8 November 2017

How British R&D can change the world

By Jonathan Dupont

The case for research and development can be overstated. Take the fashionable claim that Government-funded research is the primary cause of all leading innovations – from the iPhone to the internet. In reality, the process is far more complex – and organic. Today’s cutting edge technology, in machine learning, was as much a side result of better GPUs (graphics processing units) for computer games as it was academically-initiated research.

At some point, as with anything else, greater spending on public R&D runs into diminished returns. How money is spent matters at least as much as the amount spent. And so, measured by citations, the UK is the world’s second most important scientific power – despite spending significantly less than the OECD average on R&D as a proportion of the economy. Equally, there is no correlation between the proportion a country spends on R&D and GDP per capita.

However, one area in which the case for an increase in publicly funded R&D is especially strong comes within the area of international development. Unlike elsewhere, there is minimal risk here of crowding out or replicating work the private sector would have undertaken anyway; meanwhile the need is often extremely great.

Take health. Only 1-2 per cent of total health R&D goes on tackling infectious diseases in developing countries, while only 10 per cent of that is targeted at the conditions that make up 90 per cent of the overall disease burden. Given the extremely low incomes of the customer base, commercial companies can understandably find it hard to build a viable business case for developing products aimed specifically at developing countries.

It isn’t just health, though. In a report released by Policy Exchange this week, in collaboration with Bjorn Lomborg’s Copenhagen Consensus Centre, we used a network of independent experts to identify over 40 potential research projects that would help meet the UN’s 17 Sustainable Development Goals – from ending world hunger to improving gender equality. Among the most effective research projects identified by our experts were the expansion of the potential for irrigation in Sub-Saharan Africa, the development of a long-acting reversible contraceptive, and the creation of a system to tackle mis-invoicing in trade transactions.

Compared with other forms of international aid, there are good reasons to think that development-targeted R&D can be extremely cost effective. All but two of our 40 shortlisted projects have an estimated benefit:cost ratio of at least 5:1, while DFID estimates that its own research profile has a rate of return of 10 per cent or over. It is also one of the few forms of development supported by traditional sceptics of other forms of aid, such as Angus Deaton or William Easterly, since they believe that it sidesteps any potential issues of encouraging in-country corruption.

It is also an area in which Britain is uniquely well-placed to contribute. Beyond the strength of our wider research base, we have many world-leading institutions, such as the Wellcome Trust, the Liverpool School of Tropical Medicine and the London School of Hygiene and Tropical Medicine.

There will be many potential opportunities for Britain’s growing digital strengths in fields such as GovTech, FinTech and autonomous vehicles. Already, British start-ups such as the Babylon doctor app, are working to use their cutting-edge machine learning to provide telemedicine services to the entire population of one East African country. Brexit will offer new opportunities for the UK to become world-leading in fields such as GM crops, and in building better, more efficient systems for clinical trials in pharmaceuticals.

We do, however, need to be smart about how we spend any increased funding.

The ICAI, the independent overseer of UK aid spending, has argued that the current Global Challenges Research Fund is not strategic enough, asserting that we could do a better job of linking it up with other challenge-based forms of funding such as the new Industrial Strategy Challenge Fund. We should explore the greater use of “pull” mechanisms, such as a new generation of Advanced Market Commitments (AMCs) where the Government commits ahead of time to pay private companies who can develop solutions to pressing global challenges.

But done correctly, investment in development R&D can be a win-win scenario for both the national economy and global welfare. It should be something that everyone – aid proponent or sceptic, free marketeer or social democrat – can support. As Global Britain, we can work to plug gaps in research that would never be commercially viable, and as a side-effect, help support Britain’s broader science and innovation ecosystem.

Jonathan Dupont is a Research Fellow at Policy Exchange, Director of Research & Policy at Public First, and the lead author of "Global Britain, Global Solutions: How British R&D can transform international development"