ESRC Economic Research on the Returns to R&D Investment

Funding to support research that can help develop new measurements of the return on investments in UK R&D.

The UK government’s science, innovation and technology R&D budget will grow in real terms over the Spending Review period, totalling £58.5 billion from 2026 to 2027 to 2029 to 2030, with the current best estimate being that, on average, for every £2 of private R&D investment, £8 of net benefits is generated in the long run (DSIT R&D plans 2029/2030). Despite a substantial body of evidence on R&D returns, important questions remain about how best to measure these returns and how they vary across sectors, places, technologies, and funding mechanisms.

This Economic and Social Research Council (ESRC) funding opportunity aims to generate evidence that can support policymakers, funders and investors in making more informed decisions about the scale, targeting and allocation of future R&D investments.

Some questions that can be explored through this grant, but are not limited to include:

Estimating returns

• How the return to R&D should be defined for the purpose at hand, including private vs. social returns and marginal vs. average returns, and which empirical objects best map these concepts.
• What the returns to public spending are and how these vary across different funding designs.
• What the social returns to corporate R&D are, including whether there is evidence of differential returns to applied research and development activities.
• The extent to which public and private R&D investments act as substitutes or complements.

Spillovers, welfare and policy

• How knowledge spillovers flow across firms, sectors, and borders and whether new data sources or methods can improve our ability to trace them.
• The rate at which knowledge produced by R&D becomes obsolete and whether this varies across fields.
• How large the welfare gains from R&D are in domains where benefits are poorly captured by GDP.
• How public policy (eg, tax incentives, program design, subsidies) affects the level and productivity of R&D investment.

Methodology

• What accounts for the wide range of published estimates, and what refinements or reconciliations across approaches might narrow disagreement?
• What approaches to decomposing returns across sectors, technologies, and investment approaches can provide decision-relevant insight on the various sources of overall returns?
• How productivity impacts can be measured in ways that are robust to alternative specifications and research contexts?
• How methodologies can better capture R&D activities, sectors, places and impacts that may be overlooked in existing evidence, datasets and measurement approaches.

Actionable insights for policy and wider public sector organisations should be a goal of the projects awarded through this programme. 

This funding opportunity is supported through the UK Metascience Unit. It is solely supported by UKRI but has been developed in collaboration with the Alfred P. Sloan Foundation and Coefficient Giving as part of an international research challenge. UKRI award holders will be encouraged to engage with award holders funded directly by the Alfred P. Sloan Foundation and Coefficient Giving.