Ramping Up R&D to Kickstart the Global Economy

By Bruce R. Guile

COVID-19 has brought much of the global economy to a standstill. The now-inevitable global recession is like nothing we have experienced before. Governments and businesses are starting to understand that recovery from the COVID-19 economic contraction is not simply about getting through a global natural disaster and returning to a pre-pandemic normal. Rather, recovery will require that we dramatically reconfigure daily life and our economic organizations. To do that we need to ramp up human ingenuity, creativity, and global technological innovation.

The nature of economic activity that will drive growth and prosperity, when it comes, is almost certain to be different, and perhaps very different, from before the world hit the economic brakes. Consider how the pandemic will force reconfiguration of four very different activities that will shape the US economy over the next few years:

Risk management. We do not know how long the current crisis will last, but no credible expert has predicted that COVID-19 will disappear or that the world’s population will develop herd immunity in the next couple years. The disease will remain a global public health threat to be managed by frequent, widespread testing, contact tracing, and bouts of social distancing. Will you be tested before you board an airplane? Will you be isolated after attending a sporting event with an infected friend? Until a vaccine exists and is widely distributed, the public health resource costs and operational complexity of a COVID-19 resilient economy will be staggering. There will be no “all clear” signal, but rather an ongoing sense of unfamiliarity and uncertainty in our daily and economic lives.

Public schools. Millions of K-12 and college students in the United States are now learning from home. In addition to launching a massive, rapid, uncontrolled experiment in distance education, there is the question of what it will take to reopen schools safely. Cancellation of all extracurricular activities? A seven-day school week, staggered hours, and blended online and in person education to allow for social distancing at schools? What changes, short and long term, does this mean for teacher’s union contracts? For the importance of at least part-time at home childcare during the historically normal school day?

Companies and workplace health and safety. As the United States returns to work, employers and employees will perform a complex dance with public health officials, the federal Occupational Safety and Health Administration, insurance companies that handle worker compensation, and health care providers to arrive at a balance between safety and affordability. What social distancing is required by public health and regulatory officials, sector by sector, in physical configuration of workplaces? What does this require of employers with regard to work-from-home policies, staggered shifts, health insurance, paid sick leave, and, of course, automation, wages, and prices? What expectations can workers have about job security and protection of their health?

Urban transportation systems and the built environment. The social distancing required by COVID-19 challenges the essence of economic life in cities, with their high-density residential and business activity. Will radical increases in working from home, more physical separation in offices and factories, and home delivery of food and other goods become permanent elements of the post-pandemic economy? What type of social and facilities changes are necessary to make mass transit less dense and, therefore, less risky for riders in the next pandemic?

Across all sectors—transport, construction, retail, travel, education, health, public services—the economy will need to reconfigure itself to be more resilient to COVID-19 and future pandemics. In other words, to an extent not yet widely understood, the global recovery from COVID-19 will require human ingenuity and radical innovation. And a critical fuel for such ingenuity and innovation will be public and private investment in research and development.

R&D to overcome the pandemic itself is racing ahead and is marked by a surge in international research and innovation collaboration on testing, therapeutics, and vaccines for COVID-19. But as we look toward restarting the economy over the coming years, collaboration to stimulate innovation for global economic recovery will need to be broadened, deepened, and extended. Such an effort should be guided by three foundational principles:

No going back. This pandemic may have a terrible cost in human life and well-being—not only from the virus itself but also from the collateral damage wreaked by destruction of livelihoods and exacerbation of poverty worldwide. But it will not return us to nineteenth-century isolated communities, undo global interdependence, or erase advances in, or the global distribution of knowledge of, twentieth and twenty-first century science and engineering. To overcome the pandemic and see a resurgence of economic growth, we will need  global markets, global supply chains, and, most importantly, global collaboration and exchange in the types of R&D that catalyze economically valuable innovation.

No going it alone. National isolation is not a viable option for any country. No corporation, public institution, or nation can pursue a fully independent path today and expect to keep up with the rest of the world. This is especially true in innovation critical to economic growth and recovery. As a simple illustration, the United States has long been by far the world’s largest R&D investor. Today, US public and private R&D is less than 30% of the global total. There is more R&D and, therefore, innovation originating outside the United States than inside. Nationalism and isolation may produce seductive short-term benefits, but they are, for any nation, a path to relative poverty, as well as threats to global peace and prosperity. We need each other, now more than ever.

Do it now. The world’s attention is rightly consumed by the immediate public health and biomedical innovation challenges of the COVID-19 pandemic. But given the need for as rapid an economic restart as possible, now is also the time to stoke ingenuity and innovation to reclaim global economic prosperity and health security. Deployment of new solutions to challenges of reworking the global economy, now and over the next two to ten years, requires R&D, plus scalable technology demonstration projects, to be ramped up aggressively and immediately.

