Does academic research cause economic growth?

In most developed countries, government massively funds through academic grants, government laboratories, tax credits and research contracts: government R&D alone can often reach 1% of the GDP. In Canada, the government loves tax credits. In the US, the government spends about 60% of all its R&D funding on the military.

Is this government funding a good thing?

What economists tell us is that R&D funding is probably the most important factor determining economic growth. If you want economic growth, then you should be favorable to more research funding. And therefore, it follows that government funding for research ought to be a good idea.

The problem is that it is private R&D that contributes to economic growth, not government R&D:

The overall rate of return to R&D is very large, perhaps 25 percent as a private return and a total of 65 percent for social returns. However, these returns apply only to privately financed R&D in industry. Returns to many forms of publicly financed R&D are near zero. (Sveikauskas, Bureau of Labor Statistics, Washington, 2007)

The ubiquitous and fairly pessimistic finding which emerges from the literature is that privately funded R&D contributes significantly to output growth, whereas publicly financed R&D has little or no direct effect. (Capron and van Pottelsberghe, 1998)

(…) regressions including separate variables for business-performed R&D and that performed by other institutions (mainly public research institutes) suggest that it is the former that drives the positive association between total R&D intensity and output growth. (…)
(The Sources of Economic Growth in OECD Countries, 2003).

So the argument that economists have to make to justify government spending on R&D is that when the government pays for research, it entices companies to invest more. Thankfully, the correlation between public spending on R&D and private spending is good, except maybe for government-specific programs (such as the military R&D that the US is so fond of). As a policy, it seems that it makes sense to entice individuals and companies to do more research. Nevertheless, some economists remain cautious:

(…) the government should be careful in stimulating higher research expenditures. Recent rates of return on R&D are estimated to have reached an all-time low spanning the last 45 years, (…) Firms are also not convinced any more that their R&D investments will yield high returns (…) (Lang, 1999)

Enticing private companies to do more R&D is fine, but are there strong mechanisms turning academic research into more private-sector R&D? There is a correlation, but is there a causal relationship? Most academic research is far removed from economic activities and few professors turn their research into viable products.

Do countries that publish more also see more growth? Yes they do (but wait before concluding):

The correlation between GDP and publications is (…) high (…) for all countries in the sample analyzed here (77.7-99.6%) (Lee et al., 2011)

This correlation can mean one of two things (or a mix of both):

  1. Richer countries can afford more academic research.
  2. More academic research makes country richer.

Which is it?

We have some historical evidence in this respect.

In the 17th and 18th centuries, France had the best funded intellectuals in the world. Meanwhile, the British government did not subsidize science and scholarship much. Yet it is in Great Britain that we saw the rise of the industrial evolution and of modern science.

Similarly, the US saw a massive economic growth from its early days all the way to WWII… without any public funding for R&D. While other countries like France kept on subsidizing scholarship, it did not put them ahead economically. The US became the dominant world power in 1950 without having invested much at all, as a government, in science and engineering. The US only started investing seriously in research at the end of the 1950s, because it feared the USSR. The USSR was investing in engineering through the state apparatus and the US felt that it had to match it. Remarkably, these massive investments were not followed by an increase in growth. And we know what happened to the USSR.

Of course, today, the US is subsidizing academic research generously: according to some sources, the US is twice as generous as Europe with respect to per capita government R&D. But is the US a wealthy country because of these subsidies, or can it afford these subsidies because its wealth?

Did China get richer because it grew its Universities, or did it grew its Universities because it was richer?

Economists can answer these questions using Granger causality tests. Granger is the economist who showed that we could use the analysis of time series data to establish causality between variables.

And the evidence indicates that, for wealthy countries, government funding for academic research does not cause economic growth:

For European Community member states, the US and Japan correlation between the GDP and number of publications of a given year proved to be non-significant. (…) Studying data referring to consecutive time periods revealed that there is no direct relationship between the GDP and information production of countries. (Vinkler, 2008)

For [rich nations], there is no significant causal relationship between research production and the economy. (Lee et al., 2011)

Conclusion: There are good reasons to pursue academic research. However, academic research is more of a gift economy than an economic growth policy, at least for rich countries. Richer countries can afford to do more academic research, but academic research is not what makes you rich (I should know!).

