Public interventions supporting economic development are always controversial because you are using tax payer’s money. No matter the circumstances, like austerity or an economic boom, the national budget will never stack up, right? The needs will always exceed the available funding.
If you build a bridge over water or a new motorway, it is in most cases a longer term investment. This is almost always made from the public sector and based on a business case to create more opportunities for people and businesses. When it works it leads to more economic activity, growth, more jobs and therefore more tax payers money paid into the public purse. In cases like this, when it does work, there is no need to take measures such as increasing income taxes..
The challenge is proving to people, all of the people, that it was the right decision in the first place. Was it really this investment that made the difference? Did other factors come into play? And the most impossible question to answer; what would have happened if we didn’t make the investment in the first place?
In the area of research and innovation, a concept which Edinburgh BioQuarter is built on - public interventions through investments pose the same difficult questions. Only there is one clear difference, if we don’t make the investments then nothing will happen. However investing in research and innovation is like spending money on marketing activities, you can be pretty sure that only 20% of the spend is worthwhile and will give you the right results in increased awareness or sales. The problem is that you can never know beforehand which part of your total spend will make the real difference. Of the multibillion pound sum of money spent in the UK on research and innovation, only a portion of it leads to new technologies, products or, for instance, new ways of treating health problems. That is true for university research, big corporations and especially in high technology, where roughly one out of every ten investments are truly successful. Remember that one success must then pay for the nine that fail. It is just impossible to know for sure which research team or tech investment will make it in the end.
To get anything we must continue to invest, because if we don’t then we will get nothing in return! No progress in terms of job creation or wealth, no new knowledge that could lead to more exciting discoveries in the future. Positive examples of where calculated risk has led to reward can be boasted by two companies based at Nine (the Scottish Enterprise commercial incubator building located in the south of the Edinburgh BioQuarter campus). Congratulations to both Aquila BioMedical and IOMET Pharma, two home-grown companies who have been involved in mega deals lately. We need to see more of that.
If you haven’t already figured it out already, the point I’m making is simply this, if we do not invest in risky ventures as a society then we will get nothing in return!
Hopefully catch up with you again next week and until then.
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