Sweden is one of the OECD countries exhibiting the highest level of government-funded R&D (0.84 percent of the Swedish GDP compared to 0.6 percent in the OECD as a whole). The allocation of research funding represents an important policy instrument, and it is crucial that the limited resources are used where they have the most impact. In this report, Roger Svensson analyzes how government research funding is organized and governed. Among other things, he analyzes the government’s motives for funding research and studies the pros and cons of different ways of allocating funding. The report also compiles statistics on the distribution of government research funding and compares this with other countries. These questions are analyzed based on research literature in economics on the creation of knowledge and the role of universities in society. This, in turn, enables Svensson to offer concrete recommendations for decision-makers developing Swedish research policy.
RESULTS AND CONCLUSIONS OF THE REPORT
- Research councils have over the past 20 years received an increasing portion of the government R&D budget. Statistics also show that an increasing portion of government R&D funding is allocated in competition via research councils by means of targeted calls.
- The advantages of unconditional block grants compared to third-party funding (TPF) via research councils include that the former favors long-term research projects, results in lower costs for both researchers (applications) and the government (calls and evaluations) while also leading to less uncertainty for higher education institutions (HEIs) in terms of funding.
- The advantages of TFP, on the other hand, include that such funding results in more cost-effective research groups, provides incentives to carry out high-quality research at the individual and group level and offers the government a benchmark of what the various research groups produce. One drawback is that constant evaluations incentivize researchers to divide research results into several publications, so-called salami publication.
- Advantages of targeted calls include that there may be types of research funding (e.g., facilities, infrastructure, equipment) that do not fit into regular open program or project support. Another advantage is that politicians or public officials may direct research into areas relevant to their own country or what they believe will help solve societal problems or produce more innovations, thereby leading to increased economic growth.
- Disadvantages of targeted calls include that they restrict competition, enable lobbyists to try to influence what to research, and that they are significantly more costly than open calls. Targeted calls also risk resulting in opportunistic behavior among researchers, as they customize their applications to receive research funding (self-regulating). In cases where co-financing is required for targeted calls, there is a risk that HEIs will need to use some of their block grants. In such a case, there will be a case of dual control. Targeted calls ultimately undermine one of the cornerstones of independent research: Lernfreiheit, which means that the researchers themselves can come up with creative ideas on what they want to research.
- The research literature shows that a top-down strategy for research funding is best suited for public research institutions, as the government is then able to determine both the focus of the research carried out (public needs) and how the results are to be published and disseminated. Research at HEIs is based on the notion that the results are to be disseminated freely in international journals and that the HEIs – unlike public research institutions – enjoy some autonomy from the state. Unlike many other OECD countries, Sweden and other Nordic countries have chosen to carry out public R&D at HEIs rather than public research institutions.
RECOMMENDATIONS IN THE REPORT
- TPF via research councils offers greater flexibility in the system as a whole. It is easier to redistribute resources between projects than between HEIs. The question of how much of the government’s R&D budget should be spent on block grants, on the one hand, and on TPF via government agencies and research councils, on the other, remains open. However, there seems to be a fairly good balance in Sweden compared to other OECD countries.
- Sweden should resume its competitive approach regarding block grants by using an indicator-based model, where the allocation of block grants is based on publications, citations, and the ability to attract external funding. Such a model may be implemented at a low cost while avoiding problems associated with assessment models, such as subjectivity and high costs. Performance requirements of block grants incentivize HEIs to introduce their own productivity models for faculties and departments for when block grants are to be allocated internally.
- Government agencies engaged in funding research should not be asked to propose the future direction of Swedish research policy. Such an analysis should instead be carried out by actors that do not receive funding from the government research budget at the first or second stage (e.g., government agencies not engaged in funding research, former Swedish researchers or active foreign researchers familiar with research policy).
Roger Svensson, associate professor and senior research fellow of economics at the Research Institute of Industrial Economics (IFN).