Further reading: For supporting evidence, see Sex, Science And Profits by Terence Kealey and Faith Based Science Policy by Roger Pielke, Jr. For contrarian evidence, see Federal Support for Research and Development and The iPad wouldn’t be here without federal research dollars (via Greg Linden). Moreover, you may want to have a look at Where Good Ideas Come From by Steve Johnson for an anecdote-based analysis.

Disclosure: I have worked in industry R&D, in government R&D and as an academic researcher. I have held a federal research grant for over 10 years. My job would not exist without government funding.

Daniel Lemire, "Does academic research cause economic growth?," in Daniel Lemire's blog, February 26, 2013.

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Daniel Lemire

A computer science professor at the University of Quebec (TELUQ).

51 thoughts on “Does academic research cause economic growth?”

  1. Nice argument, but there quite a few prevailing schools of thought on this which curiously you didn’t mention. In particular, the essential idea that R&D funded by the government is much more blue sky, whilst privately funded R&D tends to be much closer to product.

    Thus, the cycle of turning an idea into a product most often starts at a University which prototypes an idea and establishes it is workable [many ideas get culled at this point]; then, a private firm takes over this idea [or is created to exploit it], at which point significant further R&D is required to actually get to product.

    You should see “Where Good Ideas Come From” by Steve Johnson, and “Wikinomics” by Tapscott & Williams … their both a great read!

    1. Good point, I also felt his argument was incomplete because he did not mention that universities generally do not go on to exploit the idea and turn it into a viable product. Nothing mentioned on the ties between academic research and the related industry as well. If there are no strong ties then all the ideas are for nothing, right?

  2. It can be hard to draw the line between private and public spending on R&D. For instance, a lot of private universities are funded from both the industry and the government. And universities does drive innovations and create wealth. Just remember Google and other recent startups.

  3. I think you forgetting something. yes modey fuel research, but without government funded research only the idiot science R&D projects are funded.

    Nuclear power, Niagra falls water power plant, CERN Super collider, any form of math beyond calculus, GPS.

    The thing is a government must spend money on technology which must be explored without any immediate return.

    and after the foundation is layed by the government, then the idiot moneymaking R&D can be made.

  4. I’ve read articles suggesting that Germany’s rise as an industrial power (surpassing Britain where the Industrial Revolution kicked off), was fuelled in part by a very liberal publishing regime that paid little attention to copyright laws. The result is supposed to have been a large volume of cheap books available to the public and rapid dissemination of new knowledge. Any thoughts on this?

  5. So fostering economic growth is not an argument to fund research. It would be interesting to hear how you would defend a necessity for research as a gift economy then. E.g., why should society help us out on doing what we love? After all, many people hold jobs they don’t particularly appreciate while we have the luxury to follow our dreams (idealistically speaking). If we choose this path, parhaps if would be fair to pay a price for that choice?

  6. Goverment R&D and industry R&D are apples and oranges – in general, the “D” part brings economic benefits and is done by industry, and the “R” part doesn’t get direct benefits but is neccessary for the development to flourish.

    For example, what many Silicon Valley VC’s seem to be saying is that the startup economic powerhouse there is enabled mainly by the fact that cutting edge research happens nearby – and it seems quite likely that if this research would be eliminated (de-funded) then after a decade Silicon Valley would be no better than the other global startup hubs, which generate far less economic value.

  7. Actually, Britain did fund research in the 17th century.

    It did so via the Chruch of England. In fact it was a notable historical oddity that Isaac Newton did not take “holy orders” when so many of his fellows did.

    For two centuries, middle class educated men were given a job that paid pocket money plus residence, that required only a few hours a week (writing a sermon, giving mass, visting a few parishoners). Thes people included many famous scientists and writers (Lewis Carroll – author and mathematician) and the practice was widespread in the 17th century.

  8. It is irrelevant as to whether it was state policy. What is relevant is whether research grants existed (whether intentional or not).

    In the UK, It was not just Oxford. Parishes all over the UK were essentially hotbeds of undirected research.

    I might argue that it is not the amount of money – but rather the devil is in the details. The CofE apparently had an interesting attitude to science – I quote from Wikipedia under the entry for Robert Hooke discussing Dr Busby (reverend):

    Work by people as disparate as Darwin (Theology, Cambridge) and Stephen Hale (vicar) were all in part subsidized by the CofE.

  9. I am lucky in that I have a very poor grasp of history – so I do fresh research any time someone posits some extrapolation such as yours and I feel interested enough to do so.

