Ungated Post | 17 Jul 2020
The relationship between public and private R&D funding
Oxford Economics was commissioned by the Department for Business, Energy and Industrial Strategy (BEIS), to assess the impact of public R&D support on levels of private R&D spending in the UK and other advanced economies.
Innovation enhances productivity and drives long-run prosperity. It can create new and improved products and processes, and generate cost savings for companies and the taxpayer, as well as numerous other benefits. However, a range of market failures mean that if left entirely to the market, the amount of R&D which takes place would be considerably less than optimal. These failures provide a strong case for government intervention to support R&D across the economy.
Against this backdrop, BEIS was looking to deepen its understanding of the impact of public R&D investment on private R&D investment. It commissioned Oxford Economics to undertake independent research to update the evidence base in this field using the most recent and comprehensive datasets, and through the application of the latest analytical techniques.
For the UK, we found that each £1 of public R&D stimulates between £0.41 and £0.74 of private R&D within the same year. In the long run, the same £1 of public R&D eventually stimulates between £1.96 and £2.34 of private R&D (inclusive of the impact in the first year).
Alongside our analysis of the UK, we estimated the link between public and private R&D rates for nine other OECD countries. We found a wide variation in the impacts of public R&D on private R&D across countries. The greatest impact was found for Japan, where £1 of public support would stimulate £3.16 of public investment in the long term. In contrast, the same £1 of public support in Spain would encourage just £1.21 of private investment.
Our economic consulting team are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques. Lead consultants on this project were:
Oxford Economics’ team is expert at applying advanced economictools that provide valuable insights into today’s most pressing business, financial,and policy issues.
To find out more about our capabilities, contact:
EMEA
Sam Moore
+44 (0)207 803 1415
Email
Americas
Hamilton Galloway
+1 (646) 503 3068
Email
Asia
Rhianne Clark
+65 6850 0112
Email
Related Services
Post
Generating ROI with AI: Six capabilities that drive world-class results
Generative AI has taken the business world by storm, with large language models (LLMs)—including OpenAI’s ChatGPT—splashed across the news. And executives aren’t immune to the hype. AI is becoming an ever-larger component of IT budgets, with worldwide spending on AI-centric systems expected to hit $154 billion this year—up 27% over 2022. But will enterprises spend these resources wisely? Our research says yes—if organizations take a disciplined approach.
Find Out More
Post
Deep Green
A global research study that details the current state of play on environmental sustainability actions and how data, technology and collaboration will drive the next phase of sustainability in business.
Find Out More
Post
Leveraging Technology to Promote Financial Inclusion
Oxford Economics and Red Hat surveyed executives at financial institutions internationally to discover how they are using technology to expand financial inclusion while gaining business benefits.
Find Out More