Business does do research

The World Bank holds that innovation is key to raising SA’s economic growth. According to its analysis, business, which should be the driver of innovation, is a laggard. Business expenditure on research and development (R&D) has declined by 40% since 2009.

But business investment in R&D does not necessarily lead to innovation. Like success, innovation has many parents. Companies learn from employees, customers, competitors and clients, and often draw on outside creators.

What counts as R&D remains a grey area. How, for example, do you quantify R&D in the services sector? Be these matters as they may, it is the claim that business is not coming to the R&D party that bears closer scrutiny.

Local business funding to its own R&D doubled between 2005 and 2014. There was a decline following the financial crisis, but there has been an uptick since.

On the other hand, government funding to business, which was R2.2bn in 2008, has since plummeted by 70%.Yet one is reluctant to label government as the laggard: the sharp rise and subsequent decline is tied up with the ill-fated pebble-bed modular reactor project that sucked in massive government funding; and the state’s funding to R&D is spread across business, state labs and universities, with strong support given to capacity development.

So the World Bank has missed the subtlety of the data.

As the Bank knows, growth is stifled, but SA is a highly innovative nation. SA enjoys food security, thanks to the agricultural innovation chain. Companies such as Steinhoff, Discovery and Denel innovate to remain ahead of the global competition.

Prof Michael Kahn Via e-mail