    There is no doubt that scots were inventive and entrepreneurial in the industrial revolution, and so were many northerners (Stephenson) and welshmen (Trevithick). This however was much later than the period you mentioned (17 century).

    I notice that your comment tool stripped my quote above – I will repost it here. BTW – I am that interesting breed, the English Roman Catholic, so I have no axe to grind when promoting the CofE as a force in the development of science.

    ‘Busby, an ardent and outspoken Royalist (he had the school observe a fast-day on the anniversary of the King’s beheading), was by all accounts trying to preserve the nascent spirit of scientific inquiry that had begun to flourish in Carolean England but which was at odds with the literal Biblical teachings of the Protectorate. To Busby and his select students the Anglican Church was a framework to support the spirit of inquiry into God’s work, those who were able were destined by God to explore and study His creation, and the priesthood functioned as teachers to explain it to those who were less able. This was exemplified in the person of George Hooper, the Bishop of Bath and Wells, whom Busby described as “the best scholar, the finest gentleman and will make the completest bishop that ever was educated at Westminster School”.’.

  10. The conclusion is false. Gov funding has huge effects, but with a large time delay e.g. DARPA’s arpanet (internet) and GPS.

    Industry focuses on more immediate tech.

  11. @Nicholas DeWaal

    Before about 1958, government funding for science and engineering was tiny. It changed all of a sudden when NASA came about. This was not followed then, or later, by historically higher economic growth.

  12. Daniel,

    I think what you really seem to be missing (or unintentionally stating) is that the amount of research funding does not correlate well with the economic growth produced.
    You claim the entire Industrial revolution as a result of the invention of the steam engine.
    One might make a similar claim of the internet economy.
    For all the R&D projects funded by both private and public organisations there will be many duds and a few successes. Conventional wisdom is that public funded R&D goes to those areas that private industry would not otherwise fund.
    The reason for public funding of these projects might not just be that the resultant growth is too far out for the private companies to stand. There are reasons beyond economic growth (no matter the timescale) that the public may choose to fund R&D.
    This article seems to attempt to make a bunch of correlatory data fit an argument without looking at the subject in a scientific light.

  13. @Mark Johnson

    Throughout the industrial revolution, the Brits spent nearly nothing on science while France was providing relatively generous funding. Later the US did the same as the Brits, the government invested little. The US only started investing, as a government, when it felt the communist threat… but the US was already the world’s greatest power then.

  14. @Dominic Amann

    France had as its state policy to fund scholarship and art. Britain did not.

    Oxford was indeed a state university (effectively). And you had to take holy orders to teach there (except for Newton). But this was not a state policy meant to help science and engineering. And what Britain spent was tiny compared to France.

    (A greater debate is how much of a role Oxford played in the industrial revolution. I would argue: not much. But it is another debate.)

  15. Sounds like both yourself and Johnson come from a place of conclusion and then examine the data (or anecdotes) to prove your positions. Frankly I see no reasons here to believe your position, and since you are the one making the assertions, the burden of proof lies with you.

  16. @Dominic Amann

    I might argue that it is not the amount of money – but rather the devil is in the details.

    I would agree with that.

    The hotbed of innovation during the industrial revolution was Scotland. Scots were not wealthy. They did not have good support for scholarship or science (they did not have Oxford). But they did have a good culture of innovation.

  17. I suspect that the most likely source of research into whether public research positively impacts GDP would be done as public research.

    Here we know that RIM (now Blackberry) came out of research done at Waterloo, as did the company I work for (Sensors and Software). Certainly the basic building blocks of what I and many others do for a living came out of public research.

    Big companies with very succesful research divisions (IBM for example) continue to invest heavily in university research due to their perception of good returns.

    In short – I am not so sure there is any pretense – and I think the work has been done to prove otherwise. Your job would be to prove government (and IBM, Microsoft and others) wrong.

  18. Facebook is an interesting example too – are you aware that it was initially a research project as a university intranet?

  19. Undisputed success? I don’t really care if who the author is if they support their argument with bald assertions.

    Epsecially as we are living in an era of the fallout from “undisputed failure of private financing”.

    If you are arguing that government has failed to make its case convincingly – that is really a matter for the electorate – and the answer has been given repeatedly. You are just more sceptical on this issue than most.

  20. Daniel, I do not know about Canada, but in US public research is just a small fraction of GDP, most of which is apparently the NIH budget.

    The NSF budget is just 10 billion. These are direct grants. The GDP and the budget are both in trillions.

