The Appliance of Science

By Eglin, Roger | Management Today, July 1991 | Go to article overview

The Appliance of Science


Eglin, Roger, Management Today


As part of his new policy at the Department of Trade and Industry (DTI), Peter Lilley, the industry secretary, wants to make encouraging innovation one of the Department's main objectives.

In a recent speech he argued that, 'Success in the '90s will depend increasingly on the willingness of firms to invest in effective R&D.' Few would disagree with this proposition. The problem is that few would also disagree that Britain is falling behind its main industrial competitors in the innovation race. While the pharmaceutical manufacturers have built a globally successful industry on the back of a big research programme, the wider picture is bleak.

R&D spending is slipping as a share of gross domestic product. We are turning our fewer scientifically qualified people than rival economies like Germany and Japan. The number of British patents being registered with the European patent office is declining. Ultimately all of this will rebound on the country's trade performance. The explanations advanced for this decline are manifold.

The City's short-termism is said to deter companies from spending on R&D (although how this argument squares with the City's general approval of big R&D spenders like Rolls-Royce, Glaxo or ICI is not made clear). Another weakness is that too much is invested in the narrow area of military R&D. Some argue that academic 'elitism' dismisses the value of 'commercial' science. Labour politicians say the state should give more help; even Lilley, although more cautious, sees a need for encouragement.

The evidence that we have not been spending enough, and are beginning to spend even less, is powerful. R&D Short-termism?, a Sciteb/CBI report, shows that industry-funded research is in decline. It is now running at 1.3% of GDP, well behind the 2.3% being spent by Germany and Japan.

Sciteb interviewed a number of senior industrialists, and what they had to say was almost without exception depressing. One pointed out that Japan's five biggest construction companies all spend about 1% of their turnover on R&D. 'Indeed any one of them spends more than the entire UK construction industry,' he added. Another interviewee said that the arguments sseking to justify R&D costs seldom arises in Japan. …

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