The contribution of medical funding by charities to the Scottish economy

Third sector medical research plays an important role both in the Scottish economy and society.

Medical research makes huge contributions to society through developing new treatments, improving existing ones and advancing technologies that can help save lives, such as vaccines that help to fight against infectious diseases like Covid-19.

Charities are major funders of medical research in Scotland. Medical research funding by charities has been estimated to be 46% of all third sector and public funding of medical research in Scotland, with active research funding of £122m in 2018.

Without charities funding medical research and development in Scotland, the government and other public bodies would need to increase direct funding by 73% to make up for the shortfall.

Our findings in the accompanying report show that medical research funded by charities has grown since 2014 in Scotland, with a fall in funding in 2020 due to the pandemic.

Furthermore, whilst the primary aim of medical research funding by charities is to create benefits to people’s health, the funding also makes a significant contribution to the Scottish economy:

  • Recipients of research funding purchase goods and services in order to undertake their research. This generates activity in their supply chains and across the whole of the Scottish economy.
  • R&D can boost output and productivity in an economy with new technologies, medicines and processes.
  • As new methods and technologies are discovered, there are knowledge spill-overs into the public, private and third sectors which boost productivity and economic growth.

This report examines the first of these contributions and estimates the economic impact of medical research funding by charities on the Scottish economy in terms of jobs, output and GVA (Gross Value Added). This includes the direct impact of research on universities and medical organisations, as well as wider impacts on supply chains and wages.

Our results estimate that, in 2019, medical research funding by charities supported 7,475 jobs, £470m output and £320m GVA in Scotland.

The pandemic had a significant impact on medical research funding by charities, placing jobs in research and the wider economy at risk. In 2020, the fall in medical research funding by charities put 575 jobs, £36m output and £25m GVA at risk in Scotland.
We also estimate multipliers for medical research funding by charities and compare these to 97 sectors of the Scottish economy. Every £1 million spent on medical research funding in Scotland by charities supports:

  • £1.98 million of output – 23rd highest multiplier out of 97 sectors.
  • £1.33 million of GVA – 4th highest multiplier out of 97 sectors.
  • 31 jobs – 6th highest multiplier out of 97 sectors.

Authors

James is a Fellow at the Fraser of Allander Institute. He specialises in applied analysis of trade and climate change. His work includes the production of economic statistics to improve our understanding of the economy, economic modelling and analysis to enhance the use of these statistics for policymaking, data visualisation to communicate results impactfully, and economic policy to understand how data can be used to drive decisions in Government.

Ben is an economist at the Fraser of Allander Institute working across a number of projects areas. He has a Masters in Economics from the University of Edinburgh, and a degree in Economics from the University of Strathclyde, as well as experience working on a variety of projects for public, private, and third sector organisations. He also conducts work related to health, social care and criminal justice.

Adam is an economist at the FAI who works closely with FAI partners and specialises in business analysis. Adam's research typically involves an assessment of business strategies and policies on economic, societal and environmental impacts. Adam also leads the FAI's quarterly Scottish Business Monitor.

Find out more about Adam.

Kate is a Knowledge Exchange Assistant at the FAI working across a number of project areas. She is currently studying for her MSc in Economics at the University of Edinburgh and has a bachelor’s degree in Economics from the University of Strathclyde. Kate is also the Outreach Coordinator at the Women in Economics Initiative which aims to encourage equal opportunity and improve representation in the field.

Part of Collection

This project provides analysis of the economic contribution of third sector medical research. The analysis covers the impact to the UK, Scottish and Northern Ireland economies. We also include an analysis of the share of the UK impact which is generated in Wales.