    A good question should be: if money put in a military research is worth it or not.

  21. Additionally, there have been over 40 nobel prize winning economists, and they all have opinions (albeit well researched opinions) which actually differ from one another.

    I would add that much of Milton Friedmans’ own research was on the public dollar.

  22. @Daniel

    A small minority of products and industrial innovations build on academic research

    Not so. Most innovative new ideas are still coming from Universities (see “Where Good Ideas Come From”, by Steve Johnson). However, that said, most industrial “innovations” are not really innovations. They are very small tweaks on existing ideas. Then when you trace back, you find the starting point is usually a University or similar (perhaps e.g. an open source development). Industry is actually really bad at innovation for the most part.

  23. > Yes, state science funding is small (in all countries), but most of the public funding for research in the US goes toward defence, not the NIH. Arguably, the overall funding is too small. (That’s what I believe.)

    Sure, that’s my point. Another point is that the overall funding is small and we cannot afford not to fund. We do not know exactly if it helps or not (many believe that it does). However, expenses are small. If it does help and we do not fund, potential losses may be huge.

    Besides, aside from GDP, it is hard to put monetary value on the overall progress. We now use all Internet. It may not boost the GDP, but it (sometimes) makes our life better. Same thing for other innovations.

  24. Don’t forget that what you just described it’s pretty much one well-known country for the last 20 years, i.e., no science, greedy corporations, etc. Some argue that US and Britain were a success, but France was a failure. In fact, a lot of people would disagree. Who knows what will happen to US and Britain soon, in the light of growing inequality and poor access to education.

  25. @Dave

    Johnson states on page 234 of his book:

    Universities have a reputation for ivory-tower isolation from the real world, but it is an undeniable fact that most of the paradigmatic ideas in science and technology that arose during the past century have roots in academic research. This is obviously true for the “pure” sciences like theoretical physics, but it is also true for lines of research that on their surface seem to have more straight forwardly commercial applications, (…)

    The subject is discussed in the reference I gave you: Sex, Science And Profits by Terence Kealey:

    (…) though Mansfield found that around 10 per cent of industrial innovations emerged out of academic research, he also found that those innovation tended to be economically marginal, accounting for only 3 per cent of sales and 1 per cent of the savings or profits (…)

  26. @Dominic Amann

    since you are the one making the assertions, the burden of proof lies with you

    Let me propose another approach:

    “People proposing to spend money should have the burden of the proof.”

    This seems more reasonable.

    Now, there are tremendous benefits to funding academic research. I am an academic researcher and I think that I do very useful work.

    But I don’t justify the money that the Canadian tax-payers spend on me by claiming that I am going to improve economic growth. I am more likely to improve the economy by going to work for Google or something similar.

    The work I do (on this blog and elsewhere) does not aim to make us richer, I would have to be pretentious to think so. I’m probably not going to invent the next Facebook. And whoever invents the next Facebook won’t build on my research papers.

    Not everything of value can be measured by a growing GDP.

  27. @Dominic Amann

    Your job would be to prove government (and IBM, Microsoft and others) wrong.

    Meanwhile, here is what Milton Friedman (Nobel prize in economics) says about where the burden of proof should lie:

    The question remains: what ethical justification is there for imposing taxes on people to finance scientific research for which they would not voluntarily contribute? …

    Given the undisputed success of private financing in the past, the burden of proof that the benefits of government financing exceed the costs surely rests on those who support such financing.

  28. @Itman

    Yes, state science funding is small (in all countries), but most of the public funding for research in the US goes toward defence, not the NIH. Arguably, the overall funding is too small. (That’s what I believe.)

    Anyhow, really, when you talk about government R&D in the US, it is not about health… it is mostly about building better war machines.

    But my argument is not that the state shouldn’t fund science. My argument is rather that it shouldn’t fund science on the basis that it causes economic growth. It is important to know why we do things, even when they are cheap.

    Let me give you an example. Would sending men to Mars grow the GDP and produce industrial innovations? It is tempting to claim so. But the benefits of sending men to the Moon, compared to the costs, are not at all obvious in retrospect.

    Still. I think we should be sending men on Mars even if it does not contribute to the GDP.

    Not everything is about making more money.

  29. @Itman

    You must not compared today’s world with a world without Internet and ask how the GDP compares.

    What you must do is go back to 1950 and imagine that the US had stayed the course and not copied the USSR. What would have happened?

