Why Britain and the US are streets ahead of Europe in innovation

The proposed takeover of the hugely successful ARM Holdings by the Japanese giant SoftBank is in the news. Cambridge-based ARM is well placed to exploit the white hot concept of the internet of things, highlighting the UK’s recent advances in this field.

The UK has also performed well in biotechnology. But the industry came under scrutiny last week at a Centre for the Study of Financial Innovation seminar. Geoffrey Owen, former editor of the Financial Times, and Sussex academic Michael Hopkins introduced their new book Science, the State and the City.

On a world scale, the UK is second only to the United States in biotech, outstripping everyone else in key performance indicators for the industry. Owen and Hopkins’s book, however, is prompted by the fact that we are a very long way behind the leader. For example, US scientists have 45 per cent of all the citations in life sciences in academic journals, while we have just 15 per cent. The UK government spends roughly double the amount on health research and development of our European neighbours, but America spends at least 10 times as much as we do.

Our distant second places, in these and other areas which determine the success of a high technology industry, feedback on each other and cumulate. As a result, the market capitalisation of US biotech firms is more than 20 times as big as those of the UK.

Why has this happened? After all, what is possibly the greatest scientific discovery of the twentieth century which made all this possible, that of the double helix structure of DNA, was by the British scientists Crick and Watson.

Owen and Hopkins carefully dismantle the myth that it is the short-term outlook of the City which is responsible. This is often compared unfavourably to the long-termist approach of Germany and Japan. But it is the allegedly short-term Anglo-Saxon economies which are by far the best performers in biotech, an industry in which the time period from scientific discovery to marketable product is at least 10 and often as much as 15 years.

They do note, however, that British academics appear more interested in publishing academic papers and securing yet more research grants than in the process of commercialisation. There is a steady flow of entrepreneurial scientists who found biotech companies, but it is very much a minority taste in the UK compared to America.

The US industry clusters, with firms concentrated in San Francisco and Boston. So does the British, mainly near Cambridge. But attempts by European governments to develop clusters in a top down, dirigiste way have not worked. Owen and Hopkins argue that American success is based on a bottom up, evolutionary process, in which a successful ecosystem emerges rather than being designed.

Entrepreneurial academics, teaching hospitals, and venture capital spontaneously collaborated for mutual benefit. The US government also helped, with its massive funding for research and regulatory changes which boosted the industry.

The lesson is a general one for development. The public sector can facilitate but not command success. That arises from the drive of individuals with proper incentives.

Paul Ormerod

As published in CITY AM on wednesday 27th July 2016

Image: DNA representation by Andy Leppard is licensed under CC BY 2.0

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e: aobyrne@volterra.co.uk
t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

e: eevans@volterra.co.uk
t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.