At the frontier of economic advance

Technology and innovation are important drivers of productivity improvements and growth.  Whether it is companies, regions or nations, they will need to harness technology to pull ahead. But doing so requires informed strategies. We have advised a range of stakeholders on the policies and practices that encourage and reward technological progress and innovation-driven models of growth. We frequently assess the impact that technology and innovation have on the economy, the workforce and wider society.

Understanding the economic return to investment in science and innovation

The public sector invests almost £10 billion per year into UK research and development (R&D). The Department for Business, Innovation and Skills (BIS) commissioned Frontier to explore the rates of return to innovation-related spending, and how public investment can best complement the almost £14 billion invested annually by private enterprise in R&D. We carried out a review of 60 published studies which estimated the returns to R&D. Synthesising the evidence, our analysis established that private rates of return typically amount to some 20-30 percent per year. In addition, spillover benefits such as new innovations being appropriated by other companies means that social returns can be two to three times larger than this, providing a clear rationale for public support of R&D investment. To complement the evidence review, and explore the interaction between publicly - and privately - funded R&D investments in more depth, we also carried out case studies of four companies in aerospace and life sciences, two strategically-important sectors that between them account for around one-third of UK private sector R&D. Together, our analysis found little clear evidence that public support for R&D crowds out private investment. Indeed, public investment in the UK science base and an increasingly coordinated approach to public support for innovation across lengthy development cycles were seen as an important driver of why businesses choose to locate their own R&D spending here. The results of our study have helped BIS strengthen their evidence base on the economic impact of knowledge investments and, at a time of constrained public finances, make an evidence-based case to Treasury for sustained investment in the science base.

We have worked in many areas that are critical to understanding technology and innovation. These include investment in digital infrastructure and skills, public support of innovation and research and development, the impact of emerging technologies on productivity and growth, the institutional impediments to technological diffusion, and the economic implications of general purpose technologies, to name a few. We understand the drivers of progress – historically and today.

Our clients span the public, private, and non-profit sectors, representing key areas in technology and innovation that include: biotechnology, renewable energy, e-commerce, venture capital, innovation-driven SMEs, research and development, information and communications, and emerging digital technologies.

We provide our clients with a wide range of services, such as economic research and modelling, policy analysis and programme evaluation, cost-benefit analysis, framework development, econometric and statistical analysis, case studies, and strategic advice. Our work has been used at the highest levels of government and business.

 

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