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Achieving Balance and Adequacy in
Federal Science and Technology Funding
SUMMARY
The complementary goals of balance and adequacy in federal funding
for science and technology require both diversity and cohesion in the
nation’s R&D system. Diversity fosters creativity, creates competition
among people and ideas, brings new perspectives to problems, and fosters
linkages among sectors. Cohesion helps ensure that basic research is not
squeezed out by more immediate needs and that the highest quality research
is supported.
Federal actions that could improve the balance of federal science and
technology (FS&T) funding include the following:
• Create a process in Congress that examines the entire FS&T budget
before the total federal budget is aggregated into allocations to appropria-
tions committees and subcommittees.
• Establish a stronger coordinating and budgeting role for the Office
of Science and Technology Policy to promote cohesion among federal R&D
agencies.
• Maintain the diversity of FS&T funding in terms of sources of fund-
ing, performers, time horizons, and motivations.
• Balance funding between basic and applied research and across fields
of research to stimulate innovative cross-disciplinary thinking.
This paper summarizes findings and recommendations from a variety of recently published
reports and papers as input to the deliberations of the Committee on Prospering in the Global
Economy of the 21st Century. Statements in this paper should not be seen as the conclusions of
the National Academies or the committee.
397
OCR for page 398
398 RISING ABOVE THE GATHERING STORM
• Protect funding for high-risk research by setting aside a portion of
the R&D budgets of federal agencies for this purpose.
• Maintain a favorable economic and regulatory environment for capi-
talizing on research—for example, by using tax incentives to build stronger
partnerships among academe, industry, and government.
• Encourage industry to boost its support of research conducted in
colleges and universities from 7 to 20% of total academic research over the
next 10 years.
Two important goals can help policy-makers judge the adequacy of
federal funding for FS&T. First, the United States should be among the
world leaders in all major areas of science. Second, the United States should
maintain clear leadership in some areas of science. The recent doubling of
the budget of the National Institutes of Health—and other recent increases
in R&D funding—acknowledge the tremendous opportunities and national
needs that can be addressed through science and technology. Similar oppor-
tunities exist in the physical sciences, engineering, mathematics, computer
science, environmental science, and the social and behavioral sciences—
fields in which federal funding has been essentially flat for the last 15 years.
Among the steps that the federal government could take to ensure that
funding for science and technology is adequate across fields are these:
• Increase the budget for mathematics, the physical sciences, and engi-
neering research by 12% a year for the next 7 years within the research
accounts of the Department of Energy, the National Science Foundation,
the National Institute for Standards and Technology, and the Department
of Defense.
• Return federal R&D funding to at least 1% of US gross domestic
product.
• Make the R&D tax credit permanent to promote private support for
research and development, as requested by the Administration in the fiscal
year (FY) 2006 budget proposal.
Support for a new interdisciplinary field of quantitative science and tech-
nology policy studies could shed light on the complex effects that scientific
and technologic advances have on economic activities and social change.
A Century of Science and Technology
In 1945, in his report Science—The Endless Frontier, Vannevar Bush
proposed an idea that struck many people as far-fetched.1 He wrote that the
1V. Bush. Science—The Endless Frontier. Washington, DC: US Government Printing Office,
1945.
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399
APPENDIX D
federal government should fund the research of scientists without knowing
exactly what results the research would yield—an idea that flatly contra-
vened the US government’s historical practice.2
Despite the misgivings of many policy-makers, the US government even-
tually adopted Bush’s idea. The resulting expansion of scientific and techno-
logical knowledge helped produce a half-century of unprecedented techno-
logic progress and economic growth. New technologies based on increased
scientific understanding have enhanced our security, created new industries,
advanced the fight against disease, and produced new insights into ourselves
and our relationship with the world. If the 20th century was America’s cen-
tury, it also was the century of science and technology.
Since 1950, the federal government’s annual support for research and
development (R&D) has grown from less than $3 billion to more than
$130 billion—more than a 10-fold expansion in real terms.3 Today, about
1 in every 7 dollars in the federal discretionary budget goes for R&D. Per-
formers of federal R&D include hundreds of colleges and universities and
many thousands of private companies, federal laboratories, and other non-
profit institutions and laboratories. These institutions produce not only new
knowledge but also the new generations of scientists and engineers who are
responsible for a substantial portion of the innovation that drives changes
in our economy and society.
