R

1
RD Spending in South Africa

• Neo Moikangoa and Adi Paterson
• CSIR

2
Context

• RD in South Africa
• The Science Vote
• The some industry research anecdotes
• The way forward

3
RD in South Africa

• Benchmarking with the rest of the world
• RD intensity
• Civilian RD
• Synergy with government spending
• Government incentives
• What does RD spending buy
• Personpower (50c in the Rand)
• Facilities and Equipment (30c in the Rand)
• Information provision, management and networking
  (20c in the Rand)

4
RD Intensity

• The primary measure of the knowledge and
  innovation capacity of a nation
• Total RD spending as a proportion of GDP
• South Africa 0.69 of GDP (R4.01billion)
• Measure of the size of the research base
• Pays for all South Africas active scientists and
  technological innovators
• A key metric of the extent to which we
  participate in or can respond to the global
  knowledge economy

5
Comparing RD Intensity
Country RD intensity Spend ( greater than SA) Per capita RD spend ()
South Africa 0.69 0 30
Sweden 3.1 349 592 (20x)
South Korea 2.8 305 346 (12x)
Canada 1.7 146 363 (12x)
Norway 1.3 88 316 (10x)
6
Civilian RD Spending by Government

• A measure of spending related to quality of life
  and economic growth
• A measure of national commitment to ST
• South Africa 0.29 of GDP
• 0.44 in the US, 0.48 in the UK,
• Around 0.6 New Zealand, Portugal, Japan,
  Austria and Denmark
• Countries at around 0.75 Sweden, Norway,
  France, Germany, Netherlands
• Iceland and Finland are close to 1

7
Synergy in Spending (policy analysis findings)

• Business spending on RD does not displace
  government spending
• When governments increase spending industry
  follows
• Most competitor Governments now provide fiscal
  and tax incentives for RD South Africa does not
  increases cost of RD in SA relative to other
  countries

8
RD in South Africa (cont.)

• Private sector participation trends
• Downsizing (e.g. Anglo, DeBeers, AECI)
• Outsourcing (e.g. COMRO, AECI, Iscor)
• Inflexible resources and shortages (IT,
  Communications)
• Coherence with stated policy positions of
  Government
• IT strategy, biotechnology strategy
• New Higher Education policy
• Inability of fiscal measures (alone) to leverage
  growth

9
Implications of Our de facto ST Policy

• Not attractive for the private sector to spend or
  invest in RD
• Governments stated policy positions not
  supported by funding (more on this later)
• South Africa is falling into the Malaysia trap
• Investment and infrastucture without knowledge
  workers
• Project and programmatic rather than substantive
  interventions
• An unpopular cause but you get what you pay for

10
The Science Vote

• Most holistic perspective of Government RD
  spending
• Research Councils, National Facilities and SABS
• NRF (agency) and International Programmes
• The Innovation Fund
• TechTransfer, and Special projects

11
Science Vote

• Does not include
• Special government research funds (e.g. Defence,
  WRC, SIMRAC)
• Targeted programmes THRIP (DTI)
• DoE spending in univerities
• DoC initiatives (for instance)
• Intellectual property costs/returns to the nation
• We do not yet have the Science Budget proposed
  in the White Paper on ST (section 5.4.1) It is
  the intention of government that a document
  setting out the Science Budget will be available
  for the 1998-99 fiscal year

12
Change in the Science Vote?

• The Science Vote
• 1997/8 R1.183 billion
• 2001/2 R1.508 billion, but
• Adjusted for Inflation
• 1997/8 R1.516 billion
• 2001/2 R1.508 billion
• The de facto fiscal ST policy of the
  government is to maintain RD spending at
  identical real levels (but a greater number of
  programmes and activities are funded every year)

13
The Science Vote

• The Science Vote is a partial Composite Budget
  funding different Departments
• Department of Agriculture
• ST Branch of DACST
• Department of Health
• Department of Trade and Industry
• Department of Minerals and Energy

14
The Science Vote

• Real changes in distribution (given that the
  total is the same)
• DACST is increasing its share of the Vote
• DACST has significantly increased the number of
  funding instruments - in line with policy
• MRC has received increased funding based on
  agreements reached through NACI
• All other Departments (and consequently the
  Science Councils) have received reduced transfer
  payments

15
Real Changes in Funding Science Vote ( of
previous year)
Transfer from Science Vote to Department 1998/99 1999/00 2000/01 2001/02
Agriculture (ARC) -17.3 -7.9 -9.6 -6.1
DACST (ST Branch) 27.8 10.5 15.2 5.5
Health (MRC) 6.2 -2.4 29.3 11.7
Trade and Industry (CSIR, SABS) -6.7 -5.1 -8.5 -3.6
Minerals and Energy (CGS, Mintek) -7.1 -8.4 -9.6 -1.9
16
DACST ST Branch Application of the Science Vote

• Funding Changes in the ST Branch
• National Reasearch Foundation (post-graduate
  reasearch and education) has had real growth
• Innovation Fund and LEAD (introduced after a
  pilot in 1997/8) are now at R152 million
• New Initiatives Regional ST, Equipment
  Placement, GODISA, Technology Stations, etc (R32
  million)

17
Application of Science Vote

• Special projects R20 million
• Protection of Knowlegde infrastructure National
  Laser Trust, AISA, IKS (R21 million)

18
Analysis Application of the Science Vote Overall

• Positives
• A wider and more robust range of policy
  instruments and initiatives available
• More focus on linking up a potentially
  fragmented system
• Better funding of health and innovation
• Much stronger emphasis on technology transfer
• More stakeholders involved

19
Analysis Application of the Science Vote Overall

• Challenges/ Weaknesses
• Funding level will not increase the knowledge
  intensity of South African industry
• Too many small programmes run from DACST
• The standard measurement of the RD and ST
  system is in disarray (must meet international
  minimum standards)
• National risk (resulting from reduced funding) to
  the research institutions
• No credible policy voice regarding ST has
  emerged and its national importance is severely
  underestimated (Malaysia vs Korea)

20
Governments Role

• The difference between private and social
  rates of return is the primary reason why
  governments must support RD spendingIf
  governments dont support RD spending, much too
  little RD will be doneThe economic payoff from
  more social investment government funding in
  basic research is as clear as anything is ever
  going to be in economics. Lester Thurow, in
  Creating Wealth, pg 113, Nicolas Breasley
  Publishing, London, 2000.

21
Practical Proposals

• Government civilian RD spending should be
  doubled over 3 years with the increases going
  into 3 themes
• Centres of Excellence
• Mission-driven research
• Bilateral (science council governemtn
  department) research capacity in the national
  interest slide
• Fiscal incentives for companies doing RD (based
  on international best practice)
• Increase scope and comprehensiveness of
  Governments Science Budget to improve overall
  strategy and management

22
Three Areas for Increased Investment in RD

• Creation of Centres of excellence in identified
  fields via the NRF at universites (in partnership
  with science councils where appropriate)
• 2 or 3 mission-driven research initiatives in
  key areas (e.g. Open source software,
  telemedicine, logistics for trade and investment,
  PBR)
• Increased funding to science councils based on
  bilateral agreements with identified Government
  departments

23
Practical Proposals (cont.)

• Engage the Department of Finance on the Science
  Budget and its implications
• Create capacity to have annual RD and Innovation
  surveys (based on Canadian Model)
• Introduce the concept of national risk into ST
  policy (loss of capacity, research migration
  overseas, health and disease risks, defence and
  national security, the digital divide,
  bio-divide)
• Provide clear signals to private sector about
  government commitment to STdebate