Why is Europe so efficient at producing scientific papers, and does this explain the European Paradox? Patricia Foland and R. D. Shelton WTEC 11th International Conference on S&T Indicators, Leiden, Sept. 10, 2010

NSF Science and Engineering Indicators--fractional counts. Q: Why did the EU become world leader in mid-90s?

Relative efficiency is this ratio normalized by OECDg values. EU and US had the same k i in 1990, but curves diverged in 1990s. After 1998, curves are flat with EU 60% more efficient. Finding why 1990s changed will suggest why the EU is more efficient today. A: EU passed the US because it sharply increased its ratio of papers/R&D €. Q: But, why?

Model of a national scientific enterprise Indicators measure inputs like R&D investment (GERD) and outputs like patents. Multiple linear regression can identify which inputs are most important Resources In S&T Outputs

Statistical techniques for accounting for national publication changes Multiple regression shows that publication outputs are more highly correlated with R&D investment (GERD) than other inputs The Shelton Model predicts publication share m i from overall GERD share w i : m i = k i *w i k i is the “relative efficiency,” it is also papers/€, normalized by values for whole set Model works well after 2000, when k i is fairly constant, but not for 1990s EU advance Need to search for better model, by analyzing effect of input components on efficiency

Analysis of components of efficiency Numerator (papers) vs denominator (GERD)? Artifact of SCI: new journals favored EU? GERD sources: Govt, Industry, Foreign, Other? GERD spending: HERD, BERD, Goverd, Other? Govt appropriations: military, civilian? Labor vs capital: HR, GERD? Countries of the EU? Only a few of these analyses will be shown here.

EU shot ahead in efficiency ratio because it slowed rises in R&D $, but still sped rises in papers. Q: how? GERD = gross expenditure on R&D. US and EU reduced rises in GERD; the EU more so. Paper change is more dramatic. NumeratorDenominator

Was this because the SCI added journals favoring the EU in the 90s? In 1992 and 1994 the SCI added many journals that seem to favor the EU. (From NSI CD)

Until 2004 NSF used a fixed set of journals. With SEI2004 it used full SCI. Shelton and Foland (2008) confirm this finding with a different approach. No, change is real and not an artifact of the SCI

A: The EU increased paper share in the 90s by sharpening focus on sectors that maximize papers Government funding instead of industry University instead of business R&D spending Civilian instead of military R&D Multiple regression shows these input components are more effective in producing paper outputs—first two much more so. BUT, this allocation minimizes outputs like patents with more immediate economic benefits—thus the European Paradox

Regression analysis of which GERD components best account for paper outputs Year = 1999, Constant $ PPP series used Dependent Variable (DV) = papers in SEI, fractional counts Independent Variables = two components of R&D funding (IV1, IV2)—several types N = 39 countries in OECD Group, sometimes fewer P is significance probability of IV; if p < 0.05, variable is important R 2 > 96% always – IVs are very good predictors

Government vs. industrial funding of R&D IV1 = government funded part of GERD IV2 = industry likewise Much smaller components omitted IV1: P = (very significant) IV2: P = (not significant) Regression equation for papers: DV = 2.73 IV1 – IV

In 1990s, both shifted R&D funding from government to industry, but this change was much smaller in the EU Government funding is much more likely to produce papers. Paper advantage: EU.

Patterns are almost identical with a small lag. Is this the smoking gun? (EU curve is shifted slightly above US because of another factor- -HERD.) Input Output

University vs. business expenditure of R&D IV1 = HERD, higher education part of GERD spending IV2 = BERD, business part likewise Much smaller components omitted IV1: P = (very significant) IV2: P = (very significant, but coefficient is much smaller) Regression equation for papers: DV = 2.53 IV IV

A model that can account for EU passing US DV here is paper share IV1 = Government funding, share IV2 = HERD, higher education spending share Much smaller components omitted Both IV: P = (very significant) Regression equation for paper share: DV = IV IV

Higher education R&D spending Despite smaller overall GERD, the EU spends more on university R&D. Paper advantage: EU.

This shows EU sharpened focus on HERD in 1990s. “Over 1990s academic researchers contributed almost ¾ of the total [paper] output” SEI Advantage: EU. Higher education part of R&D expenditure

Business R&D spending This sector produces fewer papers, and US sharply increased this focus in the 1990s, while EU investment was fairly flat. Advantage: EU.

Defense vs. civilian government appropriations IV1 = civilian part of GBAORD funding IV2 = defense part likewise N = 29 available IV1: P = (very significant) IV2: P = (very significant, coefficient is somewhat smaller) Regression equation for papers: DV = 2.65 IV IV

More than 50% of US government R&D is for military; EU has about 10% Both cut military R&D share after Cold War, but EU cut far more than the US. Paper advantage: EU.

Despite smaller overall R&D funding, EU governments spend more on the civilian sector Paper advantage: EU

Conclusions At the end of the Cold War, the EU spent more of the peace dividend on R&D that produced papers, and the US spent more of it on R&D that did not. This sharply increased EU efficiency, causing it to become the world leader in papers. But, papers are only one output of the R&D enterprise. The European Paradox is the perception that Europe does not reap the full economic benefits of its leadership in papers. This analysis suggests that EU focus on investments that produce papers probably lowers outputs with more immediate economic benefits—patents, for example. Regression also shows that those outputs come more from the private, business, and perhaps military investments—the opposite of research papers.

Appendix Charts

More than 50% of US government R&D is for military; EU has about 10% All reduced military R&D share after Cold War, but EU cut far more than the US. Paper advantage: EU.

EU paper gains driven by large countries Large EU countries greatly increased output. US decline is related. This is almost a zero sum game.