Major priorities within the federal R&D budget have shifted from the
space race in the 1960s to energy independence in the 1970s to the defense
buildup of the 1980s to biomedical research in the 1990s. In the 1990s, the
nation’s R&D system also began to encounter challenges that it had not faced
before. The end of the Cold War, an acceleration of economic globalization,
the rapid growth of information technologies, new ways of conducting re-
search, and very tight federal budgets led to thorough re-evaluations of the
goals of federal R&D. Though Vannevar Bush’s vision remains intact, the
R&D system today is much more complex, diversified, and integrated into
society than would have been imagined 60 years ago.
In this decade, the challenges to the R&D system have intensified. In-
ternational competitors are now targeting service sectors, including R&D,
just as they have targeted manufacturing sectors in the past. Global devel-
opment and internationalization, new trade agreements, and the rapid flow
of capital are reshaping industries so quickly that policy-makers barely have
time to respond. Similarly, workplace technologies and demands change so
quickly that workers must be periodically retrained to remain competitive.
2A. H. Dupree. Science in the Federal Government: A History of Policies and Activities, 2nd
ed. Baltimore, MD: Johns Hopkins University Press, 1986.
3National Science Foundation, National Science Board. Science and Engineering Indicators
2000. Arlington, VA: National Science Foundation, 2000.
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400 RISING ABOVE THE GATHERING STORM
Throughout modern economies, advantages accrue to individuals, govern-
ments, and companies that are adaptable, forward-looking, knowledgeable,
and innovative.
At the beginning of the 21st century, the United States stands at a cross-
roads. The only way for this nation to remain a high-wage, high-technology
country is to remain at the forefront of innovation. Achieving this goal will
require that the nation remain a leader in the scientific and technological
research that contributes so heavily to innovation.
ACHIEVING BALANCE IN FEDERAL SCIENCE AND
TECHNOLOGY FUNDING
Federal funding for science and technology in the United States histori-
cally has been balanced along several dimensions—between research and
development, between defense and nondefense R&D, between academic
and nonacademic R&D performers, and so on. Much of this balance arises
in a de facto manner from the independent actions of a wide range of array
supporters and performers. But some is the consequence of explicit policy
decisions by the executive and legislative branches.
In the 1995 report Allocating Federal Funds for Science and Technol-
ogy, a committee of the National Research Council laid out five broad
principles designed in part to help the federal government achieve the proper
balance of R&D funding:4
• Make the allocation process more coherent, systematic, and
comprehensive.
• Determine total federal spending for federal science and technology
based on a clear commitment to ensuring US leadership.
• Allocate funds to the best projects and people.
• Ensure that sound scientific and technical advice guides allocation
decisions.
• Improve federal management of R&D activities.
The report recommended that
• The President present an annual comprehensive FS&T budget, in-
cluding areas of increased and reduced emphasis. The budget should be
sufficient to serve national priorities and foster a world-class scientific and
technical enterprise.
• Departments and agencies make FS&T allocations based on clearly
4National Research Council, Committee on Criteria for Federal Support of Research and
Development. Allocating Federal Funds for Science and Technology. Washington, DC: Na-
tional Academy Press, 1995.
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401
APPENDIX D
articulated criteria that are congruent with those used by the Executive
Office of the President and by Congress.
• Congress create a process that examines the entire FS&T budget
before the total federal budget is disaggregated into allocations to appro-
priations committees and subcommittees.
• The President and Congress ensure that the FS&T budget is suffi-
cient to allow the United States to achieve preeminence in a select number
of fields and perform at a world-class level in other major fields.
The Executive Branch responded by providing, as part of the President’s
budget submission, an analysis of the FS&T budget that encompasses fed-
eral funds spent specifically on scientific and technological research pro-
grams, the development and maintenance of the necessary research infra-
structure, and the education and training of scientists and engineers. In
addition, the White House Office of Management and Budget (OMB) and
Office of Science and Technology Policy (OSTP) issue a joint budget memo-
randum that articulates the President’s goals for the upcoming budget year
to aid them in the preparation of agency budgets before submission to OMB.
