Dr Jeff Tallon and Dr Bob Buckley, from Industrial Research Ltd, are two of New Zealand’s greatest physical scientists.  I discussed some of their work in a blog post last month.  Twenty five years ago, the Jeff and Bob took New Zealand to the forefront of research and development in high temperature superconductivity, and have kept us there ever since.  Their work has not only had immense scientific impact, but has led to the development of a superconductivity industry in New Zealand.  Jeff is a Principal Investigator in the MacDiarmid Institute, and Bob is a member of the Institute’s governance board.  Bob and Jeff have both been important mentors in my career.

Elizabeth Connor is the winner of the Science Communicators Prize.  I taught Elizabeth at Victoria University of Wellington during her BSc(Hons) in physics.  After her honours degree, Elizabeth travelled overseas to pursue further training in science communication, before returning last year.  She has since worked with us at the MacDiarmid Institute on several projects, including our Interface newsletter, and for Radio New Zealand.  You can read some of her work in our newsletter here.  She is one of our up and coming science journalists. I hope that Elizabeth continues to go from strength to strength in her journalism.

John Watt is another winner with MacDiarmid Institute affiliation.  We knew about John’s prize in advance as he was the winner of last year’s MacDiarmid Young Scientist of the Year award, which has now been superseded by the Prime Minister’s Emerging Scientist award.  John submitted his PhD thesis earlier this year and is awaiting his oral exam at the moment.  You can see some of John’s work on palladium nanocrystals here.  After he graduates, he is going to work with a Victoria University spin out company.  The prize will give him an excellent opportunity to become one of New Zealand’s scientific entrepreneurs.

I wasn’t able to make it to his talk, but I was put in touch with Philip earlier last year after I presented some of my results at a MoRST chat shop.  We have subsequently had some interesting discussions about innovation and scale, and then last week I was able to see Philip give a talk at the Reserve Bank.

It was an excellent talk (even Alan Bollard seemed to enjoy it), and it helped me get to the bottom of some of the things that Philip has been writing about:

This paper examines New Zealand’s poor productivity performance from the reform period onwards, from the perspective of economic geography.  Rather than employing institutional or free-market versus interventionist arguments to explain New Zealand’s low productivity, as is usually the case, the argument developed here is that the debate should be considered from a very different viewpoint.  If we adopt an economic geography perspective, there is nothing really paradoxical about New Zealand’s productivity performance.  As such, New Zealand’s productivity performance is rather more of a conundrum, a riddle, with a fairly straightforward solution.

McCann, P., “Economic geography, globalisation and New Zealand’s productivity paradox”, New Zealand Economic Papers, 43: 3, 279 — 314 (2009).

So over a series of posts I would like to discuss some of Philip McCann’s ideas.  Do they offer an explanation for some of the data I have, and what insights do they offer for innovation in New Zealand?

But first, what is New Zealand’s productivity paradox?  The OECD put it this way:

The mystery is why a country that seems close to best practice in most of the policies that are regarded as the key drivers of growth is nevertheless just an average performer.

(OECD Economic surveys: New Zealand, 2003).

In other words, New Zealand’s recent productivity performance has been poor, and no one quite knows why.

The domestic discussion about productivity often focuses on the gap between NZ and Australia.  However, what I’ve found in my work on patents is that at the city scale, our cities perform no worse than Australian cities of the same size.  Indeed, Philip McCann argues that the productivity gap between New Zealand and Australia has the same underlying cause as the gap in patents:  Sydney and Melbourne.  Why are big cities crucial for both innovation and productivity?

Tonight I am back on Bryan Crump’s show (‘Nights’) on Radio New Zealand at 8.40pm.  I am planning that this will be the first in a series of chats about nanotechnology.

