Private investment in basic science

Investigating ways to cure disease, reduce mortality rates and improve life expectancy

The challenge

Research and development (R&D) expenditure in the pharmaceutical industry is extremely high. However, developing countries face severe resource constraints and weak institutions, and their urgent need for medicines can only be met by profit-driven, big pharmaceutical firms. Why do (some) firms conduct unprofitable research and why are their R&D decisions so different? These are critical questions as many of these products can cure disease, reduce mortality and improve life expectancy.

The intervention

The literature on innovation and growth largely attributes economic development to technology advancement and, more specifically, the application of science to profitable innovation. It has focused on overall R&D, with little empirical research into investment in basic science. The author studies the determinants of private investment in basic science by linking the academic article database to corporations via author affiliation and funding acknowledgement.

The impact

By understanding the determinants of private investment in basic science, this research will inform the design of public policies that encourage businesses to invest and make technology advances in parts of the world where governments are not equipped to do so. This is an urgent and critical issue, because private investment in basic science can benefit these countries by relaxing resource constraints and assisting governments in basic infrastructure and services provision.

Luofu Ye is a PhD student, Finance, graduating class 2021 at London Business School. Luofu’s research interests are labour, innovation, and under-investment in education, art, and areas with high social returns.

Leave Comment

Your email address will not be published. Required fields are marked *