The Socio-Economic Importance of Scientific Research To Canada

The Socio-Economic Importance of Scientific Research to Canada Page 17© David A. Wolfe and Ammon Salterconsider the full costs of commercialization (US Congressional Budget Office 1994, p. 15). 8The most important failing of his approach is that it offers only a social rate of return, not amarginal rate. It can not inform policy makers about the marginal benefits of adding fundingto research or development. “In this sense, these studies (including Mansfield's) offer littleguidance for policy makers, other than by stressing the importance of investments in basicresearch in general” (US Office of Technology Assessment 1986, p. 4). “Like many costbenefitcalculations, it is more useful as an ex post rationale for historical public researchinvestments, rather than as a criterion for future investments” (David et al. 1992, p. 79).The figures generated by Mansfield’s studies are also hard to compare with other financialfigures on rates of return. If the benefits of investment in R&D are so high, then, why dogovernments and firms not invest more in research? The lack (from a social point of view) ofinvestment might be related to the risk of R&D. More likely, however, these estimates can notbe realistically compared with the estimates for other rates of return, such as that on capitalequipment. They do not provide a meaningful yardstick to measure such benefits, but merelysuggest that there are some considerable benefits arising out of past investments by governmentin publicly–funded basic research.A new approach to evaluating the benefits of publicly–funded scientific research is found in thework of Narin et al. They measured the academic citations in US patents to conclude that overthe past six years there has been a tripling in the knowledge flow from US science to USindustry. Their study is based on an analysis of the front pages of over 400,000 US patentsissued between 1987 and 1994. Narin et al. traced the 430,000 non–patent citations containedin these patents. Of these 430,000 non-patent citations, 175,000 were references to paperspublished in the 4000 journals covered by the Science Citation Index (SCI). They undertook alibrary search of 42,000 matched papers with at least one US author. They located thesepapers and were able to determine the sources of US and foreign research supportacknowledged in the papers.Using this methodology, they demonstrated a secular increase across countries (UK, France,German, and Japan) in citations of science in patent records. Patents also tend to cite theirown country's papers two or three times more often than expected, when adjusted for the size8 In a review of Mansfield's work the Congressional Budget Office suggested that such an approach is misleading for policy-makers. Mmakers as they allocate research funding or even determine the amount of funding devoted to R&D (CBO 1994). However, this criticisfrom citing Mansfield's work as a justification for an increase in basic research funding.17