The Role of Competitive Research Funding in Science
22 October 2018
ERC President Prof. Jean-Pierre Bourguignon's keynote speech, Event organised by the Institute of Science and Technology Austria (IST Austria) and the Austrian Federal Ministry of Education, Science and Research (BMBWF), Vienna, Austria
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Dear Minister Fassmann, dear Dr Wojahn, dear President Henzinger, Distinguished guests,

Many thanks to the Austrian EU Presidency for giving me the opportunity to speak today at this special event on an important topic.

The questions you raise are indeed critical for all of us involved in carrying out research who, for that purpose, need to get some form of support. Let me quote the questions:

  •  What are the key factors to consider when designing, implementing, and evaluating a competitive research grant program?
  • How does competitive research funding affect research institutions?
  • And does competitive funding help to develop and support Europe's research talent in full, or does it perpetuate the participation gap?

How research gets funded makes a big difference because it affects the very dynamics that exist in laboratories and how researchers position themselves vis-à-vis their work.

I would like to offer you now some critical views on this issue.

Allow me to start with a reminder of why research needs to get funded. This is not a side issue to the very topic of this speech. Actually it is surprising to me that one still has to explain such a thing. But yes we do!

It seems that some people still have to be persuaded as they regard funding research as some sort of luxury. Something that is nice to do if one has some extra cash during good times, hence the first thing that can be cut when hard times come.

That view is not only wrong, it is highly dangerous. Indeed funding research is not a luxury, neither in the public sector, nor in the private sector. If you don't do it properly and at a sufficient level, you seriously hamper the long term development of society at large.

As you remember, last year an independent high-level group chaired by Pascal Lamy was set up by the European Commission at the suggestion of Commissioner Carlos Moedas. Beyond an analysis of the present Research and Innovation programme of the European Union, they were asked to draw up a vision and strategic recommendations for the future one.

The final report was called ‘Fab-Lab-App, Investing in the European future we want’. A nice title and a truly appropriate one actually! Its conclusion was: "Doubling the overall budget of the post-2020 EU research and innovation programme is the best investment the EU can make." Doubling the current programme would imply a seven-year budget of around €160 billion.

The report continued: "At a minimum, the budget should maintain the average annual growth rate of Horizon 2020, taking the budget foreseen for the programme’s final year as starting point. This would lead to a seven-year budget of at least €120 billion in current prices. Anything below that would break momentum and call into question the EU’s commitment to deliver on its political priorities."

These findings were welcomed by many European political leaders and elected representatives. As you know, the budget proposed for the Horizon Europe programme is rounded up to €100 billion.

So yes, it is important that everyone has clearly in mind why research needs to be funded - to create new knowledge of course; to open completely new avenues that will later turn into new economic sectors; to train the next generations with up-to-date skills and to take a long view!

We have just received another reminder of why research needs to be funded, a particularly timely one: one of the joint laureates of the 2018 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, coined as the Nobel Prize in Economics, Paul Romer, was awarded his share of the prize for his work on the role of knowledge in economic growth.

Economists have been studying the classical factors of production: land, labour, and capital for over 200 years. But starting with Robert Solow (who also received a Nobel Prize for this work), economists in the 1960s and 70s came to realise that, at most, half of the historical growth could be explained by known factors. The rest could only be explained by positioning a new factor of production: technological progress. But, in these early models, technological progress was something that was ‘exogenous’. In some sense something that just happened.

Romer's work helped to look into this black box and show how technological progress comes about. And, just as importantly, what we have to do to make it thrive. He showed that any idea for a new technology, wherever it originates, can be used for the production of new goods and other ideas in any other place, now or in the future. In other words, there are a number of spill-over effects. Science has no borders.

This sounds like great news, and it is! Maybe a bit worrying for economists. If nobody can capture the benefits of his or her ideas, then fewer ideas will be produced. Romer showed that unregulated markets tend to underprovide R&D and the new goods created by it. Addressing this requires well-designed government interventions, such as R&D subsidies and patent regulation. And such policies are vital to long-run growth, not just within a country but globally.

