DOES FEDERAL FUNDING “CROWD IN” PRIVATE FUNDING OF SCIENCE?

Proposed cutbacks in government science funding have caused many to expect that the rate of scientific progress will significantly decline. Before the magnitude of the decline can be estimated, a preliminary question must be answered: what is the extent to which private funding of science may be expected to fill the gap left by the declining government funding? Using data on government and private funding of science, preliminary estimation indicates that past government funding of science has not “crowded out” private funding of science. If this finding is supported by further research, it would indicate that private funding could not be expected to replace lost federal funding of science. (JEL H4, HI, 03, D6, L3)