    Some claim that without government, we would not have had our current technology. We would not have had the iPad or a worldwide network. We would be stuck in the 1950s, run by greedy corporations.

    The claim can be reformulated as such: in 1950, the US had the wrong science policy whereas the USSR had the right science policy.

    What do we think?

    I think people can’t imagine a world without a strong government science policy. They imagine that science wouldn’t get done.

    But that’s more or less like a soviet saying that without the government, he would not get toilet paper.

  30. Thanks for this post, its an interesting topic. A thought: given that most academic research is internationally disseminated via journal publications, what is the basis for the expected relationship between economic output and R&D funding? Is it that academic researchers who make innovations are expected to “go private”, or collaborate with private companies in their country of residence?

  31. @Kieran

    That’s a very interesting question.

    In theory, a country or a company could invest very little in engineering and science and simply copy the leaders. In practice this does not really work. Copying others is hard work (despite what people think). In fact, just understanding what others have done, even if you have full access to it, is very hard.

  32. I’m sorry but this is mis-informed andnot properly researched. Just two points:
    1. there would be no laser, and therefore no CDs, DVDs etc without gov’t funded basic physics research that made these inventions possible
    2. the US in the 1940s and 50s reaped the benefits of massive migration of scientists from war-torn Europe, without itself investing much in research,

    How can such basic facts be ignored by someone who wrote this?

  33. @Stan Matwin

    We owe the first working laser to the Hughes Aircraft Company and the science itself, at least in the USA, was built decades before the US adopted a science policy, mostly in private institutions (e.g., Stanford). The NSF started out in 1950 and it was tiny during its first decade (handing out dozens of grants a year). It is true that much of the underlying ideas were developed by Jewish scientists from Germany starting with Einstein, but it is unclear how much these Jews “owe” to the German state. I would rather give credit to the great Jewish culture than to the German state. I mean, I am quite open to a debate as to what made the German Jews so smart, but I really object to the notion that the German science policy was key to it. After all, these Jewish immigrants were also quite adept at other things, like movie making.

  34. @Itman

    Who knows what will happen to US and Britain soon, in the light of growing inequality and poor access to education.

    The US government has not been spending less on education. In fact, per capita and in constant dollars, the US government has never been spending as much as it does now on education.

    (As you know, there are alternatives such as MOOCs which can offer a decent education very cheaply, so there is hope.)

    Inequality might be an issue, but, again, the government’s share of the GDP is high right now, so if there is rising inequality, it can’t be blamed on low government spending.

    (Inequality is probably higher in one of the last communist power, China. Poor people in the US are nothing like poor people elsewhere in the world.)

    Overall, it is true that the US could collapse while France could win out. But it does not look that way. France is in much bigger trouble than the US. You might have “free” university education in France, but what good does it do when you hit a 2-digit unemployment rate when you graduate?

    There are a few things that France gets right. For example, it has decent food. But there is hope in the US food-wise too!

  35. It is just 10%. It used to be 10% in US (in 2009), while in France at the same point it was 8%. See, also Overall, employment rates in US are only marginally better.

    Regarding the spending. It’s probably schools, not colleges. Spending on them increased twice in the last 50 years, but it did not help much to make them better. So, it may very well be the fact that US is getting a more expensive education, not a better one.

    And it should spend more on education, because students have to study fancier things (to be a bioinformatician or a programmer). In general, US is quite good (as compared to many other countries). Poor people don’t die from hunger. But it may not be enough to compete with China and India. Very few people were able (like you) to do well after graduating from a mediocre school. For many others, a good school was a key. Even more important than a college.

  36. Daniel, you cannot compare unemployment at a single time point. As I mentioned, several years ago, the situation was the reverse. US had 10, but France had 8.

    Income is not directly compatible either. One may earn more, but has to spend more on education and medicine. Overall, the difference between France and US is, indeed, rather small.

    So, in one country rose with government grants, another country — without. Both are doing quite well. So, these examples tell us nothing. And they may be less useful as future references.

  37. @Itman

    So, it may very well be the fact that US is getting a more expensive education, not a better one.

    Yes. That seems entirely likely.

    Meanwhile, France’s unemployment rate is stuck in the double digits (10.3% now). The US unemployment rate is still high at 7.8%. That’s a 30% difference ((10.3-7.8)/7.8) so it is quite significant.

    Of course, the Canadian unemployment rate is at 7%. And the Australians are doing much better at 5.4%.