Romer's specific insights came from the clear fact that ideas are different from physical or human capital. Indeed they are non-rival goods as they can be used simultaneously and often non-excludable unless regulations prevent from using them. His breakthrough article showed how the rivalry and excludability of ideas impact economic growth.

Does that sound like something citizens should be kept away from? Does that sound like a luxury?

So much for why research needs to be funded. It also shows how research matters. Now let us turn to how to fund research and to focus on the very subject of this event, ‘competitive research funding’.

As President of the ERC you might expect me to be an unqualified supporter of competitive research funding. ERC calls are certainly ‘competitive’. Many researchers apply, and the ERC unfortunately cannot fund such a big proportion of them: presently, with the funds available to the ERC, the average success rate is around 13%.

First of all, it is indispensable to consider the European research eco-system as a whole. It has several components that need to be properly balanced: positions available at various moments of the research career, infrastructures, flexible rules, time, room and incentive for initiative, to mention those which, for the most part, do not involve funding agencies directly.

As with all important research policy questions, these issues have a long history, and there are different opinions on the place ‘competitive research funding’ should occupy in the eco-system. For some, it is the answer to many of the problems encountered in developing research at the right level. Others see it as the cause of many of the problems research faces today!

To start with, I think it is very important for each of us to be clear about what we mean by ‘competitive research funding’.

Prior to the Second World War, most governments had little involvement in R&D, except in limited areas such as agriculture and medicine. This changed with the massive efforts made in military R&D during the war. This period saw breakthroughs in nuclear energy (the Manhattan Project representing its military side), radar and cryptography. The post-war period saw large R&D programmes in defence, nuclear energy and space in many countries. Europe was keen not to fall behind the superpowers in critical technologies that underpin economic growth as seen at this time. This went along with a massive development of higher education and PhD programmes, and of new industries based on newly developed technologies.

Interest in different ways of funding emerged in the 1970s and 80s, mainly because of a stagnation in volumes of public research funding. The idea was that competitive allocation mechanisms would stimulate better research performance and more efficient use of resources. They would do this through selection of top research groups, promotion of specific research themes and fields, and by supporting structural changes in universities and other research organisations through competition and cooperation between groups.

In the 1990s, the trend toward competitive allocation gained strength. Government funding increased for mission-oriented and contract-based research. Governments tried to set performance criteria and tie this to funding. And this trend continued with many countries embarking on reforms hoping to achieve increased output from limited resources.

The 2014 Commission's Communication ‘Research and innovation as sources of renewed growth’ describes the need to increase quality of public spending “by allocating funding on a competitive basis, through open calls for proposals according to excellence, for instance on the basis of international peer review, and by allocating institutional funding on the basis of proven performance”.

So, from this perspective, ‘competitive research funding’ can be seen as part of a conscious effort by authorities (governments, the European Commission) to direct and plan research in a more top-down manner. And this, I think, is one of the reasons why it has negative connotations for some in the scientific community. This reason is not the only one: this effort often went along with a decrease in the amount of basic support given to research, and even worse happened at a time where research positions became scarce and irregularly available, forcing young researchers to jump from one unstable position to another. These, basic funding and positions, are two other resources that are absolutely critical for research to flourish and for young people to consider science as a possible career.

But of course there is another possible approach to ‘competitive research funding’. As I have said before, there is certainly a lot of competition to get ERC grants, and this funding is designed to do just the opposite of directing researchers and promoting particular top-down priorities. The ERC operates in a bottom-up way, to provide maximum freedom to researchers to pursue their most ambitious ideas, and selects them strictly on the basis of the scientific quality of their projects. The ERC's mere existence brought its load of structural changes. Here are a few: setting standards for quality evaluation - mostly away from numerical indicators; stimulating young researchers to think big, allowing them to gain some independence early and to learn how to manage a team; and attracting some of the best researchers to Europe, also to take part in ERC-funded research as team members.

So what can one say about the overall balance between different forms of funding in the European eco-system?

The first thing we see is that, on the one hand, a lot of the research funding available in Europe is institutional, i.e. attributed to research organisations for their operating activities. It is usually not earmarked for specific activities or organisational sub-units. Instead, internal allocation is left to the performing organisation. Institutional funding can be formula-based, negotiated or historical. On the other hand, project funding is defined as money attributed to a group or an individual to perform a research activity limited in scope, budget and time.

