Government Subsidies to Civilian Commercial R & D Decline
by James L. Morrison

[Note: This is a re-formatted manuscript that was originally published in On the Horizon, 1992, 1(1), 9, 12. It is posted here with permission from Jossey Bass Publishers.]

R & D tax credits have been approved by Congress on a year-to-year basis since 1986, when the break was reduced to 20% from 25%. Right now these credits are a good subsidy to large companies, but are a detriment to small companies trying to compete. [Walters, D.K.H. (1992, January 30). Many companies are wary of R & D plan. The Los Angeles Times, p. D3.]

Of President Bush's promised $76 billion for R & D, half of that figure goes into defense-related research and development. With the exception of NASA, most federal civilian R & D expenditures are comparatively flat. [Schrage, M. (1992, January 30). R & D lags, despite presidential puffery. The Los Angeles Times, p. D3.]

The Bush administration is encouraging companies to enter into cooperative projects with government laboratories. For example, last fall when Vivid Technologies Inc. was trying to develop an x-ray system for detecting bombs in airports, it got assistance from the Federal Aviation Administration in Atlantic City, NJ. In addition to licensing technology from research already done, the labs have been developing "collaborative research and development agreements" (CRADAs). Creative partnerships such as these will be necessary in an economy of shrinking budgets and cut backs. [Trumbull, M. (1992, February 18). Rich Federal research trove open to the public. The Christian Science Monitor, p. 7.]


The constraint on federal dollars for research and development forces companies into collaborative relationships. This provides institutions of higher learning with an unprecedented opportunity to interact with industry for the mutual benefit of both organizations. However, these interactions call for dynamic administrative leadership within the university to address issues specific to university- industry collaboration such as ethics, patent/intellectual ownership rights, academic jealousy and conflict of interest. Institutions of higher education that are administratively flexible enough to take advantage of these opportunities and to address these issues may reap a disproportionate amount of benefit in this difficult fiscal environment.

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