Chapter 17. RESEARCH, DEVELOPMENT, AND SCIENCE POLICY

We added this chapter because researchers need to see how their activities relate to social and economic goals, and they must be able to understand trends that shape science policy. Since they do have some choices of how they will spend their time, they must be able to influence funding for their research by understanding broader policy implications.

Science policy should not be shaped only in the nation's capital. Unfortunately, one of the major problems in the United States has been insufficient participation by scientists in shaping policy. In discussing research goals with colleagues, supervisors, subordinates, and science policy framers, researchers need to know something about the formulation of science policy. In a democracy, if government alone is left to decide such matters, it will result in second-rate policy. Participation by scientists is necessary for the sound development of such policy. To do this effectively, scientists need to understand relationships between:

• Science and technology

• R&D expenditures and economic development

• R&D expenditures internationally and nationally

• R&D expenditures and science policy

Some of the information in this chapter provides a global view of international and national investment in research. While this may seem to be of little utility to a principal investigator or a research manager, there is no question that the information included here provides a broad understanding of the research enterprise and its implication for science policy and thus has a number of possible uses at certain times or at some levels. Some suggestions on how a principal investigator or a research manager can use this information follow.

A persuasive case has been made that investment in R&D plays a crucial role in the economic well-being of a nation, the profitability of business enterprises, and the effectiveness of technology-based governmental agencies. There is evidence that the return on R&D investment in industry is higher than investment in other activities (Nadiri, 1980). Described in Table 17.1 and 17.2 are annual rates of return data on public R&D investment—as demonstrated by the National Academy of Science and the National Academy of Engineering (NAS and NAE, 2007) in their publication Rising above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future (NAS-NAE, 2007, pp. 48–49). As indicated in one of the footnotes to the tables, caution must be used in regard to the reliability of these numerical results. Reasons for this relate to biased information processing, using only projects that have been successful and ignoring some costs. That notwithstanding, annual rates of return are quite significant. There are also other returns from R&D that are incommensurate: R&D outputs, for example, can provide real choices for addressing crucial social, economic, health, and environmental related challenges, otherwise not possible.

Another point made in the NAS, NAE report (2007) is that return-on-investment data normally fluctuate in various studies; however, most economists agree that federal investment in research pays substantial benefits. Table 17.3 shows the large number of jobs created and revenue generated by Information Technology (IT)—an industry that did not exist until recently. This industry flourished because of the federal investment in R&D (providing the patient capital) and entrepreneurial spirit. The power of the research enterprise is demonstrated not by any single discovery or innovation but by the ability of this human endeavor to create entirely new industries. These industries have become some of the most powerful economic drivers nationally and internationally. R&D managers can use this information to develop a strategy for making a case for R&D funding support in their own programs.

Using national information as a model, the R&D manager of a research group or a laboratory may want to conduct a study to check the effectiveness of its research activities. For example, return on investment (ROI) of selected completed research projects can be analyzed. To minimize biases, some research organizations have a third party conduct such ROI studies. In conducting such a study, tangible benefits accrued from the use of research output are documented and analyzed through direct discussions with the users, while costs are determined through discussions with the research group. In one case, such an activity demonstrated that the ROI from completed research projects was, on the average, 30 to 1. As a note of caution, since only completed research projects can be analyzed and since there is a natural bias built into selecting more successful projects than others, the overall ROI may be somewhat lower than such a study may show. In any case, such information can provide a powerful argument for convincing research sponsors to provide the necessary resources. The ROI in research, including the importance of basic research, was further discussed in the chapter on university research enterprises.

Research requires considerable resources; it is indeed an expensive activity. The data we present here may be used to support the need for realistic budgets that may seem inflated to those who are unfamiliar with R&D. For research excellence, it is necessary to attract talented scientists and have well-equipped laboratories. None of this is possible without sufficient funding. Seeking funds for research is also an excellent way to test the market and user response to previous research outputs. Making a successful case for research funding and convincing sponsors and customers of the considerable benefits that R&D output provides is, in the final analysis, an effective feedback mechanism that is healthy for all concerned.