And get in quick to get your tickets to see talks by Martin Lord Rees this month.  Tickets are free (but disappearing fast) from the Royal Society’s website.  He is giving a talk in Wellington and a talk in Christchurch:

Martin Lord Rees is a successor of Sir Isaac Newton and Ernest Lord Rutherford as President of the Royal Society of London, the world’s oldest and most prestigious scientific institution.  He is also UK’s Astronomer Royal and Master of Trinity College, Cambridge.  He comes to New Zealand as the Rutherford Memorial Lecturer in the 350th year since the founding the Royal Society of London.

The World in 2050

7.00pm, Tuesday, 23 March 2010
Wellington Town Hall, Wakefield Street, Wellington

As a cosmologist, Lord Rees studies the universe and tries to understand its evolution on grand timescales of billions of years.  But he is also concerned with the much smaller time scale of a human life.  In his book Our Final Century, he gave our civilization a 50/50 chance of surviving the 21st century.  He is not a prophet or a doomsayer, but a scientist and ‘a worried member of the human race’.  What does he think now, five years on from the publishing of his book and what is his view of how things will stand in 2050?

The next 20 years in astronomy:  Probing the Big Bang, Galaxies and Planets

7.30pm, Monday, 22 March
Limes Room, Christchurch Town Hall, Christchurch

We can trace cosmic history from the mysterious ‘beginning’  of the universe nearly 14 billion years ago to our current home and the complex biosphere of which we are part.  But with advancing technology  in the coming decades, we can expect further breakthroughs in our knowledge of the spread of life in our cosmos.  Is physical reality even more extensive than the domain that our telescopes can probe?  What can we expect in the next 20 years in astronomy?

I will certainly be going to his Wellington talk.

Finally, congratulations to one of my PhD students, Dmitri Schebarchov, who submitted his thesis today.  He has done some fantastic work on the growth of carbon nanotubes, something that is still poorly understood, despite almost two decades of intense research.

His first point:  when evaluating an investment, he wanted to know the maximum pay-off, rather than the most likely pay-off.  He already knew that the most likely outcome of any of his individual investments would be failure – sure things are backed by banks, not Angels.

His second point:  he expected to pull the plug on nine out of every ten investments within two years.  He then relied on the sale of the tenth to repay his fund with net profit.

On the face of it, this may not surprise you.  An Angel’s business is that of making risky investments, and a pay-off from one in ten is much better odds than playing Lotto.

But one in ten is an interesting number.  If the value of each investment was distributed on a bell curve, it seems unlikely that the Angel would make a profit by winding up nine and keeping one.  Instead, it appears that the Angel relies on the Pareto principle – that is, almost all of the pay-off from his portfolio will be generated by just one of the investments in it.

In other words, the distribution of pay-offs has what is sometimes called a ‘fat tail’.  A bell curve (more technically, a normal or Gaussian distribution) does not have a fat tail:  the likelihood of large pay-offs falls off exponentially.  For distributions with fat tails, pay-offs are not necessarily clustered around the mean, and the likelihood of large pay-offs drops off more slowly.

As I’ve come to learn, fat tails often crop up in economics, but my conversation with the Angel was the first time I had come across a fat tail outside of physics.  If you’re a regular reader of this blog, you will have seen a fat tail or two when when we looked at the distribution of patents among applicants.

Does this tell us anything about innovation?  Angels invest in ideas, which are then tested in the marketplace.  Some of these ideas fail or have little impact, but the way that Angels invest does suggest that there is a fat tail of ideas that succeed spectacularly.

This may be something that is characteristic of innovation.  Thomas Kuhn, author of The Structure of Scientific Revolutions, argued that science did not progress by incremental accumulation of knowledge, rather it developed via occasional revolutions called paradigm shifts.  Kuhn called the humdrum stuff that most of us scientists do in between paradigm shifts ‘normal science’.

It is quite tempting to draw the analogy between Kuhn’s scientific revolutions and the Angel’s one in ten investment that pays out.  What if the impact of scientists’ work and ideas was distributed according to a Pareto principle?  In this picture, Kuhn’s paradigm shifts would be those bits of science that live way out in the tail.  However, the analogy is not complete; a scientific Pareto principle would require that the impact of science is distributed across a continuum, rather than in a dichotomy, where some ideas shift paradigms, while others have no outcome.

