years, efforts to balance the federal budget left the science
and technology community with expectations of fewer dollars
and leaner years. In 1997, the White House and Congress reached
an agreement to balance the budget by 2002. In the aftermath
of the agreement, and with the U.S. economy growing at a rapid
pace, congressional appropriators found themselves in an entirely
different environment than the past two years. Because the
budget agreement allowed for increases in discretionary spending,
the portion of the budget that funds all federal R&D,
in FY 1998, appropriators were in the position of deciding
which programs should receive increases. This is a sharp contrast
to FY 1996 and FY 1997 when decisions were being made as to
which programs should be eliminated or cut.
R&D, therefore, fared better than anticipated in the FY
1998 appropriations process. R&D funding for NIH, NSF,
and the Environmental Protection Agency (EPA) grew significantly
even after adjusting for inflation. Other R&D agencies
such as NASA, and USDA received small increases, while DOD
R&D decreased. While this situation represents a substantial
improvement over the sharp reductions that were projected
in past budgets, all federal agencies, except for NIH and
NSF, still have less to spend on R&D, in constant dollars,
in FY 1998 than they did in FY 1994.
FY 1999 budget request also shows good prospects for growth
in R&D. The Administration singled out NIH and NSF to
receive large increases for FY 1999 and in the out-years.
Cancer and human genome research received particular emphasis.
With the recent international agreement to reduce global greenhouse
gas emissions, the Administration has also targeted the Department
of Energy (DOE) to receive large increases for R&D. DOE’s
R&D budget request focuses on fossil energy, energy conservation,
and basic energy science research programs. Finally, the transformation
of our society to one dependent on electronic information
has reinforced the need for federal investments in information
technology R&D within various agencies such as DOD, NSF,
trends in R&D funding and the President’s budget request
are generally good news for civilian research institutions
across the country. However, the implications of these trends
for the future of R&D in Arizona are mixed. Arizona may
find some aspects of its share of the federal research enterprise
weakened because of the distribution of the state’s federal
R&D funding among the federal agencies.
derives a larger share of its R&D funding from the federal
government than do most states. (Fifty-five percent of Arizona’s
R&D is federally-funded, compared to a national average
of about 35 percent.) More than two-thirds of these federal
funds come from DOD. In view of the recent downward trend
in DOD’s R&D budget, it is noteworthy that federal support
of R&D in Arizona has generally increased during the past
several years. This suggests that the state has been receiving
a growing share of a shrinking pie. Since DOD is the main
source of federal R&D funding to Arizona’s aerospace and
electronics industries as well as to its federal laboratories,
the question of how long this growth can continue before it
is affected by declines in defense R&D is an important
one to the state.
brighter side, though, is the compatibility between DOD’s
long-term goals and the types of technological expertise found
in Arizona. DOD is increasingly focusing on electronic warfare,
using telecommunications and computers to efficiently coordinate
and conduct military campaigns with reduced manpower and costs.
Arizona has many public and private resources, like those
of EPG and Motorola, which could play an integral part in
developing the technologies that will be used by the armed
forces in the 21st century.
is another federal agency whose R&D budget has declined
during the past several years and is projected to continue
shrinking. While money from the International Space Station
project will continue to flow to Arizona’s space businesses
for the next few years, the universities and colleges that
receive over $39 million from NASA for other activities may
have to fight harder for research funding.
the exception among the federal R&D funding agencies in
that it has consistently received large increases in recent
years. This is good news for the University of Arizona, the
state’s number-one recipient of HHS R&D funds. UA and
its Health Sciences Center lead the state in biomedical research.
The research programs of the Phoenix-based Epidemiology and
Clinical Research branch of the National Institute of Diabetes
and Digestive and Kidney Diseases and the state’s nonprofit
health institutions are also likely to benefit.
though, the growth and standard of living Arizona residents
enjoy are pinned to high technology innovation and product
development. Manufacturers of semiconductors, electronics,
and aerospace technologies perform most of the state’s R&D.
Federal R&D funding, in the form of defense and space
contracts, often facilitates innovation, leading to new technologies.
Given the right interplay of timing, market forces, and opportunity,
new technologies can lead to new products, keeping manufacturers
of Arizona’s high technology businesses are in extremely competitive
industries, such as computers and electronics, where product
cycles are very short and continued innovation is necessary.
Now, with the development of the Asian economic crisis, many
Arizona businesses may see markets flooded with low cost goods.
Manufacturers across the United States and Arizona could face
increased pressure to lower costs while maintaining their
face of these increased pressures on Arizona’s aerospace and
electronics businesses, it makes sense for the state to think
about ways to diversify its research enterprise. While Arizona
is likely to remain strong in astronomy, aerospace, and advanced
electronics research funding, this might be a good time to
explore opportunities for expanding research and technology-based
industry in the biomedical and environmental sciences, and
in software and information technology, as well as in energy
development and conservation.