The Socio-Economic Importance of Scientific Research To Canada

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The Socio-Economic Importance of Scientific Research to Canada Page 21© David A. Wolfe and Ammon Salteraccepted standards and codes able to transmit information, face–to–face contact and acommon cultural background might become of decisive importance for the informationexchange (Lundvall 1988, p. 355).These untraded interdependencies become the collective property of the region and help theregional actors expand their range of activities by drawing one another through their variousand blended set of institutions, conventions, habits, and common infrastructure. The evidencediscussed here suggests that nations and regions need to maintain their own capability inresearch and development. Face–to–face interaction and personal links are essential for theresearch process. “In order to transfer existing forms of knowledge, research performers andusers often need close, personal interaction, given the importance of know-how (i.e. tacitknowledge that cannot be codified). This need to ‘be there’ forces firms and individuals tocongregate in particular localities in order to share and transfer knowledge quickly andeffectively” (Martin et al. 1996, p. 13). 13 Policies designed to support geographicalagglomeration would help facilitate this level of interaction. 14Spillovers are also common among types of research–related activities. “[I]t is assumed thatthe level of productivity achieved by one firm or industry depends not only on its own researchefforts but also on the general pool of knowledge accessible to it” (Griliches 1995, p. 63).Using US patent data, Scherer was able to construct development measures of the direction ofspillovers by classifying a large sample of patents by the industry where the innovationoccurred and by the industry where it was expected to have an impact (1982, 1984). Otherspillover models have used the Canadian patent office date which provides an SIC codedestination for the patent. New work in Europe by Los and Verspagen has expanded thetreatment of spillovers. They looked at the location of patent and paper citations in US patentrecords to determine the degree of spillover of domestic sources of science and technology.They found that spillovers do exist, but they vary among sectors and countries (Los andVerspagen 1996). 1513 An important analysis of the advantage of "being there" has been made by Meric Gertler at the University of Toronto. Looking at crotools, Gertler found that substantial differences in a nation's social and economic institutions act as a barrier for successful technology teconomic systems are embedded in bits of technology. Gertler's work highlights the difficulties Canadian firms have relying on distant stechnology (Gertler 19 95 and 1 996).14 For a fuller discussion of these issues, cf. the treatment in Wolfe, 1997.15 Los and Verspagen’s approach focusing on patent citation records faces the same methodological problems asthat of Narin et al.21
The Socio-Economic Importance of Scientific Research to Canada Page 22© David A. Wolfe and Ammon SalterWork in the new growth theory also highlights the importance of spillovers. New growththeory has focused on the spillover effects of technological development. Growth theoriststend to see spillovers as the main mechanism underlying growth patterns (Romer 1994,Grossman and Helpman 1994). 16 These models suggest that the elaboration of spilloversthrough government institutions may be helpful from a policy perspective (Romer 1990).These models do, however, largely rely on the theoretical elaboration of production functionconcepts and they make limited use of empirical data. Most of these models also focus onindustrial R&D, rather than publicly-funded basic research. These models show thatknowledge and technologies spill over across sectors and fields. It is, however, difficult todevelop useful measures of the extent of these spillovers. Often the links betweengovernment–funded basic research and production are varied and indirect. Simple measures,such as sales or cross patent citations, only capture this spillover to a very limited degree.IDENTIFYING THE BENEFITS OF PUBLICLY–FUNDED RESEARCHDespite the methodological problems in estimating the economic returns to public investmentin basic research and the limitations of the studies discussed above, it is possible to identify thekey contributions that publicly–funded research makes to economic growth (Martin et al.1996). Six main benefits have been identified:1) increasing the stock of useful knowledge;2) training skilled graduates;3) creating new scientific instrumentation;4) forming networks and social interaction;5) increasing the capacity for scientific and technological problem-solving;6) creating new firms.These different benefits are interrelated and overlapping. In the next section, we draw uponrecent research in science policy studies to analyze the benefits that flow from governmentfunding of basic research in each area.Increasing the stock of new knowledge:The traditional justification for the public funding of basic research is that it expands theamount of information available for firms to draw upon in their technological activities.However, this view largely underestimates the substantial effort and costs needed by users totake advantage of this information. The difficulty with the pure information theory of basic16 The case for spillovers is strong but needs to be tempered by an understand of the importance of firm level dynamics. As Rosenbergdevelopment takes place within the firm. External relations among firms, such as spillovers, help to constitute these internal firms dyna22
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