Competing in the Global Economy – The Innovation Challenge

• Faraday partnerships aim to address the systemic barriers to collaboration and
knowledge transfer that exist between HEIs and business. Although the scheme is
relatively new (some Faradays were only set up in 2000) participants in the
programme generally felt that it was effective in promoting knowledge transfer.
Faradays appear to have stimulated some increased innovation activity, particularly
amongst smaller firms. But most thought that the volume of innovation activity had
not increased. Instead the main impacts were found on the effectiveness and nature
of innovation activity. Firms said that effectiveness increased, although a minority
believed it was due to Faraday involvement.
In addition to the generic instruments which can be applied to any technological area,
the DTI currently funds a number of sector specific schemes.
• Biotechnology support is encompassed within a range of programmes, some
specific to Biotech others drawing on existing products to provide support – e.g.
LINK. Support for Biotechnology is justified on the grounds that it potentially offers
major economic benefits but industry needs support in order to draw upon and
exploit the strengths of the UK science base. The biotech industry is characterised by
SMEs many of which are spin-outs or at a very early stage of development. Venture
Capitalists are reluctant to invest in early stage companies which do not have a
substantial pipeline of products. A number of measures – such as assistance to
public sector research institutions (HEIs, NHS, etc) in identifying and exploiting
intellectual property, and the provision of business advice to spin-outs and early
stage companies – generated significant benefits to participants. Both these
measures probably accelerated a process that would have been undertaken anyway
– universities and business owners would have developed the competencies in time
– although IP within the Science Base may have gone unexploited or companies
may have failed. A scheme aimed at raising awareness of biopharmaceutical
manufacturing issues has been successful in the provision of relevant training to
scientific staff but, importantly, less successful in engaging interest from senior
managers, despite the fact that exploitation of products is vitally dependant on
manufacturing processes that can overcome the inherent difficulties of scaling up
from laboratory to pre-clinical and early stage trials. This programme has not been
able to utilise its full budget.
• The evaluation of DTI’s civil space activity concluded that the rationale for a measure
of DTI support for the development of space technologies was supported by sound
economic arguments. High technical and financial risks and the potential for
spillovers, particularly in the form of markets for space based services, meant that
benefits might not accrue fully to those taking the risks and as a result incentives for
private sector involvement were small. Furthermore the public sector is a major
consumer of some space-based services (e.g. imagery from earth observation). As a
result of an earlier evaluation DTI’s funding of space has been subject to some
changes. Responsibility for science aspects have been passed to the Research
Councils for example. The DTI has commissioned a study to look at the evidence for
spillovers of technology from space to non-space sectors, as well as wider impacts,
such as the development of services, from UK civil space activity.
A number of points emerged during the exercise which are applicable to the
development new interventions. These are:
• The importance of basing interventions on a wide analytical base, including
contributions from those with an independent, but informed, perspective.
• Ensuring that individual projects funded under programmes are scrutinised for their
contribution to productivity. In practice this means that projects need to address a
market or systemic failure, which has been identified through detailed analysis.
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