I will explore this idea further in another post.

First, I want to look at CRI revenues since 1994.  It is clear that CRI revenue has increased by about 30% over this period, once adjusted for inflation (figures are given in 2008 $).  Not all CRIs seem report their levels of public good science funding (or PGSF, which I will define here as the level of FRST and capability funding), but for those that do (most), I also plot PGSF revenue after adjusting for inflation.  Note that the PGSF revenue, at least for those CRIs that report it, has remained static over this period.

This is especially interesting given statements made when the CRIs were established.  Here is Sir James Stewart, Chair of the CRI Implementation Steering Committee:

“The science staff surpluses are not an outcome of the restructuring, but in part stem from chronic underfunding of science … Science departments had carried too many people for the money available.”

So how have staffing levels changed at the CRIs?  Statistics NZ collects FTE data from the CRIs, assigning research FTEs to the categories of researcher, technician and support staff.  Here is how Statistics NZ defines the different categories:

Researchers
Researchers are defined as those staff engaged in the conception and/or creation of new knowledge/products; personnel involved in the planning or management of scientific and technical aspects of R&D projects, and software developers.

Technicians
Technicians are defined as staff engaged in technical tasks in support of R&D, normally under the direction and supervision of a researcher.

Other Supporting Staff
Other Supporting Staff are described as staff providing specific information acquisition and treatment (for example drafting, typing, maintaining libraries etc. or specific administrative support such as bookkeeping, personnel services etc.)

The COMU website reports that just over 80% of CRI staff were involved in research in 2008.  On the right, the plot shows how the numbers of these research staff in each of the Stats NZ categories have changed according to the Stats NZ R&D survey.  (Note – in an earlier post, I reported on the numbers of researchers at CRIs, but there I used government sector researchers as a proxy, as not all the CRI data has been published.  The data on the right is the actual CRI data kindly supplied to me by MoRST.)  From the plot, we see that research staff FTEs have steadily increased at the expense of technical and support staff.  The decline in support staff since the mid-1990s is particularly dramatic.  This is something that has been very noticeable to me during my time as a CRI scientist.

Now let’s look at how the revenues above scale with staff FTE and bibliometric output.  In the plot on the left, I give the total revenue (in 2008 $) per Researcher FTE (not research staff). This has remained relatively stable since 1994, fluctuating at around $400k per Researcher FTE.  On the other hand, revenue per paper published declined sharply in the 1990s, but then stabilised at roughly $500k per paper over the last decade. Of course, a good fraction of the research conducted in the CRIs will not lead to a publication, so this number does not reflect the true cost of a publication.

As we have seen, the CRIs’ bibliometric output has risen since their creation, and their citation impact has grown faster than the rest of New Zealand.  It also seems that they have become much less dependent on PGSF funding since they were created, with total revenue growing by 30% while PGSF revenue remained static.  Researcher FTE levels have risen, albeit at the expense of support and technical staff (although this may be typical of many businesses?), while the revenue per researcher FTE has remained static. Thus, the generation of revenue from non-PGSF sources, has led to increases in researcher staffing levels, which has in turn lifted the bibliometric output of the CRIs. To go any further, we will need to look more closely at the performance of individual CRIs.

New Zealand’s high-tech industries are now our third-biggest exporter earners, outpacing wine and meat exports and sitting relatively close behind the dairy and tourism sectors.  This is according to the Technology Investment Network’s 2009 TIN100 Report, sponsored by NZTE and Ernst & Young, which says that technology exports rose 4 per cent last year to NZ$5.1b, compared to the dairy sector’s NZ$8.8b.

The Report, now in its fifth year, makes excellent reading if you are interested in the growth of New Zealand’s high-tech industries, and sits very well alongside the messages and stories that Paul Callaghan makes so eloquently in Wool to Weta.

