The Domino Effects of Federal Research Funding.
The extent to which federal investment in research crowds out or decreases incentives for investment from other funding sources remains an open question. Scholarship on research funding has focused on the relationship between federal and industry or, more comprehensively, non-federal funding without disentangling the other sources of research support that include nonprofit organizations and state and local governments. This paper extends our understanding of academic research support by considering the relationships between federal and non-federal funding sources provided by the National Science Foundation Higher Education Research and Development Survey. We examine whether federal research investment serves as a complement or substitute for state and local government, nonprofit, and industry research investment using the population of research-active academic science fields at U.S. doctoral granting institutions. We use a system of two equations that instruments with prior levels of both federal and non-federal funding sources and accounts for time-invariant academic institution-field effects through first differencing. We estimate that a 1% increase in federal research funding is associated with a 0.411% increase in nonprofit research funding, a 0.217% increase in state and local research funding, and a 0.468% increase in industry research funding, respectively. Results indicate that federal funding plays a fundamental role in inducing complementary investments from other funding sources, with impacts varying across academic division, research capacity, and institutional control.
Department of Management, Lundquist College of Business, University of Oregon, Eugene, Oregon, United States of America.
Lauren
http://orcid.org/0000-0002-0658-5367
L
Lanahan
Price School of Public Policy, University of Southern California, Los Angeles, California, United States of America.
Alexandra
A
Graddy-Reed
Department of Public Policy, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina, United States of America.|Science of Science Innovation and Policy, Directorate of Social, Behavioral & Economic Sciences, National Science Foundation, Arlington, Virginia, United States of America.
Maryann P
MP
Feldman
D016001:Confidence Intervals; D005380:Financing, Government / Q000191:economics*; D018803:Models, Economic; D057766:Policy; D012044:Regression Analysis; D012106:Research / Q000191:economics; D012109:Research Support as Topic / Q000191:economics*