Analysis of this budget reveals trends in the support of scientific and
technologic research that the broader category of R&D obscures. For ex-
ample, in the president’s FY 2006 budget request, federal R&D would be
up 1% from $131.5 billion to $132.3 billion. But FS&T would be down
1%, from $61.7 billion to $60.8 billion (see Figures R&D-1 and R&D-2).5
(The director of OSTP has pointed out that it can be misleading to compare
proposed budgets with enacted budgets because the latter can contain funds
specified by Congress for research projects that were not included in the
President’s budget.6)
Congress has not yet adopted a process that entails an overall consider-
ation of the scientific and technological research supported by the federal
government.7 Subcommittees in both the House and Senate still consider
portions of the federal R&D budget separately without deliberations or
hearings on the broad objectives of S&T spending. At a minimum, the use
of a common budget classification code could allow Congress more easily
to address science and technology programs in a unified manner.
Overall consideration of the FS&T budget could reiterate the importance
of basic research and of diversity among research supporters and performers.
5Office of Management and Budget. Budget of the United States Government, Fiscal Year
2006. Washington, DC: US Government Printing Office, 2005.
6John Marburger, speech to the 20th Annual AAAS Forum on Science and Technology
Policy, April 21, 2005.
7J. Bingaman, R. M. Simon, and A. L. Rosenberg. “Needed: A Revitalized National S&T
Policy.” Issues in Science and Technology (Spring 2004):21-25.
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2004 2005 2006 Dollar Change: Percent Change:
Actual Estimate Proposed 2005 to 2006 2005 to 2006
402
By Agency
Defense ...................................................................................................................... 65,462 70,422 70,839 417 1%
Health and Human Services ..................................................................................... 28,047 28,752 28,807 55 ........................
NASA ......................................................................................................................... 10,574 10,990 11,527 537 5%
Energy ........................................................................................................................ 8,779 8,629 8,528 –101 –1%
National Science Foundation .................................................................................... 4,160 4,082 4,194 112 3%
Agriculture .................................................................................................................. 2,222 2,415 2,039 –376 –16%
Homeland Security .................................................................................................... 1,053 1,185 1,467 282 24%
Commerce ................................................................................................................. 1,137 1,134 1,013 –121 –11%
Transportation ............................................................................................................ 661 748 808 60 8%
Veterans Affairs ......................................................................................................... 866 784 786 2 ........................
Interior ........................................................................................................................ 627 615 582 –33 –5%
Environmental Protection Agency ............................................................................. 661 572 569 –3 –1%
Other .......................................................................................................................... 1,089 1,243 1,145 –98 –8%
Total ...................................................................................................................... 125,338 131,571 132,304 733 1%
Basic Research
Defense ...................................................................................................................... 1,358 1,513 1,319 –194 –13%
Health and Human Services ..................................................................................... 14,780 15,124 15,246 122 1%
NASA ......................................................................................................................... 2,473 2,368 2,199 –169 –7%
Energy ........................................................................................................................ 2,847 2,887 2,762 –125 –4%
National Science Foundation .................................................................................... 3,524 3,432 3,480 48 1%
Agriculture .................................................................................................................. 829 851 788 –63 –7%
Homeland Security .................................................................................................... 68 85 112 27 32%
Commerce ................................................................................................................. 43 58 71 13 22%
Transportation ............................................................................................................ 20 38 41 3 8%
Veterans Affairs ......................................................................................................... 347 315 315 ...................... ........................
Interior ........................................................................................................................ 37 36 30 –6 –17%
Environmental Protection Agency ............................................................................. 113 66 70 4 6%
Other .......................................................................................................................... 149 155 175 20 13%
Subtotal ................................................................................................................ 26,588 26,928 26,608 –320 –1%
FIGURE R&D-1 Federal research and development spending, in millions of dollars, for all R&D and for basic research, by agency,
2004-2006.