You can get an executive summary of the 2009 TIN100 report here.  The full report is well worth reading if you can spare the $200, or you have a chance to look at it in a library.  Paul Callaghan’s arguments are also worth reading:  take a look at his Herald article here or buy the book.  As Paul points out, to catch Australia in per-capita prosperity, we would need to lift our GDP by US$30 billion a year.  We could increase the number of dairy farms five-fold, or we could quadruple the number of tourists … well, you can see why Alan Bollard might be a pessimist.  But back to Richard Blaikie:

The scope for future growth is enormous, and the TIN100 people have pulled out “Ten Companies to Watch” that grew combined revenues by a massive 34% in 2009 to a total of NZ$1.8b.  The high-tech growth potential is not resource limited as for our other important big sectors, and with the price-to-weight ratios of many products measured in dollars per gram (rather than dollars per tonne for commodities) the tyranny of distance to market is not a show-stopper either.

Can we turn NZ$5b in exports into NZ$50b?  It’s a tough ask, one which I doubt we’ll achieve by tinkering with the tax system, but it’s worth remembering that this is essentially what Finland did with Nokia in the mid 1990s.  As I have discussed in previous posts, the Finns took Nokia from a Fisher & Paykel-sized electrical appliance company to a globally dominant mobile phone company.

Now I don’t know what’s sufficient to turn an F&P into a Nokia, but it is clear from our patent studies that the Finns built Nokia on the intellectual grunt of a large cohort of engineers.  And I don’t know about you, but turning out 300 PhD engineers a year in New Zealand sounds a lot easier to me than quadrupling our tourist numbers (any room on your couch?) or quintupling the dairy herd (space for a cow or two on your lawn?).

Now, the analysis I am going to give below is somewhat naive. I should really be breaking down the citations by subject area (as pointed by Crikey Creek’s Daniel Collins in a comment last year). This is important because rates of citations differ considerably between disciplines – unfortunately I haven’t had the time to do this, except in a few special cases such as my own Institute. Thus, differences in impact factor between Institutes will depend on the areas in which they work. Changes in that difference over time may reflect changes in focus within Institutes, rather than changes in impact of the research conducted.

Why do citation rates differ between disciplines? At least part of the difference comes from the degree of empiricism within a discipline. Medical science frequently makes use of the aggregation of meta-data from many studies, some of which may be too small to have statistical significance on their own. So if your small study suggests that  smoking is a risk factor for diabetes, it will be important to cite as many other studies of smoking and diabetes as possible to give your reader context. Mathematics on the other hand relies on mathematical proof. To prove the Reimann hypothesis, you may only need to cite a handful of papers that contain results you rely on in your proof. You hardly need to cite every paper on the Reimann hypothesis that has appeared in print. Not surprisingly, journals in medical science typically have much higher impact factors that mathematics journals.

On to the results. Firstly I have plotted the CRI (2 year) impact factor from 1995 to 2008 (on the right) against the New Zealand impact factor as calculated from the Thompson Reuters database. Firstly, we note that both data series show large increases over this time period. However, in 1995 the CRIs trail New Zealand as a whole, whereas in 2008 the CRIs lead New Zealand. The data is sufficiently noisy that one can’t to assert that the CRIs are significantly different from the rest of the country with much confidence however.

However, with the 5-year impact factor, the trend seems clearer: the 5-year impact factor of the CRIs is below those of New Zealand as a whole at the end of the 1990s, but by the mid 2000s it surpasses those of the rest of the country. As I mentioned above, there could be a number of explanations for this. CRI citations per paper have grown faster than New Zealand as a while. For example, I wonder if this could reflect a diversification of research activities at Universities, where disciplines with lower impact factors have started publishing more, perhaps as a result of the Performance Based Research Fund.

Unfortunately, without breaking down citations by discipline we can’t really tell whether this does reflect an increase in relative impact by CRI researchers. However, the data does suggest that this would be a worthwhile exercise: why has CRI impact surpassed that of the rest of New Zealand in the last decade?

