Basic scientific research, a key driver of economic growth: IMF
The COVID-19 pandemic has wiped the slate of decades of progress on key social measures such as life expectancy and stopping economic progress. Policymakers want to get the global economy back on track and simultaneously tackle climate change. But how will it be? Basic scientific research, according to the International Monetary Fund (IMF).
The latest IMF analysis found that countries were experiencing a slowdown in productivity, a key index of long-term growth, despite increased efforts in research and development (R&D).
Indeed, the composition of R&D matters more than the effort. While investments in R&D have increased, they are increasing in applied sciences. These commercially oriented R&D programs will have less long-term impact on the global economy.
âOur analysis suggests that the makeup of R&D is important for growth. We find that basic scientific research affects more sectors, in more countries and for longer than applied research (commercially oriented R&D by companies), and that for emerging and developing economies, access to foreign research is particularly important, âthe IMF report reads. .
Easy technology transfer, cross-border scientific collaboration, and policies that fund basic research can foster the kind of innovation we need for long-term growth, the authors added.
Basic science or basic research refers to scientific research that aims to expand the understanding or knowledge base of a particular field of study. Often purely theoretical in nature, it seeks to understand a use case for a particular new discovery.
Applied research, on the other hand, is undertaken to find solutions to specific problems or questions. Applied research uses knowledge from basic research to apply it to real use cases.
“While applied research is important for bringing innovations to market, basic research broadens the knowledge base necessary for revolutionary scientific progress,” the IMF explained.
The importance of basic research stems from the fact that such research is very rarely confined behind the national, corporate or legal boundaries that applied research often is. This allows basic research to remain relevant and influential for longer, to be disseminated to a wider community, and to continue to generate new scientific breakthroughs.
The IMF also found that the impact of foreign research, both applied and basic, was much more impactful for emerging and developing economies. Their effects on productivity growth and technology adoption for these markets are particularly important.
âIn countries with strong education systems and deep financial markets, the estimated effect of the adoption of foreign technologies on productivity growth – through trade, foreign direct investment or learning through practice – is especially important. As such, emerging markets and developing economies may find that policies aimed at adapting foreign knowledge to local conditions are a better development path than investing directly in local basic research.
The IMF suggests that policymakers could increase subsidies to private and public research to see the economic impact. If such subsidies had been granted between 1960 and 2018, it is estimated that per capita incomes would have been 12% higher than they are now.
(Edited by : Jomy Jos Pullokaran)