Science and university research can’t deliver economic growth – at least not as we measure it

Alan Collins

• economic growth • Research Recent discussion arguing that “UK science must deliver on its promise of economic growth” is fundamentally flawed. Based on the identification that the positive relationship between research funding and economic growth is disappearing, some commentators have argued that the sector must respond urgently and act decisively. Unfortunately, this is like asking a dolphin to compete in a greyhound race.

What growth actually measures

The key issue is how growth is measured and, again unfortunately, it is grossly misunderstood. We think of economic growth as an improvement in the quantity of outputs given a quantity of inputs. Improvements in efficiency and economic growth are understood to be akin to having the same amount of resources and using those to make more items. But that is not how we measure economic growth. Work by Webber and Huaccha shows that our measure of economic growth, and specifically Gross Domestic Product (GDP) or Gross Value Added (GVA), does not quantify the number of units of output or even the rate of throughput. Instead, those economic growth indicators measure financial value, so effectively increases in the value of revenues less intermediate costs. Thus, to increase economic growth we need to increase the number of sales and/or increase mark-ups per worker hour, but whether we can do that depends on whether consumers want to buy what we produce. Revenues and mark-ups are the result of market power. Yes, innovation – real or imagined – can make some customers purchase more products; geeks love the latest tech irrespective of whether that tech is substantively better than previous versions. More British university scientists wearing white coats on television adverts may help sell more British goods and increase British revenues. More films documenting the beauty of the UK physical landscape and of the wealthy few may make overseas consumers purchase British goods (i.e. UK exports) so that they can conspicuously showcase a socially desirable association with our Western nation. But the image of the UK is deteriorating and prestige associated with consuming its outputs is waning. Couple that with slowing global population growth and we find that the rate of growth of demand is falling. Irrespective of how efficiently the UK produces goods, if those goods are not cheap enough to compete with least cost competitors or if those goods do not convey enough prestige to justify a high price, revenue streams will not increase. By focusing on the contribution of the university sector to the growth of the economy we are making the link that the university can either increase revenues, justify higher mark-ups, or reduce costs. Scientists and researchers matter for inventions and innovation but much less so for salesmanship, placemaking, and marketing. Our politicians and their decisions on the world stage are the most visible on this front.

The wrong scapegoat

Driven by university cost savings, some of our most innovative university staff have either recently retired or moved abroad for better working conditions. The genius researcher is not valued for their contribution to knowledge anymore, which did attract overseas students. With government-imposed restrictions on overseas students (and their families) contributing to a reduction in the export value of our UK education sector, and with the perpetual underfunding of the tertiary education sector by successive governments, it is no wonder that working in the academic sector is increasingly unattractive to our recent doctorates and the next generation of researchers and to our current staff who are increasingly seeing attractive opportunities overseas. Most academics want to make a valuable contribution to the quality of life and/or the depth of understanding. Few of them are experts in income generation or even selling their own research in an impact case study competition under the current government policies, let alone knowing how to increase revenues for the economy. If the government wishes to get the best out of academia, then it should be marketing our achievements and financing the exploitation of that knowledge, as it did with Yorkshire’s Croda to scale up production of the mRNA molecule to help deliver vaccines in the Covid-19 pandemic. Disproportionate laser focus on conventional GDP metrics excludes success on other measures of value accelerated by UK Universities. This includes being leading agents of progress across many UN Sustainable Development Goals and a whole raft of targeted regional interventions by almost every public (not-for-profit) UK University. These exercises in civic engagement are designed to boost inclusive, more equitable growth across the UK. This may come from local job creation (due to high student numbers) and start-up space in university enterprise zones; improving health and education infrastructure supporting public sector training; and helping economically inactive populations transition to stable employment via targeted community outreach programmes. Despite all this activity, academia has become the current scapegoat for the ineffectiveness of government policies to stimulate revenue increases for our economy at least since the global financial crisis. The government may claim improvements in measured productivity per worker of the university sector with cuts to the number of academic staff, but that’s because productivity is measured as GVA divided by the number of workers or worker hours. It’s a continuation of austerity measures that have reduced demand for UK production and its exports over the last 15 years, and hence the revenue value of UK-produced goods in the marketplace. GDP per person is now about 29 per cent lower that what it would have been if the pre-2008 trend had continued, and charging the UK tertiary education sector to increase those revenues and mark-ups is misguided and “unscientific”.

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