LAST month, this blog examined some recent economic statistics for Wales that did not make happy reading for those of us who want to see the economy flourishing.
Four days ago, further data was released by the Office for National Statistics that suggests there has been little improvement in one of the most important parts of the Welsh economy, namely research and development spending by the private sector, otherwise known as BERD.
In 2006, BERD expenditure for Wales was £222m, a fall of 7% since 2005. This compares with an increase in BERD expenditure in the UK of 5% to £14.3bn, with spending concentrated in three key sectors – pharmaceuticals (£3.9bn), aerospace (£1.8bn) and computer and related activities (£1.4bn).
Sadly, the gap continues to grow between Wales and the UK in terms of research and development activities undertaken by business. Since the creation of the Assembly, Wales now accounts for only 1.6% of the total business R&D undertaken in the UK; in 1999 it was 1.8%.
This unequivocally demonstrates the challenge facing the Assembly Government in making Wales the “small clever country” we all want it to be.
It is therefore worth examining the targets that the previous administration set itself in A Winning Wales, which remains the economic compass for the Civil Service. In this document, a target was set of increasing business R&D expenditure to more than 1% of Welsh Gross Value Added (GVA) by 2010, from an estimate of 0.6% in 2006.
Now, 0.4% doesn’t seem like much but assuming GVA grows at the same current rate to 2010, then R&D spend by the private sector will have to increase from £222m in 2006 to £497m in 2010 to reach this target. This needs to equate to an annual 20% growth in R&D spending by the private sector in Wales.
Is this achievable?
I believe it is, but it will need a long-term strategic approach to developing the innovative capability of Welsh firms coupled with a focus on increasing the research capacity of our higher education institutions and a clear, co-ordinated approach to linking the worlds of academia and business together.
As we have seen, there is a need to increase the research spending by private businesses in Wales, and this can be done with greater incentives, particularly by using European structural funds effectively and imaginatively.
Is our higher education sector doing its bit?
Wales has certainly improved its research record over the past few years in terms of collaborative research involving both public funding and funding from business. For example, this has increased by 32.8% to £65.2m in 2006, compared with 26.7% increase for the UK.
However, 88.7% of this collaborative research over the past two years was concentrated in Swansea and Cardiff universities, with less than £13.6m being generated for research across the rest of the Welsh university sector in 2005 and 2006.
While the Welsh Higher Education Funding Council has made steps to improve the situation by encouraging greater collaboration, I believe more could – and should – be done to support our smaller universities to increase their research capacity while continuing to support world-class research in our two main academic institutions.
In terms of academic-industry linkages, the evidence regarding links with business is more mixed. For example, the value of non-government research contracts awarded to Welsh institutions fell by a third between 2003 and 2006.
This could be explained by the fact that most of the current programmes developed by the Welsh Assembly Government are geared towards the commercialisation of R&D rather than its creation and development. While this current support structure helps to get the university out into the marketplace, the reverse is also required and we also need better incentives to encourage industry to invest in research, particularly in partnership with academia.
Some pessimists have argued that we do not have the capacity in Wales to develop research within our business sector. In my opinion, not only is that wrong but I would suggest that such an attitude, particularly among people who should know better, denigrates the talents that we have here among our entrepreneurial ventures.
Even in traditional sectors such as food or transport, R&D can play a vital role in this changing world where environmental issues are to the fore.
All businesses need is the right type of approach and support to get them onto the first rung of the innovation ladder, and their ambition and drive will do the rest.
Four days ago, further data was released by the Office for National Statistics that suggests there has been little improvement in one of the most important parts of the Welsh economy, namely research and development spending by the private sector, otherwise known as BERD.
In 2006, BERD expenditure for Wales was £222m, a fall of 7% since 2005. This compares with an increase in BERD expenditure in the UK of 5% to £14.3bn, with spending concentrated in three key sectors – pharmaceuticals (£3.9bn), aerospace (£1.8bn) and computer and related activities (£1.4bn).
Sadly, the gap continues to grow between Wales and the UK in terms of research and development activities undertaken by business. Since the creation of the Assembly, Wales now accounts for only 1.6% of the total business R&D undertaken in the UK; in 1999 it was 1.8%.
This unequivocally demonstrates the challenge facing the Assembly Government in making Wales the “small clever country” we all want it to be.
It is therefore worth examining the targets that the previous administration set itself in A Winning Wales, which remains the economic compass for the Civil Service. In this document, a target was set of increasing business R&D expenditure to more than 1% of Welsh Gross Value Added (GVA) by 2010, from an estimate of 0.6% in 2006.
Now, 0.4% doesn’t seem like much but assuming GVA grows at the same current rate to 2010, then R&D spend by the private sector will have to increase from £222m in 2006 to £497m in 2010 to reach this target. This needs to equate to an annual 20% growth in R&D spending by the private sector in Wales.
Is this achievable?
I believe it is, but it will need a long-term strategic approach to developing the innovative capability of Welsh firms coupled with a focus on increasing the research capacity of our higher education institutions and a clear, co-ordinated approach to linking the worlds of academia and business together.
As we have seen, there is a need to increase the research spending by private businesses in Wales, and this can be done with greater incentives, particularly by using European structural funds effectively and imaginatively.
Is our higher education sector doing its bit?
Wales has certainly improved its research record over the past few years in terms of collaborative research involving both public funding and funding from business. For example, this has increased by 32.8% to £65.2m in 2006, compared with 26.7% increase for the UK.
However, 88.7% of this collaborative research over the past two years was concentrated in Swansea and Cardiff universities, with less than £13.6m being generated for research across the rest of the Welsh university sector in 2005 and 2006.
While the Welsh Higher Education Funding Council has made steps to improve the situation by encouraging greater collaboration, I believe more could – and should – be done to support our smaller universities to increase their research capacity while continuing to support world-class research in our two main academic institutions.
In terms of academic-industry linkages, the evidence regarding links with business is more mixed. For example, the value of non-government research contracts awarded to Welsh institutions fell by a third between 2003 and 2006.
This could be explained by the fact that most of the current programmes developed by the Welsh Assembly Government are geared towards the commercialisation of R&D rather than its creation and development. While this current support structure helps to get the university out into the marketplace, the reverse is also required and we also need better incentives to encourage industry to invest in research, particularly in partnership with academia.
Some pessimists have argued that we do not have the capacity in Wales to develop research within our business sector. In my opinion, not only is that wrong but I would suggest that such an attitude, particularly among people who should know better, denigrates the talents that we have here among our entrepreneurial ventures.
Even in traditional sectors such as food or transport, R&D can play a vital role in this changing world where environmental issues are to the fore.
All businesses need is the right type of approach and support to get them onto the first rung of the innovation ladder, and their ambition and drive will do the rest.
Comments
You are obviously a man of great talent and intellect that could contribute and probable are in some form otr other but until the dinosaurs in Cardiff Bay die out nothing will ever change i fear.