Can we use state spending on research and development to increase prosperity in those parts of a country that are economically lagging?
The UK’s regional disparities in economic performance make it an international outlier among developed countries. Research and development spending in the UK is also very regionally imbalanced, as I’ve described in a recent NESTA report with Tom Forth: the UK regions and subregions containing London, Oxford and Cambridge account for 46 per cent of public and charitable R&D in the UK, despite only having 21 per cent of the UK’s population.
The government’s recently published R&D roadmap makes a commitment to address regional imbalances in R&D intensity “as part of our levelling up ambition”, and promises a new UK R&D place strategy later this year “to unlock local growth and societal benefit from R&D across the UK.”
Importantly, the government has reasserted its commitment to a big increase in the public R&D budget – from the 2018 value of £12.8 billion to £22 billion by 2024-25. This means, for the first time since the expansion of universities in the nineteen sixties, that rebalancing doesn’t have to be zero-sum game, where more spending on R&D in less research-intensive parts of the country means that resources have to be taken away from existing centres of excellence.
But simply increasing spending may not be sufficient – we need to use that spending in less research-intensive regions in a way that really makes a difference to the economic performance of those places. It’s all too easy to imagine ill-thought out initiatives, probably in fashionable fields, that fail to embed themselves in local economies – and don’t deliver excellent science either.
The Royal Society’s Research and Innovation Clusters policy brief argues that the goal should be to develop mutually reinforcing clusters in particular places. a “cluster” is identifiable where there’s a flow of people and ideas between the public and private sectors, leading to real innovation and the creation of substantial value, prosperity and jobs.
What’s worked in the past – and what’s worked in other countries – can be our guide to the right kind of policy, and we can learn from case studies what conditions might best foster success. International lessons are important, but we shouldn’t neglect success in our own backyard. Cambridge is a great example of a prosperous knowledge-driven economy.
We have seen more recent, conscious, attempts to develop innovation clusters in some of the UK’s cities that have suffered from post-1980s de-industrialisation. Belfast offers a good example, where an initiative from university-based technologists has, with support from the city and devolved government, succeeded in creating a cluster based on digital technology.
In Sheffield the focus has been on translational research in manufacturing technologies as an attractor for inward investment by internationally leading companies together with increasing the innovation capacity of the existing business base.
But it is important to look overseas too. San Diego shows how a successful cluster can emerge from government defence spending and procurement. Perhaps most impressive of all is the story of how Taiwan developed a world-leading electronics industry around the Industrial Technology Research Institute in Hsinchu.
There’s no simple transferable recipe for science-driven economic growth; places are different and successful strategies will have to be sensitive to the different characteristics that arise from the endowments that history and geography leave to cities and regions.
Policy for a place needs to start with whatever is already there. There will be an existing industry base, which with support may be able to adapt to take advantage of new technological opportunities. There will be universities, with their particular research specialisms, that will be a crucial source of skilled and adaptable people. As happened in Pittsburgh, universities may need to adapt from a mode of competition with their neighbours, to a spirit of collaboration in support of their mutual interest in promoting the economic growth of their city or region.
National needs may result in the development of new institutions, which can be important in providing an anchor for a growing cluster, as ITRI in Hsinchu, Taiwan, did for its growing semiconductor cluster, and, some decades earlier, as the Naval Electronics Laboratory did for communications technology in San Diego.
In Cambridge, private sector R&D contractors and technology consultancies, such as Cambridge Consultants – what David Connell has called “soft companies” – have played a crucial role. As a cluster takes off, developing the necessary hard and soft infrastructure – including access to finance and professional services – will be important. For some nascent clusters, physical infrastructure can be part of the picture, and cluster development can be part of a regeneration project, as happened on the urban waterfront in Belfast.
None of this can happen without the cooperation of many different actors: from national government and regional agencies, from the public and private sectors. But leadership is essential, and sometimes a visionary individual or small group can have a disproportionate impact.
We hope these case studies will be useful both to policy makers in central government and its agencies, and in the places that stand to benefit from a thoughtful R&D place strategy and its careful implementation.