How to get a bit of free money

The debts being run up to cover the costs of Covid-19 lockdowns are now so eye-watering that they are truly comparable to those run up in wars. To take one example; by October 2020, UK national debt had already reached 100.8% of GDP- a chilling ratio last seen in the years after the Second World War. Many other countries have similar problems.

There are two possible approaches to debt. You could pay it back. This was the approach of the Cameron-Osborne government from 2010-2016, and even with the best will in the world, the results were mixed for UK PLC. The other is to wait until the economy grows, letting the proportion of debt fall until it is manageable. This was the strategy pursued by both Labour and Conservative Governments in the UK from 1945 until 1979, and on the whole, it worked.

So how can you persuade an economy to grow? And especially fast? More and more findings seem to indicate that the answer is to spend on R&D. This leads to innovation (especially in marketable products) which in turn leads to growth, funding more R & D, which in turn…….etc etc. We’ve got a couple of links below where you can explore at leisure. We liked John Wu in Innovation Files,* who puts it succinctly

The more a country sets aside today for R&D, the greater the dividends they stand to reap in the future. In that sense, among OECD nations, Korea leads in R&D intensity at 4 percent, followed by Japan at 3.4 percent, and then the United States trailing in third at 2.8 percent. For comparison, the R&D intensity of all OECD nations averages at 2.4 percent. Countries such as Korea and China have focused on expanding heavy investment into R&D over the past decade

The fact he wrote this in 2015 only makes his predictions for the rise of China all the more prescient!

A little extra spend on R&D is worth a lot more in a few years. As the world emerges from the Covid-19 crisis there are limitless opportunities for new technologies and new markets. We are not financial advisers and can make no prediction. But to us as laymen, the speculation around healthcare and renewable energies looks intriguing. And anyone who could master cleaning up the results of 200 years of industrial pollution would indeed be wealthy. The world of the 2030s might be clean, healthy and prosperous indeed.

Fueling Innovation: The Role of R&D in Economic Growth | The Innovation Files

How important is R&D for economic growth? – Research & Development World (rdworldonline.com)

R&Dspending #GDP #nationaldebt #science #covid-19 #renewableenergy #greenindustries

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