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The major debate about the future of British academic research will not be about who should fund it. As in all other leading market economies, the overwhelming share will continue to be funded by public authorities. Large private firms in chemicals and other high- technology industries will perform substantial programmes of basic research and help fund the accumulation of academic expertise in fields clearly linked to their commercial objectives. But they will continue to depend heavily on the broader base of publicly funded academic expertise, from which society as a whole benefits, but which private firms do not finance because they cannot capture fully any resulting economic benefits.

The main debate will be about what academic research should be funded and why. Policies based on mistaken and myopic views of how academic research contributes to "wealth creation" (or, more broadly, economic and social improvement) could contribute to a downward spiral of decline in both the quality of British academic research, and the attractiveness of Britain as a base for the research and development and production of world-class firms.

All the evidence (including submissions to the British Government before the White Paper) shows that -- for business practitioners -- the main economically useful outputs of basic research are not "discoveries" or "ideas" that must subsequently be "exploited". Instead, the main benefits are the expertise necessary for solving the complex (and multi-disciplinary) problems with which industrial and other practitioners must grapple. The most valued components of this expertise are trained researchers, improved instrumentation and research techniques, background knowledge, and access to informal but world-wide networks of knowledge and skills. This has three major implications for policy.

The first is that the main economic benefits of academic research flow through personal contacts between practical problem-solvers and academic researchers and potential recruits, from a wide range of disciplines. There is therefore no substitute for local (national or regional) public investment in a broad range of disciplines.

The second is that the much-used distinction between so-called "blue-sky" research, on the one hand, and "strategic" and "applied" research, on the other, is profoundly misleading. Academics doing what they consider to be purely curiosity- driven research in, for example, organic chemistry or cognitive science, have in fact contributed to all the components of expertise for practical problem solving. Public investment in basic research in these and other fields will continue to do so in future. Policy makers should avoid the pretension that central planning can either improve on, or manipulate, the complex, varied and often informal links between basic knowledge and application.

The third is that the economically most productive investments in academic research are in world-class research closely linked to postgraduate teaching. This is likely to provide the best training in problem-solving, the most innovative improvements in instrumentation and techniques, and the widest access to international networks of research excellence. World-class, practical problem solving therefore requires world-class academic research. This explains the observed links between countries' levels of industry-funded R&D and the quality of their basic research. It also explains the rapid observed improvements in the quality of basic research in both Germany and Japan in the past 15 years.

But it points clearly to the main danger for the future of British basic research. Industry-funded R&D in Britain has persistently grown more slowly than in all other countries of the Organisation of Economic Co-operation and Development in the past 25 years. While British firms remain strongly represented among the world's technological leaders in chemicals, pharmaceuticals and aero-engines, they clearly are not in most fields of electronics. Demands for expertise in related fields of academic research in Britain are less than satisfactory.

In these circumstances, the dangers inherent in the present Government's "Foresight" exercise cannot be ignored. Its conclusions will take into account the strengths and weaknesses of British industry, and then be fed into the setting of priorities for basic research. But what will happen when first-class academic research is matched by a lack of complementary interest and expertise among British firms? Sadly, recent experience shows there will be pressures for academics to change their programmes to the less challenging requirements of British firms. Unless these pressures are resisted, they will lead to lower quality academic research without any improvements in British firms' commitments to funding their own R & D in other words, they will start a process of progressive underdevelopment.

A better alternative, in an increasingly globalised world, will be to encourage world-class foreign firms to expand their R&D and training activities in Britain, on the basis of local excellence in academic research and training. Previous experience shows that Britain can benefit greatly from world-class foreign firms. In the automobile industry, British workers, managers and firms have learned much from the know-how of the Japanese firms that have expanded their activities here. And when it was originally established, ICI adopted good management habits (including a strong commitment to R&D) from the subsidiary of the German chemical firm that it absorbed.

To conclude, British policy for academic research should not try to predict and plan what are unpredictable and unplannable. Instead, it should create the conditions for the emergence of inter-related excellence in basic research and practical application. This will require strong basic research linked to postgraduate training over a broad range of disciplines, and a more rapid increase in business-funded R&D than has been achieved in the past. Both will benefit from a greater degree of international exposure: in the judgement of international peers for academic research, and in the judgement of world markets for business firms.

Keith Pavitt is R. M. Phillips professorof science and technology policy, Science Policy Research Unit, University of Sussex.