The popular notion that research and development is something that eccentric scientists carry out in their labs has to do more with fiction than with reality. Business, education and political leaders know that a country’s future prosperity also depends on the ability to undertake creative work on a systematic basis to increase the stock of knowledge and its use to devise new applications.

Eurostat has confirmed that R&D expenditure in the European Union increased slightly in 2017 to 2.07 per cent of GDP. In Malta’s case, the spend is more modest, at 0.55 per cent of GDP, a figure that has remained static for the past decade. Two-thirds of this expenditure is incurred by business enterprise and a third is accounted for by higher education. The island ranks third from last in its expenditure on R&D followed only by Latvia and Romania.

The National Science Foundation of the US defines three types of R&D: basic research, applied research and development. Basic research has as its objective a fuller knowledge or understanding of the subject under study, rather than a practical application of it.

In Malta, this research is likely to be conducted in tertiary education institutions, like the University and the Malta College of Arts, Science and Technology. It is often the seed that will, hopefully, grow into the more productive applied research that aims at gaining the knowledge necessary for determining the means by which a recognised and specific need may be met.

This country’s open economy is now mainly based on services and it is to be expected that research both by business enterprise and by educational institutions should mainly focus on this sector. It is a sobering reality that most of our economic operators are micro businesses that cannot afford to undertake any significant R&D effort on their own. They simply do not have the necessary critical mass of human and financial resources to do so.

R&D is a good investment for business but a risky one; the majority of research projects fail to provide the expected financial results and the successful ones (usually 25 to 50 per cent) must pay for those that are unsuccessful. It is therefore essential that the government incentivises businesses and educational institutions to sink in more money in R&D.

An industry that calls for substantial investment in R&D could be the tourism sector. Climate change will undoubtedly impact the sector but little debate has so far been made on how Malta could be affected. Similarly, the effect of over-tourism has still not been addressed systematically by policymakers or operators. Cleary, there is a good economic case for researching these issues.

Similarly, many acknowledge that the farming industry is slowly but surely declining. What will the effects of a vanishing farming industry be on the Maltese economy and, perhaps more importantly, on society itself?

The most applied and commercially-relevant research is likely to be made by the private sector because private firms have strong incentives to determine what the market demands and to meet those needs.

In Malta’s case, limited financial and human resources will always restrain investment in R&D. However, it can only improve its ranking in this important sector of economic planning when educators, policymakers and business enterprise join forces to make innovation a reality.

This is a Times of Malta print editorial