Degrading economic reporting

The Times confirms why I couldn’t work for a conventional dead tree. It reports these figures (pdf), showing a fall in research and development spending as a “blow to Gordon Brown.” Economic issues are thus subordinated to the worst soap opera in the country.

There are two things that are offensive about this.

First, the figures could be a blow to all of us, because they might lead to slower economic growth generally.

The link here is both causal and diagnostic. Lower R&D spending could cause slower technical progress, which is the main contributor to long-run GDP growth. And it could be diagnostic of slower growth, as it signifies that firms are pessimistic about the future.

Second, there are interesting questions here. Why is R&D spending falling when interest rates are low and corporate cash balances healthy? Have firms cut the productive or unproductive parts of R&D spending? Can they tell?

But the dead tree ignores these issues. All that matters to it is the fleeting convenience, or not, of some politician.

Comments

[Angry_Economist]

Probably the best and most relevant stuff I have read on this is from AIM - the Advanced Institute of Management Research. Unfortunately and not the vague platitudes of management they focus on but rather in depth economic and econometric analysis.

http://www.aimresearch.org/publications1.html

Much points to the UK sectoral mix as to blacm for low productivity spending - i.e. servces. But its also much harder to measure services R&D too, as opposed to manufacturing R&D.

In fact more here...

SERVICE SECTORS HOLDING BACK UK PRODUCTIVITY PERFORMANCE www.ifs.org.uk/pr/aim_prod.pdf

You are right - there could be cyclical effects at work too.

The report actually looks at enterprise R&D - effectively private sector R&D and not public R&D (GERD) so Gordon Brown is not directly spending the R&D bucks.

you are right - low productivity is bad news for all of us. The chance to dish dirt on Gordon Brown is too much temptation to bear for the the media.

The IFS also did some great pre-election briefing papers on productivity which are very accessible.

The UK productivity gap is big and doesn't get much better. Despite the favourable economic restructuring and climate as you say, the UK achieves US style environment for productivity gains, but unlike the US just doesn't achieve it.

Some real debate would be welcome.

[Chris Williams]

Hang on, I thought that David Edgerton had demonstrated that there is little or no correlation between R&D spending and economic growth, when compared transnationally for the c. 1945-c.1980 period. Or did I get the wrong end of the stick about that, 'n all?

ObLeicesterReference: It's raining in Leicester.