Tuesday, 30 September 2008

R&D spending in recession times

In recession times and shrinking economies, reducing spending becomes the main motto. Research, and more particularly basic research, is often seen as an easy sacrificial lamb. But these short viewed decisions jeopardize future recoveries and history shows that sometimes different stands are taken.
Back in the 90's, Japan was badly hurt by the real estate bubble burst similar to the American sub-prime crisis. The Japanese government and the industry leaders counteracted by raising the R&D budgets whereas the GDP was falling substantially. This proactive attitude did promote Japan as the leader in many consumer markets:
For example, there is no doubt that technology and new-era thinking played a major role in the Japanese bubble. During the bubble, Japan took over leadership of high technology in the areas of consumer electronics, the automobile industry, manufacturing, and even robotics, and was perceived as a major threat to dominate all technological development around the globe – just as the U.S. is today.("The Japanese Bubble economy")
So lessons should be learned and it seems at least some are, as reported by the french economy newspaper Les Echos (The Industry rescue the American R&D (in French).
The US,
although plagued by the sub-prime crisis, have invested in 2007 386 B$ in R&D, 100 B$ more than the European countries all together. Most of the budget came from the industry for product developments with an increase of more than 10B$ as compare to 2006. But at the same time, we all remember the serious budgets cuts in basic research projects (-1.6 B$) by the US government. This shows that the industry was wise enough not to follow the natural decline slope. However nothing should be taken for granted and there are fears that 2008 will not go the same way and concerns are high for basic research.

Although science is not a central topic of this presidential year, a flurry of questions were thrown at the two main candidates (Science Debate).

Most questions reflect concerns on the rising of the Asian power, the loss of interest of the young generations for science, the budget cuts and the decreasing attractiveness of the US for the foreign researchers.
Concerning "the lost of interest of the young generation" in particular for basic research (mainly done in government owned research centers), let me refer here to a recent survey on the white collar salaries made by another french economy magazine, "L'expansion", where it is shown that a researcher in the industry has a salary twice as high as he would get at the end of his carrier in a government center. In addition, the potential promotion openings (like becoming a R&D director in a big company) may end up with salaries up to 7 times larger than whatever you can get as a civil servant. This may play a role in this "loss of interest" although there are compensations that motivate many of us: more freedom in selecting projects, more time for fundamental and basic research. It is passion that attract youngers to science, but salary issues may divert them to more financially rewarding jobs. For french speaking people: you may even compute your expected salary here.... Yes that is what you should get but then you still have to find "the Company" and stay there...

Let's hope that Europe (and the european countries) will follow this courageous and proactive approaches as more than ever we need a balanced world-wide endeavor in R&D. The world is facing major challenges: the more or less near end of the petrol era and the replacement by alternative energies, the vanishing of mineral resources, the steady raise of all type of pollution hazards, some leading to climate change, the fast growing of the world population expected to go from 6 to 9 billions by 2050.

Only scientific and sociological innovations give us a hope to survive. There are lessons one should not forget specially in troubled times.