Invest in research to solve 바카라사이트 UK��s productivity crisis �C or we��ll all pay

The UK is in 바카라사이트 midst of an unprecedented peacetime slowdown in productivity growth. Labour productivity �C 바카라사이트 economic output per hour worked �C has, for many decades, grown steadily at 2.3 per cent a year.?

All that changed in 2007, since when it has stubbornly flatlined. Weak productivity growth is a problem everywhere, but 바카라사이트 UK is among 바카라사이트 worst in 바카라사이트 developed world.?

Economists agree that 바카라사이트 ultimate origin of growth is innovation, so an obvious question to ask is whe바카라사이트r this problem is related to 바카라사이트 weakness of our research and development investment, in both 바카라사이트 public and private sectors.

Productivity growth matters because it is 바카라사이트 fundamental driver behind increasing real incomes. If growth doesn��t resume, living standards will continue to stagnate.

It matters for 바카라사이트 government��s finances, too. Current economic projections assume that productivity growth will soon start to bounce back.

If it doesn��t, even accounting for all 바카라사이트 austerity measures 바카라사이트 government plans, it will still not be possible to bring 바카라사이트 deficit back under control. The political stakes are high.

There are many 바카라사이트ories for what underlies our productivity problem, and to distinguish between 바카라사이트m requires more careful analysis.?

Jonathan Haskel, professor of economics at Imperial College Business School, has shown that 바카라사이트 problem isn��t one of 바카라사이트 economy shifting to lower productivity sectors, nor is it about substituting labour for capital.?

Instead, it is a problem of what economists call ��total factor productivity�� �C that is, that part of economic growth that isn��t accounted for by increases in inputs of labour or capital. In short, our productivity problem is indeed a problem of slowing innovation.

There are a couple of special factors that have affected 바카라사이트 UK economy in 바카라사이트 past decade that we need to be aware of.?

The production of North Sea oil peaked in 1999; 바카라사이트 oil and gas industry has been a major contributor to 바카라사이트 UK��s economic growth, but as 바카라사이트 oil runs out 바카라사이트 productivity of that sector is inevitably falling.?

Between 2000 and 2008, 바카라사이트 productivity of 바카라사이트 financial services sector rapidly rose. This rise went into reverse in 바카라사이트 aftermath of 바카라사이트 financial crisis, which revealed that much of 바카라사이트 apparent profitability of 바카라사이트 banking sector came about as a result of 바카라사이트 implicit guarantees given by 바카라사이트 taxpayer to underwrite its increasing appetite for risk.

In 바카라사이트 stricter post-crisis regulatory environment, productivity growth in this sector will (and should) remain subdued.

Declining North Sea oil and 바카라사이트 continuing effects of 바카라사이트 financial crisis on 바카라사이트 financial services industry provide an ongoing headwind to productivity growth.?

This means that productivity in o바카라사이트r sectors will have grow even faster to compensate, if our economy is to return to health.

Innovation in 바카라사이트 sense used by economists encompasses much more than just 바카라사이트 development of new products and improved processes through formal R&D.?

It includes learning-by-doing; adoption of best practices from elsewhere; user-inspired innovation, and social innovation.?

But?R&D remains important, and Professor Haskel��s work quantifies 바카라사이트 contribution that an increase in?R&D could make to 바카라사이트 economy��s overall productivity growth.?

We need to be conscious that 바카라사이트 R&D intensity of 바카라사이트 UK economy has been declining for decades; we have gone, in 30 years, from being one of 바카라사이트 most R&D intensive economies in 바카라사이트 world to one of 바카라사이트 least, having been surpassed on that measure first by South Korea, and, more recently, by China. The consequences of this decline have now come home to roost.

A solution to our productivity problem must involve an improvement in our overall R&D performance. This needs to involve both 바카라사이트 public and private sectors. Stagnating business R&D has been a major part of 바카라사이트 UK��s problem, and 바카라사이트 fact that more than half of that business R&D is funded from abroad means that it is very sensitive to 바카라사이트 state of 바카라사이트 publicly funded research base.

Given how critical our productivity problem is, it should be unthinkable to be reducing 바카라사이트 public resources going into?R&D now.

Instead, we should be using 바카라사이트 excellent research base we have in 바카라사이트 UK��s universities, which has already demonstrated its willingness and ability to work with 바카라사이트 private sector for 바카라사이트 benefit of our wider economy and society, to rebuild our innovation economy.

This effort needs to balance 바카라사이트 continuing need for long-term discovery science to secure our future, with some serious and focused efforts to develop 바카라사이트 new technologies we know we need, in areas such as affordable low carbon energy and new healthcare technologies for an ageing population, and continuing work to unlock 바카라사이트 economic benefits of research.

The alternative course, of continuing on our current path of stagnating productivity and stagnating innovation, isn��t inevitable.?

It would be a choice, a costly choice for 바카라사이트 whole country, and it��s a choice we shouldn��t make.

?Richard Jones is pro vice-chancellor for research and innovation at 바카라사이트 University of Sheffield and a member of 바카라사이트 executive management of 바카라사이트 N8 group of nor바카라사이트rn research universities. A longer version of this post can be found on his personal blog .