SOURCE: Executive Office of the President. Budget of the United States Government, Fiscal Year 2006, Part Two: Analytical
Perspectives. Washington, DC: US Government Printing Office, 2005. P. 66. Available at: http://www.ostp.gov/html/budge/2006/
FY06RDChapterFinal.pdf.
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403
APPENDIX D
2004 2005 2006 Dollar Change: Percent Change:
Actual Estimate Proposed 2005 to 2006 2005 to 2006
Applied Research
Defense ...................................................................................................................... 4,351 4,851 4,139 –712 –15%
Health and Human Services ..................................................................................... 13,007 13,274 13,410 136 1%
NASA ......................................................................................................................... 3,006 2,497 3,233 736 29%
Energy ........................................................................................................................ 2,693 2,760 2,709 –51 –2%
National Science Foundation .................................................................................... 266 279 276 –3 –1%
Agriculture .................................................................................................................. 1,055 1,093 942 –151 –14%
Homeland Security .................................................................................................... 247 346 399 53 15%
Commerce ................................................................................................................. 828 825 763 –62 –8%
Transportation ............................................................................................................ 349 423 494 71 17%
Veterans Affairs ......................................................................................................... 476 430 433 3 1%
Interior ........................................................................................................................ 538 530 495 –35 –7%
Environmental Protection Agency ............................................................................. 423 365 386 21 6%
Other .......................................................................................................................... 599 562 553 –9 –2%
Subtotal ................................................................................................................ 27,838 28,235 28,232 –3 ........................
Development
Defense ...................................................................................................................... 59,701 63,903 65,331 1,428 2%
Health and Human Services ..................................................................................... 41 54 28 –26 –48%
NASA ......................................................................................................................... 3,189 3,727 3,511 –216 –6%
Energy ........................................................................................................................ 1,992 1,846 1,959 113 6%
National Science Foundation .................................................................................... ................ .................... .................... ...................... ........................
Agriculture .................................................................................................................. 159 157 146 –11 –7%
Homeland Security .................................................................................................... 481 599 746 147 25%
Commerce ................................................................................................................. 152 149 90 –59 –40%
Transportation ............................................................................................................ 279 269 254 –15 –6%
Veterans Affairs ......................................................................................................... 43 39 38 –1 –3%
Interior ........................................................................................................................ 49 46 54 8 17%
Environmental Protection Agency ............................................................................. 125 141 113 –28 –20%
Other .......................................................................................................................... 324 495 396 –99 –20%
Subtotal ................................................................................................................ 66,535 71,425 72,666 1,241 2%
Facilities and Equipment
Defense ...................................................................................................................... 52 155 50 –105 –68%
Health and Human Services ..................................................................................... 219 300 123 –177 –59%
NASA ......................................................................................................................... 1,906 2,398 2,584 186 8%
Energy ........................................................................................................................ 1,247 1,136 1,098 –38 –3%
National Science Foundation .................................................................................... 370 371 438 67 18%
Agriculture .................................................................................................................. 179 314 163 –151 –48%
Homeland Security .................................................................................................... 257 155 210 55 35%
Commerce ................................................................................................................. 114 102 89 –13 –13%
Transportation ............................................................................................................ 13 18 19 1 ........................
Veterans Affairs ......................................................................................................... ................ .................... .................... ...................... N/A
Interior ........................................................................................................................ 3 3 3 ...................... ........................
Environmental Protection Agency ............................................................................. ................ .................... .................... ...................... N/A
Other .......................................................................................................................... 17 31 21 –10 –32%
Subtotal ................................................................................................................ 4,377 4,983 4,798 –185 –4%
FIGURE R&D-2 Federal research and development spending, in millions of dollars,
by agency, for applied research, development, facilities, and equipment, 2004-2006.
SOURCE: Executive Office of the President. Budget of the United States Government,
Fiscal Year 2006, Part Two: Analytical Perspectives. Washington, DC: US
Government Printing Office, 2005. P. 67. Available at: http://www.ostp.gov/html/
budget/2006/FY06RDChapterFinal.pdf.