An extensive report by the European Commission's Joint Research Centre published last year showed that the proportion of institutional funding to project funding in each country varies widely. In most countries it is more than 50%. And in many countries higher still. For example, in Austria, Denmark, France, Italy, Spain and Switzerland, institutional funding makes up over 70% of the funding. In the UK, Poland, Belgium, Czech Republic, Estonia and Ireland the proportion is less than 50%. A key factor of course is the level of selectivity of the competitive funding: if very selective, it may appear unreachable and not worth the effort. This is why it is critical that such a funding be in line with the objective it pursues.

We must also never forget the level of research funding available in Europe and that its distribution is highly unequal. In 2016, the overall gross domestic expenditure on research and development (the so-called GERD) in the EU was just over €300 billion. About €100 billion of this was spent by the public sector. In the same year, the EU support to research and innovation was around €10 billion, representing only about 10% of the total public spending.

So, for the foreseeable future, the primary responsibility for funding research in Europe lies at national level. The duty of people like us having responsibilities at the European and national levels is to find the optimal combination of strategies, each taking advantage of special situations, without forgetting sharing experience and learning from each other. The funding system in Europe is complex, but its diversity can also be a source of strength.

And, for sure, the question is not only about whether funding should be competitive or non-competitive. In fact, I think this could make us miss the key point.

Indeed, the most essential element in the research system is the researchers themselves. So the crucial question is: how does the system pay attention to the researchers? This should be a key element when we try and see whether we have the balance right or wrong.

The key issue is that Europe needs to create the conditions to attract the brightest students and teachers to its universities and research organisations. The competition for brains has become fierce worldwide, with Asia advancing at a fantastic pace, something European policy-makers should always keep in mind. The world is not static, and dreaming of building walls or coming back to a glorious past is just not going to be an appropriate source of inspiration.

So what are these conditions? From my experience as a scientist, I see three main elements. First, we need to ensure a sustainable career path, especially for talented young researchers. Second, we need to give researchers the time and freedom to explore new knowledge. And third, we must encourage diversity, risk-taking and interdisciplinarity in science.

Embarking on a research career is a lengthy process, involving 5 to 15 years, or even more, of study and first research experiences. Anybody entering such a demanding working environment wants to get some assurance that she or he has a chance of a career, of advancement, of reward.

We also need to guarantee scientific freedom for researchers, to allow them to take risks and to find room for initiative. Time and again, research with the biggest impact has come from researchers pushing the boundaries of the current knowledge, often by ignoring the current separating lines between disciplines, and often institutes.

So as a consequence, there is need for a variety of effective programmes to support research.

In my opinion, all research systems need a core of stable funding to help provide a sustainable career path for talented young researchers and allow people and institutions to plan for the future. But we need a diversity of funders, funding mechanisms and institutional settings to ensure that ideas can flourish at many places at different levels of maturity and ambition. Still, they all should be based on stimulating creativity and rewarding scientific quality as the key criterion.

So how does this relate to the questions you have set? Do we have the right balance of funding mechanisms and programmes in Europe?

Let us take the example of the country with the largest research budget in the EU, Germany. In 2017, the German government spent a bit less than €30 billion on research. The main organisation awarding grants to individual researchers there is the DFG. In 2017, its budget was €3.2 billion, of which 35% (just over €1 billion) was allocated to its individual grant programmes . These include traditional research grants and early-career grant programmes. The rest was allocated to: Research Units; Priority Programmes; Collaborative Research Centres; Research Training Groups; DFG Research Centres; Excellence Initiative; Infrastructure funding; and Prizes. In other words, in Germany in 2017, the funding available for individual researchers in "responsive mode" was a fraction of the overall funding. And this is by no means only true for Germany.

A very large fraction of Europe's research resources are therefore in the hands of senior researchers and research administrators with very few options for younger researchers, in particular to gain independence. We must ensure that the share for bottom-up research grows in several contexts, including in the EU funding.

