It seems to have become received wisdom recently that New Zealand must pick winners with its public science investment. In this post, I argue that this is not new: we picked our winners a long time ago, with a strong focus on agricultural and environmental sciences. So what are the pros and cons of backing the same winners decade after decade? You’ve got to get lucky sooner or later, right?
A matter of scale?
A few weeks ago, I went to another Philip McCann seminar, this time at the Treasury. This talk was again based on his paper  in the New Zealand Economic Papers. Readers will be familiar with McCann’s ideas about the New Zealand economy from my series of posts on New Zealand’s Productivity Paradox. There were a few additions to a talk I saw earlier this year at the Reserve Bank, but his underlying message was still the same.
McCann argues that one of the key issues affecting New Zealand is a lack of scale. As I have discussed on this blog, there is a lot of evidence that scale in important for innovation. Big cities are the drivers of innovation — scale matters when it comes to generating new knowledge.
An apparent corollary is that as a small country, New Zealand will only be able to achieve scale on the international stage in a few areas. Indeed, many people, including McCann and Sir Peter Gluckman, the Prime Minister’s Chief Science Advisor, take this to mean that New Zealand must pick winners if it wants its innovation spending to have any impact.
This is nothing new. New Zealand has always prioritised its science spending. A glance at our New Zealand science tag cloud for 2009 shows that we are strongly focused on agricultural, environmental and medical sciences. If we have scale, then it lies in these disciplines.
So should we simply invest more in these areas to take advantage of scale?
Not necessarily. Not all areas of science are going to produce the same returns. In fact, a recent study of several scientific fields by Harvard University scientist Samuel Arbesman  found that the new knowledge discovered in these fields each year decayed exponentially (HT: Nicola). The corollary here is that to maintain the same rate of discovery in a mature field, investment must increase each year.
Indeed, there is an interesting empirical study (’Has New Zealand benefited from its investments in R&D?’ ) that finds New Zealand’s sectoral public investments in R&D do not correlate with sectoral productivity growth. Relative to other OECD countries, for instance, our productivity in agriculture is slipping.
Is it possible that the resources required to maintain competitiveness in a mature field such as agriculture have grown beyond what New Zealand can muster? The Netherlands alone has more agricultural scientists than New Zealand has scientists. How can we compete?
A way forward
Last time I checked, science budgets were not increasing exponentially, so how do scientists make any progress at all? As I have seen from my studies, they collaborate more, work in bigger teams and become more specialised. Some of the tools scientists use, such as computing and genomics, are becoming exponentially more powerful each year. And blue skies research can open up new fields of discovery where the going is easier, at least for a time.
So does our science funding system facilitate or foil scientists’ attempts to beat these diminishing returns?
There are some hopeful signs on the horizon. New Zealand scientists do collaborate through mechanisms such as the Centres of Research Excellence (the CoREs), and increases in non-contestable funding for the CRIs may be able to break down traditional institutional barriers. Furthermore, the government has also shown a willingness to invest in key scientific infrastructure, including advanced genomics capability and high performance computing.
However, continued micromanagement of the contestable funding pool for science is likely to limit the size of science teams in Universities and skew the balance of this portfolio towards well-established, low pay-off areas.
The CoRE selection process was one of the few occasions in New Zealand where large teams were picked on merit from across the sciences. The outcomes did not align well with FRST portfolios.
Further merit-based investment in research networks is needed. Such investment not only offers the possibility of uncovering new under-exploited areas of knowledge, but couples this with the opportunity to rapidly build scale in a way that blue skies funding, like Marsden, cannot.
Finally, we should not labour under the pretence that decades of flat-line funding of science will keep our industries competitive. In areas of sustained national economic importance, we have no choice but to grapple with diminishing returns of knowledge by further investments in infrastructure and research networks.
 McCann, P. (2009). Economic geography, globalisation and New Zealand’s productivity paradox New Zealand Economic Papers, 43 (3), 279-314 DOI: 10.1080/00779950903308794
 Johnson, R., Razzak, W., & Stillman, S. (2007). Has New Zealand benefited from its investments in research & development? Applied Economics, 39 (19), 2425-2440 DOI: 10.1080/00036840600707308
 Samuel Arbesman (2009). Quantifying the Ease of Scientific Discovery Scientometrics arXiv: 0912.1567v3