Study highlights impact of research on output

The assessment, presented at a British Academy/Economic and Social Research Council innovation seminar, also suggest that benefits of research spending in higher education are greater than those from other areas of government-supported research and development (R&D).

‘£45bn a year is a good return on £3.5bn,’ said economist Prof Haskel, co-author of the study from Imperial College Business School. ‘It’s important to be able to put a proper figure on how public investment in university research correlates with private sector productivity for the first time.’

The authors used 20 years’ worth of figures from the Department for Business, Innovation and Skills to construct a new measure, called private sector total factor productivity (TFP), which is the change in output not accounted for by typical forms of spending, such as labour and machinery investment.

The TFP figures calculated in this study capture the contribution of ’intangible’ activities such as new technology, knowledge, skills and design. The study shows a strong correlation between public spend on research - through the research councils - and increased TFP over 21 years from 1986 to 2007.