17.3. ANALYSIS OF INVESTMENT IN BASIC RESEARCH

In the United States, the federal government continues to be the primary source of basic research support, providing nearly three-fifths of the total funding (Science and Engineering Indicatos, 2006). This is quite understandable. Results of basic research are a property of the commons, and these results are shared widely and without regard to commercialization. Since no property rights can normally be attached to the basic research output, significant investment by industry in basic research is unlikely. Table 17.4 shows percentage of funding by the performing sector for different countries. Of the $340 billion spent on R&D in 2006, only 18 percent was for basic research, as shown in Figure 17.7. Of this 18 percent of expenditures on basic research, 59 percent was from the federal government and only 17 percent was from industry, while the remaining percentage came from other private or nonprofit sources.

What investment industry does make in basic research serves the special needs of some high-technology companies. The reasons for such investment may relate to (1) industry recognition of the link between science and technology and, in turn, the link between basic research and innovation, (2) the need to have a diverse portfolio of activities to increase research productivity, (3) industry recognition that providing opportunities for conducting basic research is essential to keeping high-caliber scientists, and (4) attempts to reduce the time between basic research output and innovation by funding its own, rather focused, basic research to achieve a competitive advantage.

Federal government and industry investment in basic research is necessary to:

• Support the science and engineering (S/E) education process and to train the needed S/E manpower

  Table 17.4. R&D Expenditures for Selected Countries, by Performing Sector, Most Recent Year (percent)

  Country	Industry	Higher Education	Government	Other nonprofit
  South Korea (2005)	76.9	9.9	11.9	1.4
  Japan (2004)	75.2	13.4	9.5	1.9
  United States (2006)	71.1	13.7	11	4.2
  Germany (2005)	69.9	16.5	13.6	NA
  China (2005)	68.3	9.9	21.8	NA
  Russian Federation (2005)	68	5.8	26.1	0.2
  United Kingdom (2004)	63	23.4	10.3	3.3
  France (2005)	61.9	19.5	17.3	1.2
  Canada (2006)	52.4	38.4	8.8	0.5
  Italy (2004)	47.8	32.8	17.9	1.5
  Sources: National Science Foundation, Division of Science Resources Statistics, National Patterns of R&D Resources (annual series); and Organisation for Economic Co-operation and Development, Main Science and Technology Indicators (2006). Science and Engineering Indicators, 2008.

  
  

• Provide a vigorous link between invention and innovation

• Maintain international competitiveness for industry

• Provide technologies for critical national needs such as public health and national defense

National investment in basic research benefits industry and the public, and therefore it is an important element of national science policy. Sustained federal government investment in basic research was strongly supported and thoughtfully articulated by the Chief Executive Officers of major U.S. corporations as described in the chapter on university research enterprise.