| In the United States, Congress approved, last | | | | government involvement in research, the |
| month, increases in the 2003 budgets of both the | | | | universities, are only weakly correlated with |
| National Institutes of Health and National Science | | | | growing prosperity. As Alison Wolf, professor of |
| Foundation. America is not alone in - vainly - trying | | | | education at the University of London elucidates in |
| to compensate for imploding capital markets and | | | | her seminal tome "Does Education Matter? Myths |
| risk-averse financiers.In 1999, chancellor Gordon | | | | about Education and Economic Growth", published |
| Brown inaugurated a $1.6 billion program of | | | | last year, extra years of schooling and wider |
| "upgrading British science" and commercializing its | | | | access to university do not necessarily translate |
| products. This was on top of $1 billion invested | | | | to enhanced growth (though technological |
| between 1998-2002. The budgets of the Medical | | | | innovation clearly does).Terence Kealey, a clinical |
| Research Council and the Biotechnology and | | | | biochemist, vice-chancellor of the University of |
| Biological Sciences Research Council were | | | | Buckingham in England and author of "The |
| quadrupled overnight.The University Challenge Fund | | | | Economic Laws of Scientific Research", is one of |
| was set to provide $100 million in seed money to | | | | a growing band of scholars who dispute the |
| cover costs related to the hiring of managerial | | | | intuitive linkage between state-propped science |
| skills, securing intellectual property, constructing a | | | | and economic progress. In an interview published |
| prototype or preparing a business plan. Another | | | | last week by Scientific American, he recounted |
| $30 million went to start-up funding of high-tech, | | | | how he discovered that:"Of all the lead industrial |
| high-risk companies in the UK.According to the | | | | countries, Japan - the country investing least in |
| United Nations Development Programme (UNDP), | | | | science - was growing fastest. Japanese science |
| the top 29 industrialized nations invest in R&D | | | | grew spectacularly under laissez-faire. Its science |
| more than $600 billion a year. The bulk of this | | | | was actually purer than that of the U.K. or the |
| capital is provided by the private sector. In the | | | | U.S. The countries with the next least investment |
| United Kingdom, for instance, government funds | | | | were France and Germany, and were growing |
| are dwarfed by private financing, according to the | | | | next fastest. And the countries with the |
| British Venture Capital Association. More than $80 | | | | maximum investment were the U.S., Canada and |
| billion have been ploughed into 23,000 companies | | | | U.K., all of which were doing very badly at the |
| since 1983, about half of them in the hi-tech | | | | time."The Economist concurs: "it is hard for |
| sector. Three million people are employed in these | | | | governments to pick winners in technology." |
| firms. Investments surged by 36 percent in 2001 | | | | Innovation and science sprout in - or migrate to - |
| to $18 billion.But this British exuberance is a global | | | | locations with tough laws regarding intellectual |
| exception.Even the - white hot - life sciences field | | | | property rights, a functioning financial system, a |
| suffered an 11 percent drop in venture capital | | | | culture of "thinking outside the box" and a tradition |
| investments last year, reports the MoneyTree | | | | of excellence.Government can only remove |
| Survey. According to the Ernst & Young 2002 | | | | obstacles - especially red tape and trade tariffs - |
| Alberta Technology Report released on | | | | and nudge things in the right direction by investing |
| Wednesday, the Canadian hi-tech sector is | | | | in infrastructure and institutions. Tax incentives are |
| languishing with less than $3 billion invested in 2002 | | | | essential initially. But if the authorities meddle, they |
| in seed capital - this despite generous matching | | | | are bound to ruin science and be rued by |
| funds and tax credits proffered by many of the | | | | scientists.Still, all forms of science funding - both |
| provinces as well as the federal government.In | | | | public and private - are lacking.State largesse is |
| Israel, venture capital plunged to $600 million last | | | | ideologically constrained, oft-misallocated, inefficient |
| year - one fifth its level in 2000. Aware of this | | | | and erratic. In the United States, mega projects, |
| cataclysmic reversal in investor sentiment, the | | | | such as the Superconducting Super Collider, with |
| Israeli government set up 24 hi-tech incubators. | | | | billions already sunk in, have been abruptly |
| But these are able merely to partly cater to the | | | | discontinued as were numerous other |
| pecuniary needs of less than 20 percent of the | | | | defense-related schemes. Additionally, some |
| projects submitted.As governments pick up the | | | | knowledge gleaned in government-funded |
| monumental slack created by the withdrawal of | | | | research is barred from the public domain.But |
| private funding, they attempt to rationalize and | | | | industrial money can be worse. It comes with |
| economize.The New Jersey Commission of Health | | | | strings attached. The commercially detrimental |
| Science Education and Training recently proposed | | | | results of drug studies have been suppressed by |
| to merge the state's three public research | | | | corporate donors on more than one occasion, for |
| universities. Soaring federal and state budget | | | | instance. Commercial entities are unlikely to |
| deficits are likely to exert added pressure on the | | | | support basic research as a public good, ultimately |
| already strained relationship between academe | | | | made available to their competitors as a "spillover |
| and state - especially with regards to research | | | | benefit". This understandable reluctance stifles |
| priorities and the allocation of ever-scarcer | | | | innovation.There is no lack of suggestions on how |
| resources.This friction is inevitable because the | | | | to square this circle.Quoted in the Philadelphia |
