What is the nature of public sector research funding regimes?
Public sector research funding regimes can be distinguished into two broad types:
- Block grant based regimes, where the majority of research funds are allocated directly to research universities and PRIs according to particular formulae, performance indicators or budget negotiations among actors. Such block funding provides research performing organisations with a stable basis for research activities. This can help them to acquire funding from other sources, provides them with a certain degree of autonomy in the selection of their research, and allows them to build up expertise in new fields. Conversely, block funding regimes may de-incentivise organisations and researchers to look for funding from other sources.
- Project-based regimes, where scientists obtain project funds from external sources competitively. This gives funding organisations more control over research and can be used to make research universities and PRIs more responsive to socio-economic needs. The distribution of funding among competing proposals is often based on a system of peer review where experts assess the quality of the proposal according to predefined criteria. These criteria may include scientific merit as well as socio-economic considerations.
Both types of arrangements tend to operate in most countries, though there is variance in the balance between them, as well as to the types of research performing organisations to which they apply.
Over the last couple of decades, many countries have introduced greater selection and competition in their research funding systems in order to foster excellence, knowledge transfer and socio-economic innovation. This has seen a marked reduction in the proportion of block-grant funding. Many of these changes have been driven by changing ideas of the role and practice of science, with traditional scientific community normative beliefs being joined by new public management models of science policy. This has seen some displacement of existing trust-based funding regimes towards more performance-based regimes.
Another important trend in most countries has been the diversification of actors involved in funding public sector research and the greater complexity of the relations among them. Although the largest proportion of funding for public sector research still comes from governmental sources (either federal/national or state/regional), the private sector is also a source of funding for public research through contract research and service provision.
How are public sector research funding regimes relevant to the contributions of public sector research activities to innovation performance?
Funding regimes matter because funding is a major instrument used to steer science and innovation systems. There is debate as to whether the increasing reliance on competitive project or programme funding at the expense of block grant and long-term organisational funding has pressured public sector research to place increasing emphasis on short-term, low-risk projects and away from longer term fundamental research. There are also concerns as to whether this negatively affects the capacity of research universities and PRIs to invest in infrastructure.
On the other hand, the diversification of the funding portfolio of public sector research organisations in relation to interactions with more social and economic actors may positively affect innovation performance. However, the extent to which this occurs will be influenced by the conditions that generate markets and research users, which vary according to economic specialisation, as well as public research specialisation.
How do public sector research funding regimes shape the interests, activities and resources of the relevant actors?
- Different funding regimes provide different incentives to researchers. The criteria employed by competitive project-based regimes, such as contributions to the scientific record, strongly affect researchers’ behaviours. Block grant allocations can sometimes be informed by similar sorts of criteria, though scale, e.g. measured by number of researchers employed, tends to play a more important part in determining the size of allocations.
- At an organisational level, research universities and PRIs have responded to greater selection and competition by incentivising desirable behaviours on an organisational level. This has seen many research performing organisations concentrate resources in areas of research that will guarantee the most reward.
- The organisation and routines of funding organisations will both constitute and be shaped by research funding regimes. Most countries have seen a transformation of these intermediary bodies. Their role is now more complex and includes additional tasks related to public policy priorities and the promotion of structural changes via programme funding. The extent to which their governance is intertwined with (and even dominated by) the scientific community varies across countries. Their relative capacity to act strategically and to be real intermediaries between the state and science depends partly on that variance.
What policies are relevant to public sector research funding regimes and their shaping of the contributions of public sector research to innovation performance?
The most relevant policies are those concerned with discretionary organisational funding, competitive R&D project grants, support for R&D infrastructures and centres of excellence. Each of these is primarily concerned with providing funding for research in the public sector. But other policy instruments, such as collaborative R&D programmes, university-industry linkage schemes and post-doctoral fellowships are also important.