Especially when budgets are tight, basic research can be displaced by the
more immediate needs of applied research and technology development. In
fact, less than half of all federal R&D funding is allocated for basic and
applied research (see Figure R&D-3). The FS&T budget has increased since
2000, but these increases are primarily due to increases in funding of the
National Institutes of Health (NIH). Nondefense-related R&D funding has
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404 RISING ABOVE THE GATHERING STORM
Federal R&D Spending
Including Facilities and
Equipment $123 Billion
Research
$54 Billion
Federal Science
80%
and Technology
Budget $59 Billion
10%
10%
Non-R&D
FIGURE R&D-3 Funding concepts in FY 2004 budget proposal.
SOURCE: National Science Board. Science and Engineering Indicators 2004. NSB
04-01. Arlington, VA: National Science Foundation, 2004. Figure 4-12.
60
50
DHS Nondefense
40
NIH
30
20
Nondefense, R&D
Minus NIH, DHS
10
0
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
FIGURE R&D-4 Selected trends in nondefense R&D, FY 1976-FY 2006, in billions
of constant FY 2005 dollars.
SOURCE: American Association for the Advancement of Science. Chart: Selected
Trends in Nondefense R&D: FY 1976-2006. Washington, DC: American Association
for the Advancement of Science, 2005. Available at: http://www.aaas.org/spp/rd/
trnon06c.pdf.
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405
APPENDIX D
been stagnant in recent years (see Figure R&D-4). Recently, the FS&T bud-
get has been declining since the charge to double NIH funding has been com-
pleted (see Figure R&D-5). Recent Department of Defense (DOD) budgets
offer another example—ever the last decade, the resources provided for basic
research by the DOD have declined substantially.8 Recent trends show that
while defense R&D budgets have been increasing overall, the amount of re-
sources allocated to science research in DOD is decreasing (see Figures R&D-
6A and B). This lack of support for basic research could have major conse-
quences for the development of necessary future military capabilities.
Allocating Federal Funds for Science and Technology also recom-
mended that:
• R&D conducted in federal laboratories focus on the objectives of
the sponsoring agency and not expand beyond the assigned missions of the
laboratories. The size and activities of each laboratory should correspond
to changes in mission requirements.
• FS&T funding generally favor academic institutions because of their
flexibility and inherent quality control and because they link research to
education and training in science and engineering.
• FS&T budget decisions give preference to funding projects and
people rather than institutions. That approach will increase the flexibility in
responding to new opportunities and changing conditions.
• Competitive merit review, especially that involving external review-
ers, be the preferred way to make awards, because competition for funding
is vital to maintain the high quality of FS&T programs.
• Evaluations of R&D programs and of those performing and spon-
soring the work also incorporate the views of outside evaluators.
• R&D be well managed and accountable but not micromanaged or
hobbled by rules and regulations that have little social benefit.
Diversity cannot be an excuse for mediocrity. People, projects, and in-
stitutions need to be reviewed to ensure that they are meeting national needs
in science and technology. Open competition involving evaluation of merit
by peers is the best-known mechanism to maintain support for the highest-
quality projects and people. Quality also can be maintained by knowledge-
able program managers who have established external scientific and techni-
cal advisory groups to help assess quality and to help monitor whether
agency needs are being met.
Possible actions for the federal government to maintain the diversity
8National Research Council, Committee on Department of Defense Basic Research. Assess-
ment of Department of Defense Basic Research. Washington, DC: The National Academies
Press, 2005.
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70,000
406
60,000
50,000
Other Departments
Dept of Agriculture
40,000
Dept of Defense
Dept of Energy
NSF
30,000
Total Budget
NASA
(millions of dollars)
NIH
20,000
10,000
0
2000 2001 2002 2003 2004 2005 2006
actual actual actual actual actual estimate proposed
FIGURE R&D-5 Federal science and technology (FS&T) budget, in millions of dollars, FY 2000-FY 2006.
SOURCE: Based on data in several editions of Executive Office of the President. Budget of the United States Government, Part Two:
Analytical Perspectives. Washington, DC: US Government Printing Office, 2005. Chapter 5. For research and development in the FY
2006 budget, see Table 5-3. Available at: http://www.gpoaccess.gov/usbudget.fy06/browse.html.