| interaction between technology and science is | | | | Business Journal, Donald Drakeman, CEO of the |
| complex and ill-understood. Some technological | | | | Princeton biotech company Medarex, proposed |
| advances spawn new scientific fields - the steel | | | | last month to encourage pharmaceutical |
| industry gave birth to metallurgy, computers to | | | | companies to shed technologies they have chosen |
| computer science and the transistor to solid state | | | | to shelve: "Just like you see little companies |
| physics. The discoveries of science also lead, | | | | coming out of the research being conducted at |
| though usually circuitously, to technological | | | | Harvard and MIT in Massachusetts and Stanford |
| breakthroughs - consider the examples of | | | | and Berkley in California, we could do it out of |
| semiconductors and biotechnology.Thus, it is safe | | | | Johnson & Johnson and Merck."This would be the |
| to generalize and say that the technology sector | | | | corporate equivalent of the Bayh-Dole Act of |
| is only the more visible and alluring tip of the | | | | 1980. The statute made both academic institutions |
| drabber iceberg of research and development. | | | | and researchers the owners of inventions or |
| The military, universities, institutes and industry all | | | | discoveries financed by government agencies. This |
| over the world plough hundreds of billions annually | | | | unleashed a wave of unprecedented self-financing |
| into both basic and applied studies. But | | | | entrepreneurship.In the two decades that |
| governments are the most important sponsors of | | | | followed, the number of patents registered to |
| pure scientific pursuits by a long shot.Science is | | | | universities increased tenfold and they spun off |
| widely perceived as a public good - its benefits | | | | more than 2200 firms to commercialize the fruits |
| are shared. Rational individuals would do well to sit | | | | of research. In the process, they generated $40 |
| back and copy the outcomes of research - rather | | | | billion in gross national product and created |
| than produce widely replicated discoveries | | | | 260,000 jobs.None of this was government |
| themselves. The government has to step in to | | | | financed - though, according to The Economist's |
| provide them with incentives to innovate.Thus, in | | | | Technology Quarterly, $1 in research usually |
| the minds of most laymen and many economists, | | | | requires up to $10,000 in capital to get to market. |
| science is associated exclusively with | | | | This suggests a clear and mutually profitable |
| publicly-funded universities and the defense | | | | division of labor - governments should picks up |
| establishment. Inventions such as the jet aircraft | | | | the tab for basic research, private capital should |
| and the Internet are often touted as examples of | | | | do the rest, stimulated by the transfer of |
| the civilian benefits of publicly funded military | | | | intellectual property from state to |
| research. The pharmaceutical, biomedical, | | | | entrepreneurs.But this raises a host of contentious |
| information technology and space industries, for | | | | issues.Such a scheme may condition industry to |
| instance - though largely private - rely heavily on | | | | depend on the state for advances in pure science, |
| the fruits of nonrivalrous (i.e. public domain) | | | | as a kind of hidden subsidy. Research priorities are |
| science sponsored by the state.The majority of | | | | bound to be politicized and lead to massive |
| 501 corporations surveyed by the Department of | | | | misallocation of scarce economic resources |
| Finance and Revenue Canada in 1995-6 reported | | | | through pork barrel politics and the imposition of |
| that government funding improved their internal | | | | "national goals". NASA, with its "let's put a man on |
| cash flow - an important consideration in the | | | | the moon (before the Soviets do)" and the inane |
| decision to undertake research and development. | | | | International Space Station is a sad manifestation |
| Most beneficiaries claimed the tax incentives for | | | | of such dangers.Science is the only public good |
| seven years and recorded employment growth.In | | | | that is produced by individuals rather than |
| the absence of efficient capital markets and | | | | collectives. This inner conflict is difficult to resolve. |
| adventuresome capitalists, some developing | | | | On the one hand, why should the public purse |
| countries have taken this propensity to extremes. | | | | enrich entrepreneurs? On the other hand, |
| In the Philippines, close to 100 percent of all R&D | | | | profit-driven investors seek temporary |
| is government-financed. The meltdown of foreign | | | | monopolies in the form of intellectual property |
| direct investment flows - they declined by nearly | | | | rights. Why would they share this cornucopia with |
| three fifths since 2000 - only rendered state | | | | others, as pure scientists are compelled to |
| involvement more indispensable.But this is not a | | | | do?The partnership between basic research and |
| universal trend. South Korea, for instance, | | | | applied science has always been an uneasy one. It |
| effected a successful transition to private venture | | | | has grown more so as monetary returns on |
| capital which now - even after the Asian turmoil | | | | scientific insight have soared and as capital |
| of 1997 and the global downturn of 2001 - | | | | available for commercialization multiplied. The |
| amounts to four fifths of all spending on | | | | future of science itself is at stake.Were |
| R&D.Thus, supporting ubiquitous government | | | | governments to exit the field, basic research |
| entanglement in science is overdoing it. Most | | | | would likely crumble. Were they to micromanage |
| applied R&D is still conducted by privately owned | | | | it - applied science and entrepreneurship would |
| industrial outfits. Even "pure" science - | | | | suffer. It is a fine balancing act and, judging by |
| unadulterated by greed and commerce - is | | | | the state of both universities and startups, a |
| sometimes bankrolled by private endowments | | | | precarious one as well. |
| and foundations.Moreover, the conduits of | | | | |