Investing €8.2bn in appliance of science myth

 

Pleas for continued State funding for university-driven scientific research are just the voice of yet more vested interests, writes MICHAEL HENNIGAN

IN RECENT months, The Irish Timeshas published a number of articles defending the €8.2 billion science budget in the current National Development Plan, but its striking that the practitioners of the hard sciences present few hard facts in its defence. Dreams of finding a new Nokia are fine but critics question the over-reliance of a small country like Ireland, on university-driven basic research.

At policy level there is also a preference for bold aspirations over substance, and at the McGill Summer School last month, Tánaiste Mary Coughlan praised America’s Stanford University as an example that Ireland should emulate, with its approach to innovation, to multidisciplinary research and to engagement with industry, which has earned members of its academic staff the Nobel Prize on 27 occasions since its founding. She said the university has spawned some 3,000 companies in high technology and other fields, resulting in the creation of tens of thousands of jobs.

However, Ireland should not try to emulate Stanford University, in the same way that it would be foolish to try and create a new Manchester United or Chelsea FC.

The Oireachtas has given little attention to reviewing the planned expenditure of €8.2 billion over the period 2007-2013, and last June, Taoiseach Brian Cowen announced a 28-strong innovation taskforce, packed with insider members from the universities and State agencies.

Prof Luke O’Neill in his article on the McCarthy report (Opinion and Analysis, August 18th), which recommended that research expenditure should be more commercially focused, cites publication references, spin-outs, collaboration with commercial firms and the attraction of foreign firms. On basic research, he says “investment in basic research . . . pays back on average three to one in the long run”.

This claim contrasts with much lower returns cited by a US Congressional Budget Office 2007 report on federal support for RD. In Prof O’Neill’s own sector, biotechnology, the industry in the US became profitable in 2008 for the first time in 42 years. A study of 370 public companies showed that 67 made a net profit totalling $9.4 billion. Almost all the profits, about $8 billion, went to three companies: Genentech, Amgen and Gilead.

The problem about relying on basic research is that commercialisation is incidental. In the US, the proportion of total business RD spent on basic or pure research is less than 10 per cent, while research geared towards producing a product to meet a market need usually has a deadline of five years to launch in the market. The US government funds basic and applied research and commercialisation spin-outs happen by chance. The internet is one example.

Prof O’Neill writes: “That Ireland should not participate in this grand adventure would relegate it to the league of countries that are economically underdeveloped and unable to participate fully in the world economy. Ireland would also not have a role in the shaping of future technologies, putting us at a distinct competitive disadvantage.”

This is a dangerous position because it’s not that critics are saying there should be no RD investment or PhDs produced by Irish universities, but there will not be a return from putting most of the science budget into what is effectively blue-sky research.

UCC economist Dr Declan Jordan wrote in The Irish Timeslast July that: “A census of post-doctoral researchers that left Science Foundation Ireland-funded projects in 2007 found that 9 per cent went to work in science and engineering businesses. A further 10 per cent went to work in industry in other sectors. The most common destination, at 38 per cent, for these post-doctoral researchers was another post-doctoral position on a different research project.”

He added: “It is worrying, given the significant taxpayer investment, that there is so little movement of researchers from funded projects into business. The most effective method of knowledge transfer from universities to businesses is on two legs,” he added.

There were eight spin-outs from Science Foundation Ireland (SFI) research between 2002 and 2008 and SFI forecasts 30 in the period 2009-2013. Some of the existing firms are very small and Enterprise Ireland claims a 90 per cent survival rate from its spin-outs but this is totally out-of-line with US experience.

Simply put, its data is not credible. The number of significant university collaborations with business is small and it’s likely at a high cost level to the taxpayer.

As for the metrics of citations in journals, number of PhDs and patents, Prof Amar Bhidé of the Columbia Business School, argues in his book The Venturesome Economy that the development and effective use of innovations requires multilevel, multifaceted advances and he asks: why has the US maintained (or possibly expanded) its productivity and per capita income lead while the EU and Japan have increased their shares of PhDs, scientific articles, etc?

He also says US venture capital-backed businesses use different people and procedures than the typical laboratory high-level research: they employ a much smaller proportion of PhDs in their technical staff, and their overall workforces contain a larger proportion of managers and sales and marketing staff – people who are close to users.

It would be foolish for Ireland to bank its future on a university lab or unquestionably accept the position of the various vested interests involved.

Michael Hennigan is founder and editor of the financial website Finfacts– www.finfacts.ie