OCR for page 407
407
APPENDIX D
80
Billions of Constant FY 2005 Dollars
70
DHS Defense R&D
60
50
DOE Defense R&D
40
Other DOD R&D 6.4-
30
20
DOD S&T 6.1-6.3
10
0
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
FIGURE R&D-6A Trends in defense R&D, FY 1976-FY 2006, in billions of
constant fiscal year (FY) 2005 dollars, by agency.
SOURCE: American Association for the Advancement of Science. Chart: Trends in
Defense R&D: FY 1976-2006. Washington, DC: American Association for the
Advancement of Science, February 2005. Available at: http://www.aaas.org/spp/rd/
trdef06c.pdf.
DOD 6.1 Expenditures
20
1,600 6.1 Percentage of Total DOD Budget
6.1 Percentage of DOD S&T Budget
18
1,400
Millions of Constant 2004 Dollars
16
1,200
14
1,000
12
Percent
800 10
8
600
6
400
4
200
2
0 0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
FIGURE R&D-6B Trends in Department of Defense (DOD) 6.1 R&D, FY 1994-
FY 2005, in millions of constant FY 2004 dollars.
SOURCE: National Science Board. Science and Engineering Indicators 2004. NSB
04-01. Arlington, VA: National Science Foundation, 2004.
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408 RISING ABOVE THE GATHERING STORM
and balance of federal funding for science and technology include the
following:
• Create a process in Congress that examines the entire FS&T budget
before the total federal budget is aggregated into allocations to appropria-
tions committees and subcommittees.9
• Establish a stronger coordinating and budgeting role for OSTP to
promote cohesion among federal R&D agencies.10
• Maintain the diversity of FS&T funding in terms of sources of fund-
ing, performers, time horizons, and motivations.11
• Balance funding between basic and applied research and across fields
of research to stimulate innovative cross-disciplinary thinking.12
• Protect funding for high-risk research by setting aside a portion of
the R&D budgets of federal agencies for this purpose.13
• Maintain a favorable economic and regulatory environment for capi-
talizing on research—for example, by using tax incentives to build stronger
partnerships among academe, industry, and government.14
• Encourage industry to boost its support of research conducted in
colleges and universities from 7 to 20% of total academic research over the
next 10 years.15
ACHIEVING ADEQUACY IN FEDERAL SCIENCE AND
TECHNOLOGY FUNDING
Given the importance of maintaining balance and diversity in the FS&T
budget, the next logical question is, What is the appropriate magnitude of
federal support for science and technology?
In 1993, the Committee on Science, Engineering, and Public Policy
9Committee on Criteria for Federal Support of Research and Development, 1995.
10National Research Council, Board on Science, Technology, and Economic Policy. Trends
in Federal Support of Research and Graduate Education. Washington, DC: National Academy
Press, 2001.
11NAS/NAE/IOM. Capitalizing on Investments in Science and Technology. Washington,
DC: National Academy Press, 1999.
12National Academy of Engineering, Committee on the Impact of Academic Research on
Industrial Performance. The Impact of Academic Research on Industrial Performance. Wash-
ington, DC: The National Academies Press, 2003.
13Council on Competitiveness. Innovate America. Washington, DC: Council on Competi-
tiveness, 2004.
14NAS/NAE/IOM. Capitalizing on Investments in Science and Technology. Washington,
DC: National Academy Press, 1999.
15National Research Council, Office of Special Projects. Harnessing Science and Technology
for America’s Economic Future: National and Regional Priorities. Washington, DC: National
Academy Press, 1999.
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409
APPENDIX D
(COSEPUP) of the National Academy of Sciences, the National Academy of
Engineering, and the Institute of Medicine established two broad goals to
guide federal investments in science and technology:16
• The United States should be among the world leaders in all major
areas of science. Achieving this goal would allow this nation quickly to
apply and extend advances in science wherever they occur.
• The United States should maintain clear leadership in some areas of
science. The decision to select a field for leadership would be based on
national objectives and other criteria external to the field of research.
