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The role of intermediate Research, Development and Innovation institutes in building regional and sectoral innovation capabilities

Executive Summary

The UK has an internationally competitive science base, but its success in measures such as the world share of highly cited academic papers has not been translated into high economic performance.  On the contrary, the UK is well into its second decade of stagnant productivity growth, and there are very wide regional disparities in economic performance.

A possible reason for this disconnect is that government policy has focused on the creation of new knowledge, rather than the diffusion of existing techniques at the technology frontier and the creation of the capacity of national and regional economies to absorb new technologies, most of which will have been developed elsewhere in the world.

Moreover, the UK’s R&D landscape is highly geographically imbalanced, with a preponderance of public spending concentrated in the parts of the country that are already most productive.  This means that large parts of the nation are left with innovation systems that lack the ability to absorb and implement the new technologies that would improve the productivity of firms and the regions where they are located.

The UK’s Catapult Centres, introduced by the Coalition Government in response to the 2010 Hauser review, were an attempt to fill the weakness in the translational research landscape, and there is consensus that their contribution has been positive, though not yet on the scale initially envisaged. However, their mission was framed in a relatively narrow way, focused on the generation of applied research knowledge in specific technology fields.

In other developed nations such as the USA, Japan, Singapore and Germany, one finds intermediate Research, Development and Innovation (RD&I) institutions whose explicit mission is to develop national or regional capabilities.  In these institutions, there is an understanding that new technological knowledge is not sufficient for industrial competitiveness and economic value capture. Economic value arises from the matching of industrial capability, through the development of technology, workforce and supply chains, to the windows of opportunity presented by societal needs and technological progress.

An analysis of intermediate Research, Development and Innovation institutions in these countries reveals a wide variety of different activities.  These include:

  • Knowledge development: basic science, applied science, technology development, technology demonstration, application demonstration and product/solution scale-up;
  • Knowledge deployment/capability development: Skills & education (graduate students, vocational training, management programme, up-skilling…); access to facilities & experts (characterisation/test facilities, contract manufacturing, new product development labs); advisory & incubation services (lean, supply chain management, incubation services for FDI corporate R&D labs);
  • Knowledge diffusion: Network building (community seminars/workshops, consortium development, FDI-focused ‘industrial dialogue’); system intelligence (e.g. technology roadmapping services, international benchmarking…); standards & regulations (standards working groups, certification…).

We argue that the UK currently lacks regional RD&I institutes with a specific mandate to enhance and fill gaps in regional innovation capabilities.  The lack of such institutes places the UK at a disadvantage in supporting the high value industry clusters across the country that are crucial for productivity growth and reducing regional inequality.

Catapult Centres could fulfil this role, and indeed some of them have expanded their activities in this direction. But to do this effectively, there would need to be some explicit modifications of their remit and of the criteria for creating new ones.  In such modifications, the conversation about Catapults (and other similar institutions) should be framed in terms of innovation capability development aligned with local industrial opportunities, rather than simply research knowledge development.

Such institutions must work with the grain of existing regional economies and their regionally-clustered value chains, and in our view there is a strong argument for connecting the governance of such regional centres more closely with local and regional economic governance. Central to their purpose should be to tackle the issues of slow innovation diffusion and weak productivity growth that currently underlie the UK’s problems of regional economic imbalances.


  • Knowledge Capital




E. O’Sullivan, R. Jones, G. Anzolin (2024) The role of intermediate Research, Development and Innovation institutes in building regional and sectoral innovation capabilities, Productivity Insights Paper No.034, The Productivity Institute.