Private sector research and development (R&D) labs in Britain are disproportionately
clustered around highly rated university research departments, according to new
research from the Institute for Fiscal Studies (IFS), published in the March 2007 issue
of the Economic Journal.
Interestingly this phenomenon is not driven just by university ‘spin-outs’: in some
industries, foreign-owned firms are choosing to locate in close proximity to high quality
research. This implies that multinational firms may be sourcing cutting-edge
technologies from universities in Britain.
The study by Laura Abramovsky, Rupert Harrison and Helen Simpson finds that the
evidence for clustering of R&D facilities close to university departments is particularly
strong in the pharmaceuticals and chemicals sectors, which conduct a significant
proportion of UK R&D.
For example, the research suggests that a postcode area (for example, ‘OX’ for Oxford)
with a chemistry department rated 5 or 5*, or ‘world-class’, by the Research
Assessment Exercise (RAE) is likely to have around twice as many labs doing R&D in
pharmaceuticals and around three times as many foreign-owned pharmaceuticals R&D
labs compared with a postcode area with no 5 or 5* rated chemistry departments.
In some sectors, clustering is not limited only to the most highly rated research
departments. For example, the research finds evidence that foreign-owned labs in
machinery sectors are likely to be located near to materials science and electrical
engineering departments rated 4 or below by the RAE. This suggests that firms may
also benefit from proximity to more applied, commercially oriented research activity.
Technology transfer and the commercial exploitation of the research base are topical
issues in the government’s science and innovation policy agenda. The research results
have interesting implications for the evaluation and funding of university research.
Laura Abramovsky, senior research economist at the IFS and one of the authors of the
study, comments:
‘As well as confirming the importance of maintaining world-class research
centres in order to attract international R&D investment, the research suggests
that departments rated 4 or below in the RAE may play important roles in some
areas of technology transfer and in attracting investment.’
ENDS
Notes for editors: ‘University Research and the Location of Business R&D’ by Laura
Abramovsky, Rupert Harrison and Helen Simpson is published in the March 2007 issue
of the Economic Journal.
The authors are at the Institute for Fiscal Studies (IFS) and this research was funded by
the Gatsby Charitable Foundation, the ESRC Centre for the Microeconomic Analysis of
Public Policy at IFS and AIM. Future IFS research under the ESRC Impact of Higher
Education Institutions on Regional Economies initiative will examine the effect of
proximity on the likelihood that innovative firms actively engage with relevant university
research departments.
The analysis uses information on the location of the population of R&D labs in Great
Britain together with the results of the most recent university Research Assessment
Exercise (RAE) to investigate whether R&D facilities are located in close proximity to
high quality relevant university research departments. For example, are
pharmaceuticals R&D labs located near to university chemistry, medical science and
biology departments? Does the quality of university research matter for the extent of
clustering?
The paper uses the RAE results to map the presence and the quality of research
carried out by universities, and their specific research departments in Great Britain. The
Higher Education Funding Council for England (HEFCE) collects the RAE, with the
primary purpose being to produce ratings of research quality used to allocate the main
grant for research use among universities. Each department submission is rated within
a scale of 1, 2, 3, 4, 5 and 5*. The higher the number in the scale the higher the
department’s research quality is rated and the more funding it gets.
The UK government has recently commissioned two reviews into innovation policy: the
Lambert Review of Business-University Collaboration and the Department of Trade and
Industry (DTI) Innovation Report. Both of them stressed the importance of the
interaction between research institutions and businesses and the role of geographic
innovative clusters in improving the UK’s innovation performance.
For further information: contact the authors on 020-7291-4800; or Romesh
Vaitilingam on 07768-661095 (email: romesh@compuserve.com).