University R&D Funding Strategies in a Changing Federal Funding Environment

Science and Public Policy, September 2014, DOI: 10.1093/scipol/scu054

14 Pages Posted: 6 Nov 2014

See all articles by Margaret Blume-Kohout

Margaret Blume-Kohout

Gettysburg College - Department of Economics; Gettysburg College

Krishna Kumar

RAND Corporation - Labor and Population

Neeraj Sood

University of Southern California; National Bureau of Economic Research (NBER); RAND Corporation; University of Southern California - Schaeffer Center for Health Policy and Economics

Date Written: September 4, 2014

Abstract

This paper evaluates how changes in US National Institutes of Health (NIH) funding levels affected US universities’ total biomedical R&D efforts, over a period of dramatic change in the federal funding environment. Instrumental variables estimation reveals that during the NIH budget doubling period (1998-2003), each federal dollar that US universities received spurred an additional $0.26 in research support from non-federal sources, with stronger complementarity found among historically less-research-intensive institutions. However, in the more competitive post-doubling environment (2006 onwards), the more research-intensive PhD-granting universities substituted funding from non-federal sources to maintain stable levels of R&D expenditures. In contrast, at non-PhD-granting and historically less-research-intensive institutions, total R&D funding and expenditures declined overall with reduced availability of federal funds. However, the effect of successful federal applications on subsequent non-federal investment remained significant and positive for this latter group, suggesting federal R&D funding may play an important signaling role.

JEL Classification: I23, H59

Suggested Citation

Blume-Kohout, Margaret E and Kumar, Krishna and Sood, Neeraj, University R&D Funding Strategies in a Changing Federal Funding Environment (September 4, 2014). Science and Public Policy, September 2014, DOI: 10.1093/scipol/scu054, Available at SSRN: https://ssrn.com/abstract=2506815

Margaret E Blume-Kohout (Contact Author)

Gettysburg College - Department of Economics ( email )

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Gettysburg College ( email )

300 North Washington Street
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Krishna Kumar

RAND Corporation - Labor and Population ( email )

United States

Neeraj Sood

University of Southern California ( email )

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National Bureau of Economic Research (NBER)

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RAND Corporation ( email )

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University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

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