These goals provide a way of assessing the adequacy of federal funding
for science and technology. Being world class across fields requires that the
United States have the funding, infrastructure, and human resources for
researchers to work at the frontiers of research. Preeminence in fields rel-
evant to national priorities requires that policy-makers choose specific ar-
eas in which to invest additional resources.
An important way of measuring leadership and preeminence in fields
and subfields of research is benchmarking of US research efforts against
those in other countries. Experiments with benchmarking have demon-
strated that data can be gathered fairly readily for analysis.17 Benchmarking
analyses then can be converted into funding guidance that takes into ac-
count the activities of other research performers (including industry and
other countries) and the inherent uncertainties of research.
Responding to abundant opportunities and national priorities in science
and technology, the federal government has increased R&D funding sub-
stantially in recent years. From 1990 to 2002, inflation-adjusted investment
by the federal government in academic research went up 66%.18 Increases in
total R&D have been especially dramatic in the last few years because
of increases for defense weapons development, the creation of homeland-
security R&D programs, and the effort to double the budget of NIH.
However, as a percentage of gross domestic product (GDP), R&D has
fallen from 1.25% in 1985 to about 0.75% today, and a continuation of
current trends will extend this decline into the future (see Figure R&D-7).
Compared with the European Union, the Organisation for Economic Co-
operation and Development, and Japan, US federal R&D expenditures as a
16NAS/NAE/IOM. Science, Technology, and the Federal Government: National Goals for a
New Era. Washington, DC: National Academy Press, 1993.
17NAS/NAE/IOM. Experiments in International Benchmarking of US Research Fields.
Washington, DC: National Academy Press, 2000.
18National Science Board. Science and Engineering Indicators 2004. NSB 04-01. Arlington,
VA: National Science Foundation, 2004.
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410
FIGURE R&D-7 R&D share of GDP, 1953-2002.
SOURCE: National Science Board. Science and Engineering Indicators 2004. NSB 04-01. Arlington, VA: National Science Foundation,
2004. Figures 4-3 and 4-5.
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411
APPENDIX D
share of GDP are declining (see Figure R&D-8). Sweden, Finland, Japan,
and Korea all invest a larger percentage of their GDP in R&D than the
United States (see Figure R&D-9). In the president’s FY 2006 budget re-
quest, most R&D programs would drop in real terms, and overall expendi-
tures for R&D would fail to keep pace with inflation for the first time in
more than a decade.19 Funding for all three multiagency R&D initiatives—
Networking and Information Technology R&D, the National Nanotech-
nology Initiative, and the Climate Change Science Program—would drop
in FY 2006. Furthermore, with record-breaking budget deficits and new
federal obligations ranging from the war in Iraq to the expansion of Medi-
care to pay for prescription drugs, prospects for outyear increases in R&D
are dim.
The doubling of the NIH budget from 1998 to 2003 implicitly acknowl-
edged that the rate of return on additional federal investments in science
and technology is very high. Similar opportunities exist in the physical sci-
ences, engineering, mathematics, computer science, environmental science,
and the social and behavioral sciences—fields in which federal funding has
been essentially flat for the last 15 years (see Figure R&D-10). Microelec-
tronics, biotechnology, information technology, systems analysis, alterna-
tive fuels, robotics, nanotechnology, and many other research areas all have
the potential to transform entire industries. Even such seemingly esoteric
fields as cosmology and elementary particle physics could reveal new as-
pects of matter that not only could have practical implications but will
inspire future generations of scientists, engineers, and mathematicians.
In addition, increases in funding of fields outside the biomedical sci-
ences can pay dividends by complementing the tremendous advances occur-
ring in molecular biology. Much of the recent progress in the health sci-
ences has been underpinned by earlier achievements in mathematics, the
physical sciences, and engineering. Deciphering the human genome, for ex-
ample, was heavily dependent on advancements in robotics and computers.
The development of modern imaging machines was made possible to a great
extent by advances in engineering and mathematics.
