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Aerospace R&D helps generate £10bn of economic benefits
A new study by the Aerospace Technology Institute (ATI) has found that investment in R&D within the aerospace industry helped to generate £10bn of wider economic benefits to the UK in 2017 alone.
In its latest INSIGHT report (Spillovers: Revealing the Broader Economic Benefits of Aerospace R&D), the ATI, along with Fathom Consulting, presents up-to-date evidence on the magnitude of technology spillovers, specifically from the aerospace sector. The paper also contains a supporting narrative on spillover mechanisms and case study examples of how they occur.
The ATI report shows that investment in R&D within the aerospace industry helped to generate £10bn of wider economic benefits to the UK in 2017 alone / Picture: Getty/iStock
Analysing the seven major countries with the largest civil aerospace industries, representing around 80% of the global market, almost $200 billion was invested in R&D from 2013 – 2017, with the UK investing $11 billion during this period. As a result of the total international investment into R&D, spillovers into non-aerospace industries in the UK helped to generate additional gross value added of £10 billion in 2017 alone. This is the equivalent of £300 per worker outside of the aerospace industry. However, with the UK’s productivity 30% lower than that of the US, there is huge potential to improve on the spillover value already generated.
Spillovers come as a result of technology and knowledge generated in one industry, in this case the aerospace industry, being utilised and delivering wider economic value across other sectors.
Further analysis from ATI shows that over a 10 year period, for every pound spent on R&D in the UK aerospace industry, the wider economy benefits by generating, on average, 70p of gross value added as a result of technology spillover into other industries, every year. Over the same 10 year period, those companies investing in the R&D see a return of 15p every year.
Gary Elliott, Chief Executive, Aerospace Technology Institute, said: “Investment in R&D provides incredible value through innovation and technological advances, delivering vast benefits to the wider economy. The UK aerospace industry is a leading investor in R&D and clearly delivers value for money across a number of other sectors by fulfilling the wider potential of technology.
“As the UK works to determine its future relationship with the EU, it is vital that as a leading player in the global aerospace industry, the UK doesn’t fall behind its competitors. Providing support and encouraging continued investment in R&D is crucial. As is clear from the research, investment in the aerospace industry goes on to deliver innovation and jobs across a wide range of sectors.”
Five key sectors account for 90% of the spillover benefits from aerospace R&D investment: automotive (37%), scientific R&D (22%), machinery & equipment (19%), rubber & plastics (9%) and ships, rail, other transport (3%), with the remaining 10% spread across a range of smaller sectors.
The UK aerospace industry employs over 123,000 people across the country, 4,000 of which are apprentices. In 2017, the UK industry had a combined turnover of £35 billion, with £30 billion of this exported around the world.
Over the next 20 years, global demand for large passenger aircraft is set to reach 38,000, with a potential value of $6 trillion, offering great opportunities for the UK to be a global leader. Tackling issues such as climate change is a major challenge for the industry, and with the UK taking the lead with its 2050 net-zero target, investment in R&D in these key areas offers great potential for the wider economy.
Revealing what more the UK aerospace industry can do, Gary Elliott added: “The industry and government need to look at how the UK can become more productive and maximise the benefits of spillover from the industry.
“There are three key areas that the UK can look at in order to deliver on this: 1) identifying common technology priorities across sectors and focus R&D investment, 2) work with other sectors to develop cross-cutting technologies, 3) involving organisations such as universities and catapults in technology projects.”