Read the Text VIII to answer the question:

Text VIII

The intrinsic connection between research, innovation and growth

Since the last spending review, the Government has put nearly half a billion pounds of new capital into science and technology, into initiatives such as: the Institute of Animal Health; high-powered computing and e-infrastructure; and the commercialization of graphene. It has been hugely supportive of science and research but, of course, against the background of a very difficult economic and fiscal position.

How has that investment been justified? Well, the UK has to take account of what is happening in the rest of the world. There is a great deal in the news about the economies of China and India, but less of Russia, Mexico, Indonesia and others which are also expanding. There has been an acceptance on the part of Treasury that even in the current economic circumstances it is vitally important to invest in science and technology.

We are not alone: in the USA President Obama has singled out research and innovation as key areas in which to invest. On the other side of the world, China is making huge investments in this area. Underlying these decisions is a substantial evidence base relating economic growth to investment in R&D and innovation.

R&D is an important part of the wider story. Looking at global investment, this is increasing at a rapid rate in China and the USA but not so fast in the UK (…). So, is this a disaster? Well, even if in recent years this country has not kept pace with others, one proxy for output (citations or the most cited citations) per pound invested, shows that the UK has been remarkably productive. A priority now is to sustain that in the face of the financial investment being made elsewhere.

Innovation

Now while science and research are concerned with a great deal more than short term, economic growth, for Government the economy – including growth and jobs – is a primary focus. Innovation is a key driver of our policies. When enterprises are engaged in any one of the following they are described as ‘innovation active’:

• introducing a new or significantly improved product (good or service) or process;

• investing or engaging in:

– internal R&D, training, design

– acquisition of capital goods for the purpose of making new products or improving processes

– acquisition of external knowledge;

• engaging in development projects that have neither been completed nor abandoned.

Innovation does not always occur in high-tech areas – there is a great deal in engineering-based manufacturing, but also in retail and distribution as well as construction (…). Engagement is not purely concerned with research: there is a whole host of ways in which business engages with academia and it may be through meetings, joint research or consultancy. Indeed, there is a whole ‘ecosystem’ of inter-relationships between universities, businesses and those who fund research (the Research Councils, Technology Strategy Board, etc). (...)

Source: SMITH, Adam. The intrinsic connection between research, innovation and growth. In: FST Journal. The Journal of

Foundation for Science and Technology. Vol. 20, nº 8, May 2012. PP.5-6. www. foundation.org.uk. Accessed on Sept. 19,2013.

In order to receive the title of “innovation active”, the companies need to: