Mapping the economic returns of R&D in the UK

In 2024, the British Academy and the Campaign for Science and Engineering (CaSE) commissioned Cambridge Econometrics to conduct a systems-based analysis of the strengths and weaknesses within the UK’s innovation system.

'Mapping the Economic Returns of R&D in the UK' provides an overview of this work, drawing out key policy implications and contributing to the evolving picture of the UK’s innovation ecosystem.

Building on 'The Economic Significance of the UK Science Base ' (2014) and 'Understanding SHAPE in R&D'  (2023), this study provides an in-depth picture of the entire innovation process, from research to commercialisation to adoption.

It offers unique insights into the UK’s innovation system, focusing not only on the value created through the R&D and innovation process, but also on when and where this value is first created and captured, and by whom.

To better understand the UK innovation system, the report uses 10 case study technologies chosen to represent a range of sectors and disciplines. These include:

• Agricultural gene editing
• Artificial intelligence
• Industrial robotics
• Innovative galleries
• Mobile technologies
• Modern supply-side economics
• mRNA vaccines
• Offsite construction
• Quantum technologies
• Semiconductors

This briefing draws out the key policy implications with the goal of identifying the most promising points of government intervention within the innovation system.

The aim is not to highlight innovation ‘winners’ or to place these example technologies in direct comparison with each other. Rather, it is to help policymakers, analysts, and those working within R&D and innovation to develop a better understanding of different market structures and how a tailoring of policy approaches may help generate better economic returns on R&D and innovation investment.

Policy Implications

A central finding is that while the UK has strengths in creating knowledge, it faces barriers in capturing value from technology-based innovation pathways. These barriers differ depending on specific technologies and market characteristics.

To overcome these barriers to commercialisation and adoption, several policy implications need to be considered.

The continued uplift in R&D investment by the UK Government is likely to support the wider innovation system.

There is a persistent myth that the UK is ‘good at research, and bad at commercialisation’. However, this report shows that strengths within the research base have an impact throughout innovation pathways, whether that be at commercialisation or adoption.

Government intervention should not take a one-size-fits-all approach and instead adopt targeted approaches to capture value from innovation processes.

The approach taken should vary depending on the characteristics of a technology or process’s innovation pathway.

Intervention can be optimised based on market structure and characteristics. 

The UK Government’s current focus on driving commercialisation and adoption through the Industrial Strategy and the Science and Technology Framework is supported by this research.

Policy approaches to innovation require connected support to other areas, including housing, transport and infrastructure, and skills development. 

The report’s findings highlight that policy levers cannot be pulled in one area of the system alone, but rather, must work holistically with a realistic, and tailored, understanding of potential economic opportunities within the UK innovation ecosystem.

A more detailed account of this work can be found in the full report by Cambridge Econometrics, 'From Research to Productivity: A Systems Analysis of UK Innovation Pathways', which sets out the project’s scope, methodology and specific findings for each case study.