Oct 8, 2009

Don't Cut back on Spanish Science!

This is a close translation of an earlier article which was written in Spanish by Erola Pairó, as part of an initiative to protest against the Spanish government's decision to reduce expenditure in science and development. The earlier article was called la ciencia no necesita tijeras, literally science doesn't need scissors.

As an answer to the economic crisis, the Spanish government has decided to cut government expenditure on research and development (R&D) by nearly 18 percent [vanguardia newspaper]. Authors of a blog proposed an initiative to protest against this decision. They called out to bloggers to publish a post on October the 7th, presenting arguments why public investments in R&D should not be cut back.

I think there can be many reasons why the science budget should not decrease. The first that occurs to me is that, as a PhD student, my future could depend on what Spain inverts in science. Although this reason seems very valid to me personally, I decided to look for more objective reasons. In the process I found many studies that indicating that in fact there is a causal relationship between investments in R&D and economic growth. In this post I will explain what I found.

As explain Giovanni Dosi, Patrick Llerena, and Mauro Sylos Labini in an article from 2006, the contribution of scientific research to technology has become more and more important since the industrial revolution, with the rates of technological change often drawing from the strength of the science base. This means that science is a motor for the market. A grand part of the science funding comes from public sources. (The relationships between science, technologies and their industrial exploitation: An illustration through the myths and realities of the so-called "European Paradox", Research Policy)

The economy is changing from an economy based on raw materials to an economy based on knowledge. Countries need an economy which permits them to adapt rapidly to changes in the market and to technological advances. At the Barcelona Spring Council European heads of state and ministers of labor, as one of the conclusions of the council, agreed on an objective of R&D investments of 3 percent of GDP by 2010 (where two-thirds should come from the private sector)[2002 conclusions]. It goes without saying that most European countries including Spain will stay short of this target, exceptions being Sweden and Finland.

The amount of investment that a country dedicates to R&D can be expressed as Gross Domestic Expenditure on R&D (GERD), either in local currency or as percentage of GDP. Another indicator, the BERD, Business Enterprise Expenditure on R&D, represents the money that the private sector spends in R&D.

According to this year's report of the journal R&D magazine titled 2009 Funding Forecast and the data about research provided by the European Commission at Eurostat, GERD (in percent of GDP) has increased in Spain during the last decade, but Spain's 1.2 percent of GDP in 2008 stays below the European average 1.8 percent. Comparing Spain with United States or Japan, which both spend more than 2 percent of GDP, the difference looks even bigger.

The report Main Science and Technology Indicators 2009-1, of the Organization for Economic Co-operation and Development (OECD) includes charts which compare different countries by their R&D expenditure.

In the following chart taken from this report, you can observe the GERD in percentage of GDP for many different countries. You can see that there are European Union member states that lead this ranking (prominently Sweden and Finland) together with United States, Korea, and Japan. Other countries, among which is Spain, let the European average fall below that of the OECD which is little more than 2 percent.


In the next chart taken from the same report you can observe the development of the GERD over the last years in the United States, Japan, and OECD member states. The Europe of 27 is below OECD and Japan. Dosi and others conclude in the article mentioned before that the often-conjured European Paradox, which refers to a notion that the European incapacity to convert their investments in R&D into technological innovation, in fact is baseless. Europe inverts comparatively little in R&D. This makes again clear that Spain, which is below the European average, would have to make an effort to achieve scientific excellence similar to United States, Japan, or Switzerland, to take an example of a geographically closer country.


Below you can see a graph that shows the correlation between GERD, BERD, and GDP of the European Union since 1995 until 2005. As can be seen, the curves for the three indicators are nearly parallel, which shows that the higher GDP, the higher the spending in R&D (source: Creation of The Competitive Environment Concerning Research and Development In The European Union).


However, correlation doesn't imply causality, and therefore I tried to find out if there is evidence that R&D is important for economic growth.

The European Union commissioned different studies to study the relationship and important conclusions are summarized in Key Figures 2005. One of the studies, realized in 2004, (3% d'effort de R&D en Europe en 2010:analyse des consequences à l'aide du model), investigates the effect of increasing the R&D spending to 3 percent of GDP. It concludes that in case of reaching a 3 percent an additional economic growth of 4.1 percent could be expected and a creation of about 3 million jobs by 2015.

This doesn't seem a long time span at all for effects to be taking place.

Another study, again commissioned by the European Commission, undertaken by Roskilde University, Creation of The Competitive Environment Concerning Research and Development in The European Union investigates (among other issues) the relationship between GERD, BERD, and the GDP. One conclusion is that a correlation between the growth of GDP is in fact bidirectionally causal. On the one hand when a country increases its GDP it can spend more on R&D, on the other hand R&D helps the economy to improve.

Does it make sense then to reduce science budget in times of economic crisis? Or would it be better to make an effort to invest in something which could help the economy to grow?

The only rich European country with little investment in R&D (1.8 percent of GDB) is Norway. Norway can do it because it has oil resources. Spain's resources are sun and beach, but it has become abundantly clear that an economic growth based on tourism and construction is not safe in times of crisis. If Spain doesn't want to stay behind in the construction of a knowledge society, the last thing Spain needs is to cut back on its science budget.

When during these days the Nobel prizes will be awarded, it will have to be remembered in Spain that there have been only two Spanish Nobel laureates in science (Santiago Ramón y Cajal in 1906 and Severo Ochoa in 1959) and that Ignacio Cirac, Spanish this year's candidate to a physics Nobel prize is working at Max Planck institute in Germany. Cutting back investments doesn't make it more probable that Spain's situation is going to improve.

2 comments:

  1. yeah the economy needs repairing and science can help bring back jobs not to mention improving health.

    ReplyDelete
  2. Science can bring innovations in many fields and this in turn brings technological change, investment, and ultimately new jobs.

    ReplyDelete