The COVID-19 pandemic has wiped the slate clean on decades of progress on key social measures like life expectancy and arrested economic progress. Policymakers wish to drive the global economy back on track and tackle climate change simultaneously. But how will that happen? Basic scientific research, says the International Monetary Fund (IMF).
The latest analysis from the IMF found that countries were experiencing a slowdown in productivity, a key index to long-term growth, despite increasing efforts in research and development (R&D).
This is because the composition of the R&D matters more than effort. While investments into R&D have gone up, they are increasing for applied sciences. These commercially oriented R&D programs will have less impact over the long term on the global economy.
“Our analysis suggests that the composition of R&D matters for growth. We find that basic scientific research affects more sectors, in more countries and for a longer time than applied research (commercially oriented R&D by firms), and that for emerging market and developing economies, access to foreign research is especially important,” read IMF’s report.
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 seeks to broaden the understanding of or the knowledge base of a particular field of study. Often purely theoretical in nature, it does seek to figure out a use case for a particular new discovery.
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Applied research on the other hand is undertaken to find solutions to specific problems or questions. Applied research takes the knowledge found from basic research to apply them to real-world use cases.
"While applied research is important to bring innovations to market, basic research expands the knowledge base needed for breakthrough scientific progress," the IMF explained.
The importance of basic research stems from the fact that such research is very rarely locked behind national, corporate or legal boundaries that applied research often is. This allows basic research to remain relevant and influential for a longer time, be disseminated across a wider community and continues to drive further 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 technological adoption for such markets are especially important.
"In countries where education systems are strong and financial markets deep, the estimated effect of foreign technology adoption on productivity growth—through trade, foreign direct investment or learning-by-doing—is particularly large. As such, emerging markets and developing economies may find that policies to adapt foreign knowledge to local conditions are a better avenue for development than investing directly in homegrown basic research."
The IMF suggest that policymakers could increase the subsidies to private research and public research to see economic impact. If such subsidies were provided between 1960 and 2018, it is estimated that per capita incomes would have been 12 percent higher than they are currently.
(Edited by : Jomy Jos Pullokaran)