Crisis and funding of research

By Katka Svickova

In normal times, politicians of all strands are unanimously committed to the support of education, research and development. They never forget to stress how important these areas are to secure future prosperity. In crisis times, the “now” becomes more important than the future prosperity as governments are confronted with hard choices how best to use public funding to alleviate the negative effects of the economic crisis and help to re-start the up-cycle. Instead of the promised growth, public budgets for education and research either stagnate or fall in several Central and Eastern European countries (and as might be the case elsewhere in Europe, too).


A few months ago, investing in research and development was still promoted as one of the solutions to the economic crisis. Accordingly, the Czech national anti-crisis plan committed to increasing the R&D public spending over the next three years. Originally, the spending on research should grow by 8 % in 2010. Yet at the end of June, the government decided to freeze the annual outlays on research over the next three years at the level of 2009.

In addition to this, the Czech university and research community is in a sharp dispute over the allocation of these research funds. The conflict in essence boils down to rebalancing the spending to favor applied at the expense of basic research. The prevailing “now before then” logic favors the applied research – as a means to give a boost to industrial innovations. The funding allocations should be more result - and performance - oriented but the criteria, according to which the evaluation of performance is done, are far from perfect and heavily disputed.

Within Central and Eastern Europe, the Czech Republic actually belongs to countries with comparatively high governmental outlays to research: in 2007, it was 0,58 % of GDP as compared to the CEE average of about 0,4 % of GDP. However, both Czech Republic as well as the region are below the EU-27 average of 0,67 % of GDP spent on research from public funds (comparisons and calculations are based on available Eurostat data).

The education and research budget is now under strain not only in the Czech Republic. In Latvia, for example, the spending was reduced by about 65 million EUR affecting teachers’ salaries and resources to vocational schools, scientific institutions, state universities and colleges. The cuts were adopted under the pressure to trim the public budget in a country perhaps most stricken by the economic crisis in Central and Eastern Europe so far. They brought students and teachers to demonstrate in the streets in the course of spring. Also in Poland, discussions are under way to cut educational and research spending.

The developments show that despite the continuous mantras about the importance of research and development, these sectors are also subject to economic cycles and the workings of politics. A question that emerges from the Czech debate and governmental action is whether the cuts as well as the new rules for dividing public funding for research were passed after a profound weighing of short-term and long-term consequences of these decisions. To the most important consequences of the current decisions affect the capacity to engage in basic research. The abrupt shift of funding from research institutions such as Academy of Sciences (and to lesser extent universities) that are focused on basic research to institutes of applied research that are connected to various ministries and major industrial firms, may in the long term undermine both.

From the short-term perspective, more support to applied research in the situation when the budgets of the private sector are strained might bring more immediate results and help to increase the competitiveness of the industry. However, the private sector is also more likely to finance this type of research itself after the worst effects of the crisis on firms are over. On the other hand, basic research requires a lot of funds with uncertain and long-term results, and is thus not so attractive for the private sector. Moreover, the institutes focused on basic research are fundamental for creating the necessary human capital that allows applied research institutes to operate successfully within the global research networks. It is therefore here where public funding plays a crucial role.

Making public choices about educational and research priorities, and subsequent reforms of the system, including how public funds are allocated, are relevant in all conditions. However, the “now” perspective of crisis times should not prevent a decision-making based on sound weighting of both short-term and long-term consequences of the different options.