What if Congress Doubled R&D Spending on the Physical Sciences?

Richard B. Freeman () and John van Reenen ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Many business, academic, and scientific groups have recommended that the Congress substantiallyincrease R&D spending in the near future. President Bush's American Competitiveness Initiative callsfor a doubling of spending over the next decade in selected agencies that deal with the physical sciences, including the National Science Foundation. We consider the rationale for government R&D spending in the context of globalization and as an investment in human capital and knowledge creation with gestation times far longer than Federal funding cycles. To assess the impact of a large increase in R&D spending on the science job market, we examine the impact of the 1998- 2003 doubling of the NIH budget on the bio-medical sciences. We find that the rapid increase in NIH spending and ensuing deceleration created substantial adjustment problems in the market for researchand failed to address long-standing problems with scientific careers that are likely to deter many young people from choosing a scientific career. We argue that because research simultaneouslyproduces knowledge and add to the human capital of researchers, which has greater value for youngscientists because of their longer future career life span than to older scientists, there is reason for funding agencies to tilt their awards to younger researchers.

Keywords: Basic Science; R&D; labor markets for scientists; globalization (search for similar items in EconPapers)
JEL-codes: J23 J45 O30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino and nep-ltv
Date: Written
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