Superconductivity was discovered almost 100 years ago, when it was found that many metals completely lose electrical resistance once they are cooled to a few degrees above absolute zero (-273 degrees C).  When metals become this cold, rather than jostling and shoving their way through an electrical wire, electrons can pair up and ‘waltz’ quantum mechanically along the wire without resistance.  Today, to produce the intense magnetic fields needed by MRI machines, expensive liquid helium is used to cool metal electromagnets to temperatures at which they will superconduct.

Since the original discovery, many scientists have have tried and failed to find a material that would superconduct at room temperature:  such a material could allow us to dramatically shrink any device that needs powerful electromagnets, including electric motors.  I was lucky enough recently to see a talk by Jeff Tallon, one of New Zealand’s leading physicists, on the prospects for room temperature superconductivity.  Unfortunately, recent work by Jeff and James Storey (a kiwi physicist at Cambridge) suggests that room temperature superconductivity is unlikely to be possible, and even if it does exist, would not be practical enough for real applications.

However, thanks to Jeff and many other scientists at Gracefield in the Hutt Valley, we have the next best thing.  In the 1980s, Jeff and his colleagues at the DSIR (now Industrial Research Ltd) discovered a material that would superconduct at temperatures where nitrogen is a liquid (-196 degrees C).  Liquid nitrogen is a much cheaper coolant than liquid helium, so Jeff’s material makes it feasible to exploit superconductivity in many technologies beyond MRI machines.

So why can’t you catch a 300kph superconducting maglev train to visit Jeff in Lower Hutt two decades on?  Inconveniently, these ‘high temperature’ superconductors have proved to be very brittle, and it has taken more than 20 years to figure out how to turn them into wires that are ductile enough for real world applications.  Even then, these superconducting wires are difficult to work with, and require lots of know how to turn them into working electromagnets.  It is in these technologies that New Zealand has developed an edge. 

What is particularly interesting to me is the role that intellectual property has played in the development of this sector in New Zealand.  Jeff and his team only won the patents for their superconductor (BSCCO) after a long battle, but the paper value of these patents will quite possibly be dwarfed by the value of the industry that has been established around them.  Yet it was these patents that attracted the patient investment by government and others, which has been necessary for developing New Zealand’s capabilities in high temperature superconductivity.  These capabilities are now embodied in the skills and know how of a large team of scientists and engineers. 

In turn, this IP was generated by basic research undertaken at the DSIR.  The research was not carefully vetted by a purchasing agency prior to proceeding, nor was it undertaken after a careful assessment of New Zealand’s competitive advantage.  Rather, it was an inspired piece of ‘bottom-up’ science, by a team of talented New Zealanders, responding rapidly to international discoveries reported in the latest scientific journals. 

New Zealand has got this far with superconductivity because it backed a team of scientists conducting fundamental research in a highly competitive field, and because it then showed the patience to invest in developing the resulting technology for two decades.  Overseas investment has been crucial, and so the HTS wire itself is now made in the US by American Superconductor.  While the success of New Zealand’s superconductivity industry is not yet a sure thing, and further investment will be needed for it to grow, it is now earning export revenue with high-tech products that no other country can match.

It was a good opportunity to highlight some of the wonderful stuff going on at CERN, even if the catalyst for the interview verged on the frivolous.  As you’ll hear if you listen to the interview, Holger Nielsen and Masao Ninomiya proposed in a recent paper that production of the Higgs might be suppressed by some exotic non-local physics.  This was colourfully described in the New York Times as sabotage from the future. 

In the interview, I characterised their speculations as mathematical philosophy, although perhaps it is a bit more subtle than that:  their prediction that production of the Higgs specifically might be suppressed is actually falsifiable.  We’ve built the Large Hadron Collider (LHC), and in three to four years, most particle physicists believe that we’ll either have found it, or else have sufficient data to conclude that it doesn’t exist.  Either outcome will falsify their prediction.