Although we can count on companies responding to market forces to deliver some innovation, companies are not designed to act beyond their shareholders’ interests, and most operate with a functional time horizon between three months and a few years. The innovation they pursue reflects this reality. In the context of national defense, public health, civil infrastructure, and even medium- to long-term national economic development, governments cannot rely solely on company R&D for the scientific and technical advances necessary to advance the welfare of the national population. This is true during stable periods in the global economy and will be especially true for recovery from the COVID-19 contraction.

The types of fundamental research and advances needed (in basic science, generic or precompetitive technology, and in many emerging and transformative applications) have been the province of governments, or public-private collaborations, for the past 75 years. With rare exception, even the most innovative private companies are built on government investments in two key areas: knowledge creation and technological innovation; and higher education in science and engineering, be it research support for graduate students at universities or subsidized student tuition.

Therefore, as the United States rolls out stimulus-motivated investments or expenditures, and coordinates with other nations as they do the same, there should be explicit attention to increasing public investment in both R&D and higher education. This is where “no going back, no going it alone, and do it now” can and should differentiate the role of government from the role of private companies in post-pandemic R&D for economic recovery.

Although economic and geopolitical competition among nations is a constant force, there nonetheless has been a long history of issue-by-issue global collaboration in basic and applied research, particularly in public health and the earth and space sciences. Prevention of and recovery from natural disasters such as epidemics, storms, earthquakes, volcanic eruptions, and tsunamis has spurred international scientific and engineering research collaboration for decades.

Further, there are some precedents for broad-based government-to-government science and engineering working groups. For example, both the G20 and the G7, leading international forums for discussing economic issues, have regular meetings of ministers of science and technology (or science advisers) and are accustomed to issuing communiques or statements that reflect some agreement. And, of course, there are dozens of agency-to-agency R&D collaborations worldwide, including those structured and executed by US organizations including the National Science Foundation, the Department of Energy’s National Laboratories, and the Centers for Disease Control and Prevention.

Given the scale of the common and shared national challenges revealed by the COVID-19 pandemic, it is time to consider global collaboration on critical near-term and long-maturation science and technical advances in support of global economic recovery. The fact that such wide-ranging global R&D collaboration for economic recovery has never been done before does not mean it is not possible or the right approach. The Bretton Woods agreement, following the economic chaos at the end of World War II, stabilized the world’s economy and supported global recovery. Nothing similar had been done before and it was the right approach.

Analogously to Bretton Woods, it might be best to start by gathering the obvious suspects: leaders of the government science and R&D funding entities of the 20 most R&D intensive countries, supported by the chief technical officers of a handful of the most R&D intensive companies in the world. And, of course, their research university colleagues and advisers. Even a contentious and imperfect collaboration among such a group would help refocus the world’s $2 trillion annual pre-pandemic R&D spending toward the challenges of global recovery.

Government-to-government international R&D collaboration with deep and wide industry involvement and a focus on global economic recovery will require one or two leaders to step forward. The United States and China are obvious candidates as they have the most to contribute and the most to gain. On one hand, this may seem far-fetched given the recently rancorous trade, technology, and geopolitical rivalry between the two nations. On the other hand, the COVID-19 pandemic is rapidly and unpredictably changing the geopolitical landscape, and there are clear self-interested reasons why the two largest economies and R&D investors cannot go it alone, as both need a truly global innovation-driven recovery.

Setting aside the issue of international organization and leadership, government-to-government negotiation and planning for R&D investments needs to take into account the decentralized and largely open character of global R&D activities. This is especially important for fundamental, long-maturation R&D investments that are inherently beyond the scope of companies. Although it may be frustrating to governments, the world’s R&D enterprise is resilient and effective because it is not centrally managed. The global portfolio of public and private R&D initiatives must also include high tolerance for redundancy and failures, both of which are critical for the rapid advance of knowledge. Redundancy allows for trying multiple approaches to the same goal; failures allow rapid learning across the global innovation enterprise about what works and what does not.

Relative openness and government-to-government collaboration does not mean that nations abandon national sovereignty, national competitiveness, or research security. Efforts to prevent theft of intellectual property continue to be important, as do national concerns about science, technology, and national security. National governments in R&D intensive countries need policies to balance the national economic and global human welfare benefits of openness and collaboration against the national security needs for secrecy and export controls on defense technologies. The latter includes, of course, legitimate concerns about national vulnerabilities and resilience in technology-intensive supply chains.

As the world shifts from COVID-19 crisis to COVID-19 resilience, the global economy will be changed. The human ingenuity and innovation required to rebuild national economies and the global economy must be underpinned by national government leadership in both R&D investment and strategic international R&D collaboration. This does not imply heavy-handed government control of global R&D, but rather highlights the pressing need for international agreement on fair “rules of the road” for development, sharing, exchange, and diffusion of science and engineering knowledge with the goal of spurring innovation for global economic recovery.