Research, economics and trench warfare

There has been a bit of a battle this week in the pages of the Irish Times. On Tuesday Professor Luke O’Neill of Trinity College Dublin wrote an opinion piece in the paper defending state funding of science research, arguing that it allows us to keep the brightest and best in Ireland and that through it we can as a country take part in adventure and discovery that will allow us to improve lives. He also argued that it was not reasonable to expect an immediate economic pay-back for the investment by the state.

Two days later the paper printed a response by Michael Hennigan, the owner of the website Finfacts (and an economics graduate). He suggested that investment in research yielded inadequate commercial returns and that the calls for maintaining research funding were really just pleas by those with vested interests.

I have to say that I am finding the public debate, such as it is, on research funding to be hugely irritating, not because it is taking place but because of the way it is being conducted. For a start, as I have noted before, there appears to be a new economics orthodoxy about the impact of research (on the whole, that there isn’t one). Various economists either argue that there is no evidence that R&D produces a commercial benefit, or even claim there is evidence that it does not. In fact there is evidence of such benefits by the truckload, but maybe it is not being presented well, or maybe we are in a situation where prejudice is trumping facts.

What annoys me is that this debate is often being conducted around the idea that research should create jobs, meaning that there should be immediate spin-offs that generate large-scale employment. Trinity College and UCD fell into this particular trap in the announcement of their Innovation Alliance, promising the creation of 30,000 jobs (which is an unattainable goal and is in any case a completely unnecessary one). Luke O’Neill is quite right in pointing out that investment in research, and in life sciences in particular, will need to be given some time before it creates direct commercial activities and employment. But that is actually neither very interesting nor very relevant in the context of current needs. The economic and trading case for R&D investment now is not direct job creation, but rather the creation of an environment in which others will create businesses and jobs.

For example, the IDA (Ireland’s inward investment agency) has stated several times that its recent successes in generating foreign direct investment have overwhelmingly depended on and been based on our research investment and the existence of a serious research community in Ireland, as this was a vital factor for the companies contemplating Ireland as a location. Similarly, indigenous start-ups increasingly tap into our research capacity. In that sense, the complaint noted by Michael Hennigan that post-doctoral researchers don’t go into business but move on to other research projects is of no significance, in that researchers are rarely the right people to go into business – but they need to go on to help create further discovery that can then be used by those who have the business skills.

Hennigan also cites US professor Amar Bhidé (though he places him in the wrong university and the wrong discipline), who has suggested that the US should not worry about whether it is producing research, but should instead exploit research commercially, wherever in the world it has been generated. The problem however is that even if Bhidé were right, the US is a rather different country from Ireland, not least because it has a very large population and a huge market, so that economic activity can in theory be generated through such an approach. But in any case, he is wrong: the US became the world’s dominant economy precisely at the moment when it decided that it needed to be the global home of research and development, which was perhaps the most far-reaching decision taken there in several generations. And to focus in on a region, when the Research Triangle was created in North Carolina it transformed that state from a rural backwater into an industrial, commercial and financial power house.

The evidence is clear and is well known. It is time to stop pretending that we don’t have the facts. It’s time to be focused and determined, and to show consistency of purpose. Unless we like the idea of going back to the 1980s.

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13 Comments on “Research, economics and trench warfare”

  1. kevin denny Says:

    The evidence is not clear because, at least for Ireland, it does not exist. I think it is time to step pretending that we do have the facts. An assertion by the IDA is not a fact and I am not aware of any serious scientific evidence to justify the claim. Surveys of what firms say don’t prove anything.
    One can pick particular cases to justify any position but the plural of anecdote is not data. That is why proper research by people who are professionally qualified is required. I don’t think the Research Triangle proves anything incidentally: much of North Carolina still is a backwater both urban and rural.


    • Kevin, with all due respect (and I think that traditionally is the alert that an insult is coming :)), that’s nonsense. The IDA have been quite specific about which clients they have been able to attract with the help of R&D centres in the universities. It’s not that the evidence isn’t there, it’s just that some people don’t like it.

      As for doing the kind of research you specify (assuming that those ‘professionally qualified’ are not economists – or actually, there are even some economists), there has been lots and lots of that, all leading to the same conclusion. I can cite if you wish.

      And as for North Carolina, every state has rural areas. But look at the metrics for NC now. For heaven’s sake, Charlotte is even the #2 financial centre of the US now, after New York.

      Sorry, the evidence is clear, plentiful, and all one way.