    Of course, you might want to compare things like median income. However, it is fairly easy to figure out that the median income in France is significantly lower than the median income in the US. Americans are richer than the French. It is simply a statistical fact. It has been so for a long time.

    I think that the Americans could be much richer if they stopped wasting money and time on wars. It is a real disease, this idea that you need to have 10x as many guns than anyone else.

  38. @Itman

    So, in one country rose with government grants, another country — without. Both are doing quite well. So, these examples tell us nothing.

    The US outspends France and Europe in R&D, including government R&D. So you should be arguing that the US is richer if you want to make the point you are making. 😉

    Income is not directly compatible either. One may earn more, but has to spend more on education and medicine. Overall, the difference between France and US is, indeed, rather small.

    France sells wine. The US has Google, Microsoft, Monsanto, Walmart, Amazon and so on.

  39. @Itman

    Daniel, you cannot compare unemployment at a single time point. As I mentioned, several years ago, the situation was the reverse. US had 10, but France had 8.

    Over the last ten years, the unemployment rate in France was above 8% most of the time whereas the US unemployment rate was rarely above 8%.

  40. How do you account for the spillover of public research ? Knowledge produced by one country are freely available to other, so even countries that did not invest massively in public research in the past can know reap its fruits (e.g. China). In that case, correlating the public investment of a country to its GDP growth is probably misleading.

    1. You have to be specific regarding your hypothesis. The common hypothesis is that if one country invests in its academic research, then its economy will prosper accordingly.

      My own belief is that the causality runs the other way… rich countries can afford to spend more in academic research!

  41. thanks for the useful information. There is a fundamental problem in your analysis. Public research is mostly pure, fundamental research. By its nature, this is international, not patentable, free for everybody. Therefore it ultimately benefits the entire humanity rather that single countries. Take Maxwell’s equations. No private firm would have funded him to pursue them. Yet we would not have telecommunication without him (or maybe it would have taken 50 years more). Sum all the world’s GDP increase due to telecommunication in one century: isn’t it by far the best investment ever made? And yet, you would not see it as a percent increase of UK’s GDP in 19th century. That’s the really good thing about public funding of pure research: it is for everybody, and pays back ultimately way more than any private, patentable research. And in a much fairer way.

    1. Public research is mostly pure, fundamental research.

      From the first paragraph of my blog post: “In the US, the government spends about 60% of all its R&D funding on the military.”

      Take Maxwell’s equations. No private firm would have funded him to pursue them. Yet we would not have telecommunication without him

      There was no public funding for research as we know it today back then. It is a relatively recent invention (end of the 1950s).

      Maxwell’s family was wealthy. He inherited an estate. He wrote his first paper when he was 14, which tells you that he had a good access to documentation.

      It seems clear that what his noble birth made it easy for him to pursue his interest.

      Couldn’t we take this as an argument to support nobility and ruling classes?

      By its nature, this is international, not patentable, free for everybody. Therefore it ultimately benefits the entire humanity rather that single countries.

      Public research is patented all the time.

      Patents are issued by governments, and enforced by governments.

      It is true that science and engineering ends up benefiting everyone, but that’s true of all of it, not just the part that is funded by the state.

      1. thanks for your comment. I insist that, except in the US and probably a few other countries, the fraction of public research that goes into basic research is higher than 50%. It is certainly so in Europe: EU spends ten times more in public non-military research than in military research . Even the 40% of US is anyway a lot. Public research is of course patentable, but most of it is not. Most of the basic research literature comes from Universities (have a look at the affiliations of Physics Review) and the results are free for everybody. It’s actually the only research that is free, so even if the non-patentable part were a small fraction, that would still be the only one free for everybody, so looking just at country’s GDP is misleading. Maxwell was a University professor: he was therefore supported by public funds.

  42. Little of public research ends up being patented, but that’s true also of private-funded research. Some universities really cash in from government-funded research, earning hundreds of millions from single patents.

    When accounting public funding of research we typically do not include university budgets. We narrow it down to the grants provided by universities specifically for research (research grants). That is, certainly, what my post was about.

    Now, if we want to argue that universities have an outsized beneficial effect on society… well… I am a university professor, so I am tempted to agree. Then we can argue to what extend universities are creatures of the state. I would argue that universities are often private entities, and they were created as private entities historically.

    Note that I am also the recipient of federal research grant, I have received many such grants, and I do a lot of work with funding agencies (in computer science).

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