Cambridge Science Festival, March 2011

Jonathan Haskel, Imperial College Business School

Science, innovation and growth: some economics

© Imperial College Business School1

Science in the October 2010 spending review

• FT, 20th October 2010• Science escaped the big cuts that some researchers had

feared from the government’s spending review. • Asked what had changed since the 1980s, when the

Thatcher government slashed research spending, David Willetts, science minister, replied: “The scientific community has been able to produce empirical evidence about the economic returns from research. The Treasury buys the argument that scientific research contributes to long-term growth.”

The wide scope of science and innovation policies….

Science policy menu• Protect inventions and let firms get on with it

• Longer/shorter patents• Extend copyright/reduce it

• Subsidise private sector R&D• Large firms/small firms• Domestic/international• Patent box/R&D tax credit

• Subsidise public sector R&D• Health/engineering/the arts

Broader knowledge policy menu• Immigration• Foreign firms• Entry of new firms

And knowledge industries compete for demands for subsidies• Farmers, the Olympics, bankers etc.

Who gets the returns from investing in new goods?

The future of science and innovation in one slide…

Innovation Spending

(UK, 2008, £bn)• R&D 16.0• Design 23.3• Marketing 15.0• Training 27.1• Software 21.6• Bus process 30.7• Artistic originals 3.8• Total 137.5