Historically, federal funding of R&D associated with advances in health and the development of computer-related products and services has been substantial and important. This is particularly the case for support of fundamental long-range research where industry investment is often missing.1 Federal investment in the life sciences2 and IT3 increased many-fold from the 1950s to the 1990s. In the 1990s, however, efforts to reduce the federal budget deficit and the post-Cold War reductions in the defense budget affected federal R&D funding in terms of both amount—where funding was reduced for several years—and composition—where some research fields expanded greatly relative to others. Budget authority for federal R&D funding peaked in FY 1992 in real terms. By 1996, it had fallen by 9 percent. Real growth in the R&D budget resumed in 1997, but the federal investment in R&D did not equal the 1992 level until the FY 2000 budget. Research was less affected.4 Federal research funding went flat in 1993 and began to increase again in 1997 (see Figure 1).

As we will see in more detail in Part IV, the pattern of funding by field in the area of science and engineering changed substantially during the period from 1993 to 1997. During this period, overall federal funding for research was flat in real terms.5 The Administration and Congress, however, continued to increase the budget of the National Institutes of Health (NIH), which provides more than 80 percent of the federal support for the life sciences, including the biological and medical sciences.6 At the same time, they responded to the end of the Cold


For a recent review of the importance of the federal role in computing research and advances in computer-related technology (including networking), see National Research Council, Funding a Revolution: Government Support for Computing Research, Washington, D.C.: National Academy Press, 1999. For the impact of federally funded research in the pharmaceuticals and biotechnology industry, see I. Cockburn, et al. “Pharmaceuticals and Biotechnology,” U.S. Industry in 2000: Studies in Competitive Performance, Washington, D.C.: National Academy Press, 1999.


This includes the biological, environmental, agricultural, and medical sciences.


This is composed of computer science and electrical engineering.


R&D consists of basic research, applied research, and development. The focus in this paper is research (basic and applied), which can be classified by field of science and engineering. R&D is used to compare federal and nonfederal funding in Part III, because the data on funding of research by academia and industry cannot easily be broken out. Section IV looks at funding of basic research.


See Stephen A.Merrill and Michael McGeary, “Who is balancing the federal research portfolio and how?” Science 285, (September 10, 1999): 1979, p. 1680.


Unless otherwise indicated, all budget amounts and changes are expressed in constant 1999 dollars, using the fiscal year GDP deflators published in the President’s 2002 budget request (OMB, 2001: Table 10.1). Except for R&D in Table II–1, the numbers are obligations rather than budget authority or outlays. Obligations are “the amounts for orders placed, contracts placed, services received, and similar transactions during a given period, regardless of when the funds were appropriated and when future payment of money is required” (NSF, 2001). In this paper, the words funding, support, and investment will be used interchangeably with the term obligations.

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