New UK Study Says Domestic R&D Paying Off

A new research study by University of Warwick researcher Dolores Anon says that privately-funded research and development (R&D) is vital for improving productivity across UK manufacturing industries. The study does not find any measurable gain from foreign R&D investment done by UK companies.

Anon also found evidence of positive and significant domestic R&D spillovers from R&D investment from other UK companies. However, the results fail to detect any improvements in domestic productivity of UK manufacturing sectors arising from foreign R&D investment.

The study concludes that any benefits to productivity from R&D to UK manufacturing industries come primarily from national, private R&D investment. The researcher says that this should serve as a warning to policy makers against underestimating the importance of domestic technological efforts and overestimating the potential contribution of international spillovers. Moreover, she says that UK companies should not assume that they will be able to benefit either in the short term or the long term from the additional knowledge produced from overseas R&D investment and should instead rely more on their own R&D investment.

What is my take on this research? Interesting findings indeed. I don't doubt that companies get their biggest productivity bang from the R&D they do at home, but that does not argue against non-participation in the international research community. In global industries, such as automotive, chemicals, computers and electronics, companies must support both domestic and international research, especially if they plan for their products to be successfully adopted in international markets. Too bad the University of Warwick researcher did not note that important point--the object of R&D by business is to produce and sell product.

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