As pointed out by Sean Carroll though, there doesn’t seem to be any reason why it should be the Higgs in particular that is suppressed in this way, even if it is a mathematical possibility.  If we find the Higgs, then perhaps it’s the neutralino (the hypothetical supersymmetric partner of the neutrino) that’s being suppressed, and so on.  In this way, the theory underlying Nielsen and Ninomiya’s prediction is not itself falsifiable. 

If physics had a propensity for this type of non-locality though, I think we’d have a lot more missing pieces in our description of the Universe.  I’m also not impressed by the card game suggested to test this (pick a card from a million card deck, where just one says “Don’t build the LHC”).  There are plenty of ways to not find the Higgs other than falling victim to a spot of bad luck in a card game.  Perhaps the Universe should have avoided evolving physicists in the first place? 

Anyway, I’ve been invited to appear every 5-6 weeks on Nights on Radio NZ in the Thursday science slot at 8.45pm.  I will be trying my best to mix fun and fact, and I am happy to consider any suggestions readers might have for topics to discuss with Bryan. 

I will leave the last word to a Radio NZ listener who sent in a text during the interview: “If the Swiss can build a 27km long tunnel for $8bn, how come we can’t build a tunnel under the harbour for $3bn?”.

I’ll start this series of posts by looking at the total published outputs of the Crown Research Institutes (CRIs).  The CRIs were established in 1992 by scientists from the Department of Scientific and Industrial Research (DSIR), the research division of the then Ministry of Agriculture and Fisheries, and the New Zealand Forestry Service.  Shortly thereafter, a significant portion of the Crown funding for science became contestable through the Public Good Science Fund, open to the CRIs, universities, and businesses or other organisations conducting research and development.

At the time, the restructuring of government science into the CRIs was highly controversial.  ‘Is New Zealand shooting itself in the brain?’ wrote New Scientist magazine.  ‘A small country does something like this at its peril’ said John Stocker, chief executive of Australia’s main research organisation, the CSIRO*.  The DSIR had given the world Marlborough Sauvignon Blanc, earthquake resistant lead-rubber bearings for building foundations and high-temperature superconductors, yet the Government of the day thought that the new Institutes would be better placed to contribute to New Zealand’s economic growth.

Almost two decades later, our new Government is wondering how the experiment went.  While the government scrutinises CRI balance sheets closely, other aspects of CRI performance receive very little attention.  This is surprising, since the reason the crown owns such research institutes has nothing to do with their balance sheets at all.   

Here I will look at how the CRIs have performed bibliometrically, starting with their total published output from the year following their establishment. The figure on the left shows the number of papers in the Web of Science database published by scientists at the CRIs since 1993. It can be seen that the annual number of publications doubled from 600 in 1993 to 1200 in 1997, a level where it has remained to the present.  The increase in output from 1993 to 1997 was substantial, but how was it achieved?

The next figure shows the total researcher FTEs in the CRI sector from 1994-2006, and the corresponding productivity (in papers per FTE) over the same time period.  Researcher FTEs increased from 1996 to 2002, but have then declined by 20% since their peak in 2002.  Note that the productivity of researchers, in papers per FTE, remains relatively static over the period in question.  This largely reflects the New Zealand situation as a whole, where productivity has remained steady, and changes in levels of published outputs have been driven by changes in FTEs.

(Update: 10 Feb 2010, I have received some better FTE data from Statistics NZ so I will repost the figure above shortly).

In my next post on the CRIs, I will look at how the number of citations of their papers have changed over time.  I will then look at how the CRIs have been able to lift their researcher FTEs from 1300 in 1994 to over 1800 in 2006.  After that I will move on to the Universities.

* Australia still has the CSIRO, and although some reforms have taken place since John Stocker made his comments, Australia has resisted introducing the direct competition between CSIRO and university scientists that has characterised our science system.