    • PS – actually, I really shouldn’t write in such an insulting tone! I don’t mean my comments to be personal, and every argument has more than one side. But right now this country is in danger of throwing away its main opportunity for future prosperity on the back of some very doubtful arguments in opposition to the knowledge economy idea. So maybe I would say this, Kevin – the McCarthy/Bord Snip comments were perhaps the ultimate exercise in trying to rubbish the principles behind our research strategy based entirely on assertions not backed up with any evidence whatsoever. What has annoyed me is that this gets used as some sort of proof that R&D doesn’t work, while the same people claim there is no evidence for the effectiveness of research; when it is exactly the other way round.

      Anyway, peace! If you are reading this blog, then you are a good person 🙂

  2. Aoife Citizen Says:

    I find it amazing that these dreary economist think we should unthinkingly accept their failure to find evidence of an economic benefit to research should be read as statement about research in general and not their research, their ability to find evidence, in particular.

    It seems to me that since science funding here increased FDA announcement have often come with million-euro scale investments per job, before that the numbers were far less; the economics of cheap jobs, the ones that are being lost, rely on us being poor, the expensive jobs rely on our participation in our glorious endeavor. I know which I’d choose.

    My other big curiosity is what economic model these dreary economist propose for basic research. Along with management and development, basic research has created modernity: most, almost all, of our technology, or knowledge, or know-how, has its origin in basic research performed in universities, institutes or, sometimes blue-skies research labs. How is this to be funded if not the way it is currently funded?

  3. Vincent Says:

    On top of your evidenced and cite-able there is that force with is generated by the very existence of R&D, and not just in the sciences. There is an energy thrown off that warms even those who are not involved, something which brings with it the ‘can do’ attitude. And from that attitude will come the start up companies which the economists are on about.
    However in all this, given the posture of the economics community which seems to have polerised between the extreme free traders and those with a strong stance on central management, I have a real fear that the Government and the Civil Service will swing in behind one or the other thereby bleeding off any creative vim.

  4. kevin Says:

    As we said as kids “i take insults as complements from those who know no better” . The IDA are hardly disinterested in this so one cannot take their claims as having any independent merit. They might be right, they might not. As an academic I thought you might have some academic standards but I guess you’re a university president now (crikey now whos being insulting). You clearly have a line to sell so people who disagree with you are dismissed as ignoring the evidence apparently. Your apparent disqualification of economics being a case in point, one wonders why. I guess lawyers are bound to be better judges of the data. To infer NC’s growth from the research triangle is at best ad hoc – I am a regular visitor there btw.
    I am not making any general comment on the McCarthy & not just because hes in the office next to me.

  5. Donal_C Says:

    It’s nice that a blog generates such a lively discussion…
    I’m aware of substantial evidence showing that a country’s research capacity predicts FDI, specifically FDI in research-intensive activities. Academics have measured research capacity in various ways, but both basic and applied research seem to matter. (Note: The number of Nobel prize winners matters, even after controlling for other explanatory variables, so maybe the Shanghai Jiao Tong ranking isn’t so stupid after all 🙂 See Kuemmerle, JIBS, 1999.)
    However, though we know what causes FDI, I’m not sure there’s convincing evidence about the costs involved in building up local research institutions. In particular, are the returns from investment in research higher than investments in other drivers of FDI (e.g. public infrastructure, which seems to be a particular problem in Ireland, and general education)? I would like to see an independent and rigorous study on this issue before committing to a position.
    My hunch is that public investment in research makes sense, but only under certain conditions – and the task remains to delineate these conditions more explicitly.


  6. “What annoys me is that this debate is often being conducted around the idea that research should create jobs, meaning that there should be immediate spin-offs that generate large-scale employment.”

    If economists did not raise questions about the science strategy, who would?

    It is a huge public spending programme, which has got little attention from the Oireachtas.

    Critics are not arguing for zero research but with Luke O’Neill making claims on the returns from basic research, that do not stack-up; Enterprise Ireland claiming a failure rate of 10% for spin-out firms over a decade, which is out-of-line with US experience and a 28-person taskforce dominated by insiders, who should question conventional wisdom?

    The record from the period of reckless economic mismanagement, is that well-paid insiders would never risk putting their jobs on the line or tell petty emperors that they have no clothes.

    The science strategy was launched in 2006 with the bold goal to become recognised as at “world-class knowledge economy” by 2013. This has now been replaced by a longer term mantra on the “smart economy.”

    It’s not clear what is the goal of the science strategy. What is the expected demand for PhDs from the FDI sector? How much should a small cash-strapped economy spend on basic research and support for research in the business sector?

    If the focus is to be on basic research, then from 2013, having say 7,000 full-time equivalent researchers on the public payroll, should require some scrutiny.

    No Irish beneficiaries of public funds be they farmers or academics, would see merit in cuts despite the crash. There is no waste in the science budget and there is no need to question whether the same uncertain longterm outcomes could be achieved with more focused resources?

