Is the following equation correct? Money +Research = Innovation
Published on March 30th, 2022
Frank Gannon
QIMR Berghofer Medical Research Institute, Brisbane, Australia
Highlights
Data from the Global Innovation Index (GII) were analysed to establish if an objective basis exists to support the hypothesis that investment in research drives an innovative economy.
Results are ambiguous and examples exist for which the claim appears to be upheld, and others for which the link is not obvious.
Data suggests that the innovation and translation ecosystem of each country leads to varying correlations between the impact of research output and the innovation consequences measured by the GII.
It follows that each country must adjust its ecosystem to get maximum benefit from investment into research.
Commentary
Frank Gannon
Introduction
The EU is revamping its attempt to get all member states to increase their gross expenditure on research and development (GERD) as a percentage of gross domestic product (GDP) from the current average of 2.2% to 3%. The rational for this policy stems from the belief that European technology industries will lag behind those of other countries in the absence of increased innovation. Investment in GERD is viewed as a limiting factor that should be corrected. But is the premise for this policy as simple as money + research = innovation? I argue that investment into research is a necessary, but insufficient, ingredient of the mix required to improve a country’s economic outcome.
Data
Annually, the WIPO Global Innovation Index (GII) [1] ranks countries in terms of their innovation economy and capacity. This index integrates many relevant factors to establish its rankings. As background for this article, I considered relevant factors calculated in the GII report, as they apply to the top 25 countries [2]. Money is the first component of the equation in this commentary’s title, and increasing monetary investment is also the overarching recommendation of the EU. One would expect, therefore, that GERD would define GII rankings. Korea and Israel spend more than twice the current EU average GERD however they rank 10th and 13th in the GII. The UK ranks 20th in GERD but is 4th in the GII. Therefore, GERD does not seem to be a sufficient predictor of successful innovation.
GERD predominantly reflects expenditures by the private sector. Government expenditure on R&D (GOVERD) could provide a different national picture. But again, the UK data do not establish money as the only missing ingredient in GII rankings. The UK ranks 23rd in GOVERD, whereas Norway is at the top of the GOVERD league but ranks 20th in the GII.
Research is the second component of the simplified equation in this commentary’s title. Publications per capita can be used as one measure of research activity. Data from the GII report (publication numbers corrected for population) show a highly variable outcome, with the countries ranked 20–25 in the GII having publication outputs equivalent to those countries with the top 5 in the GII
As publications can vary greatly in content, publication quality might be a better measure of impact on innovation and its follow-on effects on national economies. The GII has established an h-index score for each country which, despite some imperfections, is widely used to assess publication quality. Similarly, h-index can be a useful indicator of national publication quality. Using this measure, the data are more in line with the GII, with the GII rankings of the top 5 h-index countries clearly superior to those ranked 20–25 in h-index. But there are anomalies. Canada has an h-index that ranks it 4th, but it is 17th in the GII. Singapore is ranked 23rd by h-index but is 8th in the GII.
Other factors could be considered in this analysis. For example, the number of researchers per country could define the GII. These data are quite variable. For instance, the countries with GII rankings from 16–20 have more researchers in the workforce, on average, than those in the GII’s top 5. Austria ranked 5th in terms of research workforce and 19th in the GII.
The link between research (primarily universities) and industry seems like a crucial determinant in terms of economic outcomes. Data indicate that this is indeed a good guide to GII ranking. Those countries at the top of the GII are ranked very highly in terms of research universities/industry, with the top-ranked GII country (Switzerland) ranking 2nd in terms of research and the 7th-ranking GII country (Finland) ranking 3rd. Again, there are exceptions. Israel, which was the top university/industry-ranked country and had the highest number of researchers per capita,is placed 13th in the GII.
Finally, I considered the number of PCT patents and patents by origin. The data show a good correlation between a country’s GII ranking and both patent output categories. Once more there are exceptions. Japan ranked 1st by both patent measures yet is 16th in the GII.
Drawing conclusions
What do we make of all these data points? Is it simply a matter of investing money to increase research if one wants a thriving, innovative economy? It seems clear that the title’s equation does not describe the complex innovation and translation ecosystem necessary for success. Each country’s particularities must be considered. This can be illustrated, in a random manner, by looking at highlight numbers from countries in which I have lived. For instance, Australia has a GII ranking of 23, despite a publication quantity and quality ranking of 10; but Australia has poor, research, patent and industry linkages. This suggests that, in Australia, GERD must be increased and industry/university interactions intensified. Ireland has a GII ranking of 15 but poor rankings for GERD, GOVERD, publication numbers and quality, and a low number of patents generated—but has researcher numbers and links with industry commensurate with its GII rank. Other indicators reflect the strengths of Ireland’s industry and suggest that innovation accompanies those external companies established there through a very successful strategy to attract foreign direct investment. This suggests that Ireland’s research productivity and ability to generate novel Intellectual Property could be improved if more money were invested into that sector. Other countries, such as Germany, France, Switzerland, and Sweden, have data points indicating that they have the right balance of input and output. The USA has a very high GII ranking but surprisingly poor publication data ranking. It is possible that the US innovation we are aware of comes from intensely localised research efforts, which feed the economy. The UK ranks 4th in the GII but has a low GERD number. Again, the industry mix and intensity, together with quality researchers who embrace the translation of results from the bench to business may be the correcting factors.
I have no doubt that investment into research is essential. In the absence of adequate investment—and 3% is a good goal for all countries—the products of tomorrow will not be envisaged. Without continued investment locally, stagnation will follow at the national or regional level, and technologies will have to be imported from external countries. Over time, that will diminish innovation and hence negatively impact the economy of the country. Investment is an essential but insufficient ingredient for innovation. Each country must tweak the particular components that link research to the market. Finding the appropriate balance is an important and complex requirement if a country wishes to get the best return from its investment.
[2] GII rankings: 1-Switzerland, 2-Sweden, 3-USA, 4-UK, 5-Netherlands, 6-Denmark, 7-Finland, 8-Singapore, 9-Germany, 10-Rep. of Korea, 11-Hong Kong, 12-France, 13-Israel, 14-China, 15-Ireland, 16-Japan, 17-Canada, 18-Luxembourg, 19-Austria, 20-Norway, 21-Iceland, 22-Belgium, 23-Australia, 24-Czech Republic, 25-Estonia.
The author: Frank Gannon obtained his primary degree in Ireland and his PhD in the UK. Following post docs in the USA and France he returned to Ireland in 1981 and was the director of the National Diagnostics Centre. In 1994 he moved to Heidelberg, Germany, to be Executive Director of the European Molecular Biology Organisation (EMBO). In 2007 he was appointed Director General of the Irish funding agency (S.F.I.). From 2011 until his retirement in 2020 he was the Director of the QIMR Berghofer Medical Research Institute . He has published over 100 research papers and 150 editorials . He was an advisor to the EU Research Commissioners , was a founder of two start-up companies and has served on the boards of multiple institutes and companies world-wide.
