Research growth hidden by the trees: BERD analysis

Scottish university research continues to be rated as world class according to the UK wide 2014 Research Excellence Framework (REF 2014). According to Research Fortnight, over 85% of Scottish university research was rated as having an impact in wider society and economy. However, figures from the Scottish Government @scotgov shows that our research base is not being exploited here in Scotland.
 
The Business Enterprise Research and Development (BERD) Scotland 2013 figure outline the spend on R&D by business. The good news is that R&D spend has increased by 10% in cash terms in 2013 compared to 2012. However, the spend in proportion to GDP has remained stubbornly at 0.6% for the last decade, despite government interventions to increase the spend using tax breaks across the UK and the promotion of knowledge transfer with university researchers. So it looks like government policy is not having an impact in developing the Scottish research base but the devil is in the detail.

The overall BERD spend is dominated by large companies and sectors so a look at a breakdown maybe more revealing. One area where there is significant growth year-on-year is in BERD spend by small and medium size enterprises (SME) with a 12% increase in 2013.  This is interesting as the government policy is likely to have a greater impact on SME R&D spend than that of large businesses such as pharmaceuticals.  The large businesses consistently spend relatively large amounts on research which makes it difficult to make an impact on the overall figure due to relatively small growth in BERD spend by SME.  Successful SME are also ripe to be taken over, hence there is significant volatility in the figures, particularly for independent SME, but the overall rise in spending is heartening.

The sources of funding reveal that investment by other UK business declined from 20% in 2005 to 1% in 2012 whereas own funding for R&D has increased from 50% to 75%.  The source of own funding is not expanded but this lack of spend by other business could have contributed to the demise of wave technology companies.

Comparisons with the rest of the UK show that Scottish business is lagging behind as even Northern Ireland spends proportionality more and only Yorkshire, Wales and the North East spend less. Relative BERD spend in Scotland is half that of the UK as whole which itself is half to quarter of that of our competitors.

It does seem that there are the roots for the growth of a knowledge economy within SME but that large enterprises dominate the figures. So, it is likely that government policy has at least contributed to the growth in R&D undertaken by SME and the rating in the REF 2014 show that our university research base is world class.