    Science Foundation Ireland wasting about €400,000 on a computer system to track grants, according to the C&AG, is one example of what can happen when there is a bonanza of public money with many vested interests seeking a part of it and little accountability.

    As for jobs, one of the problems with the Irish experience thus far, is that if there is some success, the promoters take the cash and sell to a bigger US firm.

    It is foolish to take the public statements of State enterprise agencies at face value as the senior managements generally support the political position that often has an element of spin.

    Announcements on collaborations with business firms are laced with marketing spoof but the reality is often different.

    The public cost could be 70% of a project.

    In the Irish Times on Friday, Tony McElligott of the Trinity Research Staff Association wrote: “Despite the lack of research careers, the SSTI’s commitment to effectively double the number of PhD graduates by 2013 is continuing apace. Is it little wonder that science is not perceived to be an attractive career option?”

    http://www.irishtimes.com/newspaper/letters/2009/0821/1224253019354.html

    “Hennigan also cites US professor Amar Bhidé (though he places him in the wrong university and the wrong discipline)”

    Amar Bhidé was the Laurence D. Glaubinger Professor of Business at Columbia University’s Business School until this year. He has a DBA and an MBA and is writing a book on the financial crisis as a visiting scholar at the Kennedy School of Government. The move to Harvard since the publication of The Venturesome Economy, was my only mistake!!


    • Thanks, Michael. I may disagree with your views, but I appreciate the you make the effort to debate them.

      That said, I have no problems with people asking searching questions, but they need to do so without already thinking, fairly dogmatically, that they already have the answer and that no further information is going to budge them. So no problem with the scrutiny, but it should come with less apparent baggage, and perhaps with rather more coherent analysis than is forthcoming from much of the comment coming from economists (with some exceptions).

      Nor am I suggesting that there is no waste in the science budget, but apart from your comment here that has not been the burden of the criticism: rather it has been that this investment doesn’t pay dividends at all.

      So what I am criticising right now is not critical questioning or a call for transparency and value for money, but rather just extraordinarily sloppy analysis that seems to owe more to a pre-judged position rather than genuine inquiry.

  7. Colm Harmon Says:

    http://gearybehaviourcenter.blogspot.com/2009/08/toward-debate-on-science-and-technology.html

    Blog blogging a blog but I thought it would be useful to keep this thread alive on whatever forum is available. Getting under the skin of this issue is critical.


  8. Ferdinand,

    The sloppiness begins at the top with a strategy without clarity and exaggerated claims that undermine its credibility.

    In June, Irish Software Association (ISA) chairman Seán Baker, told a meeting of researchers and software executives, research needs to involve commercial input from a much earlier point in the process. He also warned academic researchers that overvaluing intellectual property inhibited commercialisation.

    The Iona co-founder criticised the State’s current approach to driving innovation. “We don’t have a good handle on a strategy for R&D. You can’t point to one place and find someone who owns the strategy.”

    Also in June, Minister of State for Innovation Conor Lenihan said: “This rate of company creation per €100 million of research expenditure is comparable with world renowned academic heavyweights such as MIT, Imperial College London, Cambridge and Oxford  Universities. It is proof of practice that public and private investment in research and development is paying dividends”.

    Later, Enterprise Ireland told Finfacts: “The application of metrics to the transfer of technology is still a relatively new activity, consequently there are very few national or internationally comparable indicators within Europe for evaluating the success of policies to promote the commercialisation of public science.”

    More on claimed survival rates here:

    http://www.finfacts.com/irishfinancenews/article_1017027.shtml

    As for the return on basic research, shouldn’t Prof. Luke O’Neill provide some support for his claim of a three-fold return?


  9. While there are merits in both sides of the discussion, I have sympathy with the argument of Professor Amar Bhide. And I believe the model is not limited to the USA – Ireland has many elements that are potentially compatible with the possibility to commercialise IP globally.

    In my blog (intellectualprofit.blogspot.com), I pointed out that the financial return on the 2008 research budget is a loss of 99.82%. Even if they double or triple the “success”, the loss will still be 99%.

    I am delighted to see this debate playing out among respected people.

    Kind regards,
    Raymond Hegarty,
    Global IP commercialisation pratitioner.

  10. Tony Owens Says:

    The problem with the huge academic research agenda in Ireland is that the product of it cannot be captured by Ireland. The people involved are internationally mobile and outside the academic sector and certain state agencies have little to detain them in the state. The research publications are shared with the rest of the world. Little of what little patent-grade IP is generated is licenced – for teh most part it is simply digested online by others.

    Academic research almost never produces a commercial return in any traceable way. The societal value is in perhaps mainly in providing a superior professional development experience for those who engage in it during their early career which helps equip them for later technology management roles in private industry. But those roles are unlikely to be in the Irish state which has a tiny commercial innovation output and are far more likely to be found in other states.


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