University research contributes £45 billion a year to the UK economy, according to new impact study

Research from Imperial College Business School demonstrates the value of public spending on research in higher education - <em>News Release</em>

Imperial College London News Release

Under strict embargo until:
13:00 GMT
Tuesday 16 March 2010

A new economic impact assessment of university research suggests that the £3.5 billion a year currently spent on publicly funded research generates an additional annual output of £45 billion in UK companies. The data, which are being presented at a British Academy / Economic and Social Research Council innovation seminar today (Tuesday 16 March), also suggest that benefits of research spending in higher education are greater than those from other areas of government-supported research and development (R&D).

“£45 billion a year is a good return on £3.5 billion,” says economist Professor Jonathan Haskel, co-author of the study from Imperial College Business School. “It’s important to be able to put a proper figure on how public investment in university research correlates with private sector productivity for the first time.”

The authors used 20 years worth of figures from the Department for Business, Innovation and Skills to construct a new measure called private sector total factor productivity (TFP), which is the change in output not accounted for by typical forms of spending, such as labour and machinery investment. The TFP figures calculated in this study capture the contribution of ‘intangible’ activities such as new technology, knowledge, skills and design, for the first time. The study shows a strong correlation between public spend on research (through the research councils) and increased TFP over 21 years (1986-2007).

There are two main challenges to working out how university research contributes to productivity. “First, universities openly publish new findings and make them freely available for use anywhere in the economy, so it’s hard to follow a payment trail from idea to application,” explains Professor Haskel. “Second, the private sector also invests in developing new knowledge, so we also need to account for these investments before looking at effects from universities.”

The study also shows that the benefits of public spending on research in higher education are greater than those from other R&D areas supported by government, such as publicly funded civil and defence R&D, which show no such correlations with private sector growth.

University research represents a good return on public investment

This research was funded by the COINVEST project from the European Commission Seventh Framework Programme (Theme 9: Socio-economic Science and Humanities).

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For further information please contact:

Natasha Martineau
Head of Research Communications
Imperial College London
E-mail: n.martineau@imperial.ac.uk
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Notes to Editors:

1. Download the discussion paper Public support for innovation, intangible investment and productivity growth in the UK market sector by Jonathan Haskel (Imperial College Business School) and Gavin Wallis (University College London and HM Treasury).

2. The paper is being discussed at a seminar jointly organised by the British Academy and Economic and Social Research Council: Does innovation produce economic growth? 13.00-14.30, Tuesday 16 March 2010, in The Rennie Room, One Great George Street, London SW1P 3AA. Journalists who wish to attend should contact Peter Walker at Vista Conferences on 020 8542 8223/7622.

3. Professor Jonathan Haskel is Professor of Economics in the Healthcare Management and Innovation and Enterprise Group at Imperial College Business School. He is also the Business School Research Director and a Member of the Reporting Panel of the UK Competition Commission. His research interests are productivity, innovation, intangible investment and growth.

4. About Imperial College London

Consistently rated amongst the world's best universities, Imperial College London is a science-based institution with a reputation for excellence in teaching and research that attracts 14,000 students and 6,000 staff of the highest international quality.

Innovative research at the College explores the interface between science, medicine, engineering and business, delivering practical solutions that improve quality of life and the environment - underpinned by a dynamic enterprise culture.

Since its foundation in 1907, Imperial's contributions to society have included the discovery of penicillin, the development of holography and the foundations of fibre optics. This commitment to the application of research for the benefit of all continues today, with current focuses including interdisciplinary collaborations to improve health in the UK and globally, tackle climate change and develop clean and sustainable sources of energy.

Website: www.imperial.ac.uk