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Study of Patents Shows Importance of Fed-Funded Research

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A new report from Battelle based on methodology from the Academy of Radiology Research shows how federal R&D funding succeeds in producing patents. The report examines essentially all federal R&D, including not only the Department of Defense and the National Institutes of Health but also the Department of Energy, the National Science Foundation, NASA, and other agencies. It finds that, per patent, public-sector agencies provide a return comparable to private-sector ones—or even cheaper. Recent public sector budget cuts, therefore, can be expected to significantly hurt our scientific progress.

The agencies vary significantly in terms of how productive they are and how successful their patents are. Some agencies in particular, such as the National Institute of Biomedical Imaging and Bioengineering (NIBIB) have exceptional records for producing research that is widely useful: NIBIB is estimated to spur an additional $578.2 million, or 25 patents, for every $100 million in R&D expenditures. The DoD and NASA, on the other hand, are less efficient at producing patents at only around 2-3 patents per $100 million in R&D expenditures. (although, as the report notes, defense spending is more likely to be classified and thus not patentable)

Patent output per research dollar compares favorably with private-sector cost efficiency in many agencies. According to the Brookings Institution, private sector R&D spending averages $3.5 million per patent. The Batelle report, however, estimates that federal R&D spending averaged $3.1 million per patent across all NIH agencies.

As the report makes clear, policymakers who fail to appreciate the importance and success of our government R&D are an enormous danger to our future economic success. Federal money plays a key role in our innovation ecosystem, and without it we will lose out not only on future growth but on future competitiveness as well.

(image courtesy of NIH National Cancer Institute and WikiMedia)

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About the author

Ben Miller is ITIF’s Economic Growth Policy Analyst, specializing in the connection between technology, innovation, and everything else in the macroeconomy.