress. Thanks to research, people live for longer, are healthier, have wider horizons, more leisure, greater access to knowledge. Britain was at the frontier of this process of discovery and improvement, in the Enlightenment and Industrial Revolution. Other OECD countries by and large have caught up, and countries such as the US, South Korea and Japan are at the research frontier now.

One answer to the question about whether the UK’s ranking matters, is that excellence in research, and the wider innovation resulting from it, lifts skills and quality throughout the economy. David Hume argued this point in 1752: “The same age, which produces great philosophers and politicians, usually abounds with skilful weavers and ship carpenters. We cannot reasonably expect that a piece of woollen cloth will be wrought to perfection in a nation which is ignorant of astronomy or where ethics are neglected.” The amount spent on research is not only one of the inputs into successful research and innovation outcomes but also an indicator of investment in skills, education and enlightenment across the whole economy.

The pathway from research to ultimately successful commercial innovations has always needed the general spirit of intelligent tinkering and trying out new things, the same spirit that turned the Enlightenment into the Industrial Revolution. However, formal R&D matters more now because, in the complex global supply chains that characterise the modern economy, it is the main anchor tying high value activities and jobs to a specific place. Value added is increasingly intangible. It results from the combination of formal and tacit knowledge – the latter meaning the know-how of skilled and experienced people. Formal knowledge can go anywhere at almost the speed of light down a fibre optic cable. So the UK’s ability to create economic value in future decades, for the betterment of citizens, depends on having enough people with research skills and experience. Under-investing in research is simply under-investing in the economy.

So part of a vision for the future of research and innovation is ‘more’, because occupying part of the research frontier has benefits across the whole of the economy. But what kind of institutional framework does the UK need? The answer here is almost certainly ‘different’. Innovation systems, broadly understood to include all the institutions and organisations involved in the chain from fundamental research to commercial development, have changed greatly over time. In Hume’s day universities were relatively unimportant, solo thinkers and small-scale tinkerers and entrepreneurs more so. At times big corporate entities with quasi-governmental status have been important for research. Recently, certain kinds of research have become more concentrated in leading universities and specialist research institutes. Many areas of science need expensive equipment and will continue to be government funded and to be run by university-based scientists.

The institutional framework for research is likely to change, however. Technology is almost certainly going to ‘disrupt’ the present organisation of research, but this will vary depending on the subject area and on the obstacles the present structures pose for certain types of innovation. For example, it is hard to be inter-disciplinary, despite the exhortations, given the current structures of university departments and journals’ editorial and peer review policies; but the world’s pressing problems, and the economic opportunities, are significantly inter-disciplinary. Working with people from outside academia is difficult in the existing model: non-standard colleagues are hard to explain in a grant application, and then get through the peer review process. If this does not change, other kinds of organisation, including some commercial firms, even start-ups, but also think tanks and other bodies, and individuals, will fill the vacuum created by a lack of organisational innovation and flexibility within higher education. After all, Elon Musk is financing the most exciting space research at present.

Some areas of social science research – including economics – have already been significantly democratised, and in some cases the debate on the blogosphere is of higher quality than the research ‘outputs’ required for jobs and promotion in universities. One might even argue that the blogosphere offers a pretty brutal but effective form of peer review. The official world of UK research needs to become much more open and flexible; research funding through research councils and universities, and the structures of reward in higher education, are too process-driven and producer-focused. The decades-long dominance of these traditional research institutions is coming to an end.

So while there are strong practical as well as intrinsic arguments for the UK government to invest more in research and innovation, the structures for allocating it and ensuring taxpayers get a return, will have to change. It would be sensible not to resist the inevitable. But the ‘different’ is a bigger challenge than the ‘more’.


Diane Coyle is a Professor of Economics at the University of Manchester and founder of the consultancy Enlightenment Economics. She was formerly Vice-Chair of the BBC Trust. She specialises in public policy and the economics of new technologies, markets and competition, and has also worked extensively on the impacts of mobile telephony in developing countries

You can follow her on Twitter @diane1859

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