Patricia Foland and R. D. Shelton WTEC

1. 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

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

3. A: EU passed the US because it sharply increased its ratio of papers/R&D €. Q: But, why? Relative efficiency is this ratio normalized by OECDg values. EU and US had the same ki 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.

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

5. 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 mi from overall GERD share wi : mi = ki*wi • ki is the “relative efficiency,” it is also papers/€, normalized by values for whole set • Model works well after 2000, when ki is fairly constant, but not for 1990s EU advance • Need to search for better model, by analyzing effect of input components on efficiency

6. 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.

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

8. 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)

9. No, change is real and not an artifact of the SCI 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.

10. 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

11. 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 • R2 > 96% always – IVs are very good predictors

12. Government vs. industrial funding of R&D • IV1 = government funded part of GERD • IV2 = industry likewise • Much smaller components omitted • IV1: P = 0.000 (very significant) • IV2: P = 0.838 (not significant) • Regression equation for papers: DV = 2.73 IV1 – 0.031 IV2 + 1957

13. 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.

14. Input 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.) Output

15. 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 = 0.009 (very significant) • IV2: P = 0.000 (very significant, but coefficient is much smaller) • Regression equation for papers: DV = 2.53 IV1 +0.58 IV2 + 2136

16. 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 = 0.000 (very significant) • Regression equation for paper share: DV = 0.582.53 IV1 +0.271 IV2 + 0.249

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

18. Higher education part of R&D expenditure This shows EU sharpened focus on HERD in 1990s. “Over 1990s academic researchers contributed almost ¾ of the total [paper] output” SEI 1998. Advantage: EU.

19. 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.

20. Defense vs. civilian government appropriations • IV1 = civilian part of GBAORD funding • IV2 = defense part likewise • N = 29 available • IV1: P = 0.000 (very significant) • IV2: P = 0.000 (very significant, coefficient is somewhat smaller) • Regression equation for papers: DV = 2.65 IV1 +2.19 IV2 + 2531

21. 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.

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

23. 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.

24. Appendix Charts

25. 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.

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