The federal government could take several steps to ensure that funding
for science and technology is adequate across fields:
• Increase the budget for mathematics, the physical sciences, and engi-
neering research by 12% a year for the next 7 years in the research accounts
of the Department of Energy, the National Science Foundation, the National
Institute for Standards and Technology, and the Department of Defense.20
19American Association for the Advancement of Science. AAAS Analysis of R&D in the FY
2006 Budget. Washington, DC: American Association for the Advancement of Science, 2006.
20Alliance for Science & Technology Research in America. “Basic Research: Investing in
America’s Innovation Future.” Presentation for the House Republican High-Tech Working
Group, March 31, 2004.
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412 RISING ABOVE THE GATHERING STORM
Japan United States EU25
OECD
3.5
GERD as a Percentage of GDP
3.0
2.5
2.0
1.5
1.0
1996 1997 1998 1999 2000 2001 2002 2003
FIGURE R&D-8 Trends in R&D intensity, in United States, Japan, OECD, and EU,
1996-2003. R&D intensity is the gross domestic expenditure on R&D (GERD) as a
percentage of GDP.
SOURCE: Organisation for Economic Co-operation and Development. Main Science
and Technology Indicators 2004. Paris: OECD, June 2004.
2003 1995
4.5
4.0
Gross Expenditure on R&D as
3.5
Percentage of GDP
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Sweden
Finland
Japan
Korea
United States
Total OECD
EU25
Australia
China
New Zealand
Mexico
FIGURE R&D-9 Gross expenditure on R&D investments as a percentage of GDP,
for select countries, OECD, and EU, 1995 and 2003.
SOURCE: Organisation for Economic Co-operation and Development. Main Science
and Technology Indicators 2005. Paris: OECD, June 2005. Available at: http://
www.oecd.org/document/26/0,2340,en_2649_34451_1901082_1_1_1_1,00.html.
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413
APPENDIX D
Obligations in Billions of Constant FY 2001 Dollars
30
Life Sciences
25 Engineering
Physical Sciences
20
Environmental
Sciences
15 Math/Computer
Sciences
Social Sciences
10
Psychology
5 Other*
0
* Other includes research
1970 1975 1980 1985 1990 1995 2000 not classified
(includes basic research
and applied research;
excludes development
and R&D facilities).
FIGURE R&D-10 Trends in federal research by field, FY 1970-FY 2004, in
obligations of billions of constant FY 2004 dollars.
SOURCE: American Association for the Advancement of Science. Chart: Trends in
Federal Research by Discipline: FY 1970-2004. Washington, DC: American
Association for the Advancement of Science, February 2005. Available at: http://
www.aaas.org/spp/rd/discip04.pdf.
• Return federal R&D funding to at least 1% of the US GDP.21
• Minimize earmarks in science and technology funding because these
types of research requests diminish the funding available for competitive
merit-reviewed research.22
• Provide a tax credit to corporations that fund basic research in sci-
ence and technology at our nation’s universities.
• Make the R&D tax credit permanent to promote private support of
R&D, as requested by the Administration in the FY 2006 budget proposal.
LEARNING MORE ABOUT THE EFFECTS OF RESEARCH
Innovation has become more important than capital or labor in boost-
ing economic productivity, but the course and effects of innovation are
much harder to predict and understand. New technologies can spread rap-
21Council on Competitiveness. Innovate America. Washington, DC: Council on Competi-
tiveness, 2004.
22NAS/NAE/IOM, 2003.
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414 RISING ABOVE THE GATHERING STORM
idly through a society, transforming multiple areas of economic activity and
in turn triggering further innovations. The prime example is information
technology, which has had a dramatic and accelerating influence on manu-
facturing, the provision of services, and other economic activities.
Intensive study of innovation as an engine of economic growth and
social change in an extremely complex social context could provide guid-
ance for policy-makers and other leaders. For example, is the current fed-
eral support of science and technology appropriately balanced across fields?
What would be the effects if federal R&D were returned to its historical
high as a share of GDP?
Another important topic for research is the organization of the federal
agencies that support R&D. New organizational models could be explored,
performance metrics developed, and approaches tested.
Options for the federal government include the following:
• Support the development of a new interdisciplinary field of quantita-
tive science and technology-policy studies that could work to predict the
effect of specific science and technology projects on the world’s economies
and workforces.23
• Support research to examine the organization models of R&D agen-
cies and potential changes in practices and structures.
23Marburger, 2005.