This explains why the ERC funding is seen so positively by researchers working in Europe and the disproportionate impact it has when compared to its size among the overall research funding available (about 1% of the total at EU and national level). If ERC-type funding is one of the best ways to unleash creativity and dynamism in Europe, the ERC must grow and other ERC-like funding mechanisms have to be made available. This general lack of competitive bottom-up funding in Europe also contrasts with the funding available in the USA for/since? a number of years. In 2015, Andrea Bonaccorsi produced a report on the ERC for the FP7 ex-post evaluation .

His conclusion on the ERC was: "The European Research Area has long been in need of this institution… in the US there has been half a century of systematic, comprehensive, tough ex-ante competitive selection process, largely based on peer review, at federal level. The large size of the competition has forced all researchers, with no exception, to fight for quality of research and, where possible, for excellence. Several decades of this institutional design have shaped the research system deeply and irreversibly. In Europe, on the contrary… the size of the pool has been traditionally small, the intensity of competition rather limited… The ERC has been the first step in changing this state of affairs. The initial results are remarkably positive and reinforce the rationale from which it has been created."

The strength of the ERC is that it runs a pan-European competition and offers researchers with the most ambitious projects substantial, long-term funding and the freedom to pursue their own ideas. It draws on a wider pool of talent and ideas than any national scheme and increases the visibility and prestige of European research overall.

After its first decade, there is no doubt that the ERC is achieving its aims. The ERC’s peer review system is widely seen as a benchmark. ERC-funded researchers are producing world-class research. Typically 5% of publications by ERC grantees are among the 1% most highly cited - the highest proportion of all funding agencies worldwide by far.

And everywhere I go, ERC grantees tell me that they could not have carried out their work without the ERC's support. There is great interest in their work in the mainstream media and amongst the public, and the results of each ERC call are reported widely. ERC grants boost careers and increase the reputation of the institutions hosting grantees. This means that Europe's top researchers no longer feel the need to move overseas to do their best work and, increasingly, that researchers from outside Europe see it as a place to carry out outstanding work.

I also travel extensively outside Europe, and I can observe that the ERC is seen everywhere as a global benchmark of quality. Some colleagues outside Europe even fight to have their countries set up a similar scheme.

So what we are seeing is ERC grantees set an inspirational target for frontier research in Europe. They raise Europe's profile. It encourages European universities and research organisations to assess their relative strengths and weaknesses, brings about reforms and offers more attractive conditions for researchers, in particular young ones.

The IST Austria here in Vienna is a great example of this effect in action. Inaugurated only in 2009, it is now one of 65 institutions in Europe with 30 or more ERC grants. With a success rate of 48%, IST has the highest of all of these 65 institutions. The success of the IST shows how the ERC can complement and catalyse efforts of ambitious countries and institutions, while contributing to trigger more interdisciplinary research.

And the IST is by far not the only example. All around Europe individuals and institutions are raising their game. Through a well thought use of structural funds nurtured by the scientific community, I was able to recently witness two successful examples, one in Slovenia at the Jožef Stefan Institute and one in Romania at the Polytechnic University of Bucharest, of attracting researchers receiving ERC grants.

So in conclusion, I believe that all research systems need a regular flow of positions available and a core of stable funding. This is particularly important to help provide a sustainable career path for motivated and talented young researchers. But competitive funding, and in particular its bottom-up part, needs to have a significant share. It is fundamental to allow researchers the freedom to pursue their most ambitious ideas. To me Europe faces the danger of being satisfied with a system where stability is being eroded without increasing room for initiative. Moreover, project funding is too often assigned to very specific, politically chosen ways of working with a short term goal and specific narrow priorities. ERC-type funding is remarkably rare at the present moment, when it should be given a high priority.

My first plea therefore is that we must ensure diversity of the funding mechanisms, programmes and institutional settings at national and European level using scientific quality as the main driver. And my second plea is for your active and vocal support for an ambitious budget for Horizon Europe, the European part of this edifice, a key part because of the evident added value it brings. This conditions the capacity for Europe to fulfil ambitious goals for its development, and to prepare an appropriate future for its citizens in an increasingly competitive world.

When the EU budget funds quality scientific research, it’s the economy and citizens that benefit.

I thank you for your attention.