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Beyond the transactional: Three lessons from Australia for Foreign Direct Investment in research and development (R&D)

  • 17 March 2023
  • By Professor Aleks Subic
  • Midlands Innovation is a strategic research partnership of eight research intensive universities. Universities in the Midlands and the pan-regional growth body, the Midlands Engine, are piloting how universities can work together to attract foreign direct investment into regional research and development.
  • HEPI’s report, The Role of Universities in Driving Overseas Investment into UK Research and Development, published on 7 March 2023, provides national analysis of what is happening. Here, Professor Aleks Subic, Vice-Chancellor and Chief Executive of Aston University writes as part of a series of blogs from Midlands Innovation on the key considerations for policy makers and the Higher Education sector on increasing investment into regional R&D through universities.
  • Prior to his role leading Aston University, Professor Subic held senior leadership roles at RMIT and Swinburne University of Technology.  

When creating the right ecosystem for foreign direct investment (FDI) in UK research and development (R&D) to thrive, we can learn from Australia’s experience, where I have worked at the interface between government, industry and academia. Here I set out the critical success factors in Australia, and how these might apply in the UK context.

1. Simplicity and clarity 

The fragmented picture of actors involved in FDI at the policy and operational level in the UK is striking. A unique patchwork of central government departments, local, regional and pan-regional actors, university partnerships, as well as arms-length bodies such as growth companies and niche agencies, all play a role. While a collaborative mindset is beneficial, there is a risk that the sheer number of disparate actors involved hold investment and strategic partnership opportunities back. 

In Australia, this sort of complexity is simply not an issue. Within a more devolved political ecosystem, state governments have a single front door approach whereby all international investment and trade inquiries are channelled via their respective investment office, for example, Invest Victoria.

At the federal level, the Australian Trade and Investment Commission, Austrade, plays a coordinating role for the whole country. In both cases, universities are considered central to enable access to R&D facilities and a highly skilled workforce, which are essential to foreign investment in a knowledge-based economy. 

2. The triple helix 

Addressing this fragmentation should support the UK to move more successfully towards a functioning triple-helix approach – where universities, industries and governments work together to secure strategic and fruitful partnerships, which lead to investment. 

The Victorian Government securing the first mRNA vaccine manufacturing facility in the Southern Hemisphere at Monash University through investment by US company Moderna and the Queensland Government securing high-technology manufacturing investments from global companies Rheinmetall and Stryker, demonstrate the success of this approach. Other countries, for example Singapore, Germany and the US (California), have achieved significant success by using a comprehensive value proposition supported by simple streamlined processes.

3. Thinking long term

Foreign direct investment is not the end game, but a welcome byproduct of creating long term strategic partnerships that move beyond the transactional. In the examples above, Stryker first joined the Innovative Manufacturing Cooperative Research Centre and undertook collaborative R&D with local universities via the Aikenhead Centre for Medical Discovery in Melbourne, before deciding to establish manufacturing in Australia.

Similarly, one of the main reasons Boeing invested in manufacturing is the development of homegrown Intellectual Property in composites manufacturing through collaboration with local universities. Moderna chose Melbourne due to world-leading research in biomedical and pharmaceutical sciences across Monash University and the University of Melbourne. Engagement with universities coupled with government support has been essential in these cases.

I am convinced that this is the right strategy to attract foreign investment that drives growth and prosperity. Having personally implemented this approach with Siemens to establish the national network of Industry 4.0 Hubs, or with Amazon Web Services to establish the AWS Cloud Innovation Centers in Melbourne, I have seen how universities serve as a catalyst for FDI and development of national sovereign capabilities through R&D effort, and for the creation of new national supply chains that can access global markets and create jobs.

By ’hunting in packs’ this strategic approach has been implemented both in Australia and elsewhere though interconnected centres and landing pads in places like San Francisco and Silicon Valley, Berlin, Singapore and Bangalore.  

Translating this to the UK context

In the West Midlands a new international strategy is under development. Assuming R&D features centrally – as it ought to – this will be an opportunity to project a clearer regional narrative to potential partners overseas. With new mayoral combined authorities in the pipeline for our regions, there is a chance to position R&D as a strategic lever for attracting regional inward investment from day one. 

Nationally, the creation of the Department for Science, Innovation and Technology (DSIT) is an acknowledgment that investment in R&D is crucial to deliver growth and high value jobs for the UK. While a new department does not do much to simplify what is already a cluttered landscape, it has the potential to drive a more laser-like focus on leveraging FDI in R&D. This will only succeed if DSIT works successfully with the reconstituted Department for Business and Trade, with its remit to make the UK the best place to start and grow a business and to strengthen the UK’s offer to international investors, and with the Department for Levelling Up, Housing and Communities, which is leading on the devolution agenda and associated investment zones.

I hope to see a shifting mindset within government which sees universities playing a more central role in FDI; Minister George Freeman’s speech on ‘Science Superpower: the UK’s Global Science Strategy beyond Horizon Europe’ was certainly promising in that regard.

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