BusinessToday. com/ditors/6ditors.

htm No Hadlin6 Friday, Oclober 10, 199,

Contributing Editors
No Headline.
Friday, October 10, 1997
By John O. Harney

R&D in New England, revisited

This column made its debut a half-year ago with a warning that New England's world-class
university research and development (R&D) base could go the way of its once-booming textile
and shoe industries. Now, new data show the shift accelerating.

The six-state region's share of total university R&D expenditures slid from 8.7 percent in 1994
to 8.4 percent in 1995, according to new federal data analyzed by the New England Board of
Higher Education.

One might reasonably wonder what the fuss is about. New England's vaunted academic
research enterprise, after all, still managed to perform a record $1.8 billion in R&D in 1995,
about twice as much in dollar terms as a decade earlier.

And by many measures such as per-capita R&D expenditures, New England remains the
nation's most research-intensive region. So why fret about figures to the right of a decimal
point?

Well, first of all, university research is big business - worth neaiy $22 billion nationally in
1995. So each tenth of a percent in share represents well over $20 million. Secondly, New
England's share has been declining for a long time, so the "losses" are piling up.

In 1983, New England university labs performed 10.1 percent of U.S. university R&D. Had
they maintained that share through the mid-1990s, an additional $375 million would have
> Euslns$ellllro flowed into the region in 1995 alone. Over a 7Z-year period, the loss in share has diverted
billions of dollars - billions - away from New England's universities and the region's
) Stock 0uoles knowledge-intensive economy.

* fund Glly
More importantly, New England university research has given the region a crucial jump in
cutting-edge industries such as biotechnology, environmental technology and, more recently,
aquaculture and photonics. And the tendency ofNew England university labs to spin offstartup
companies and create jobs is well-documented. That's all in jeopardy now.

New England's share of U.S. R&D expenditures has dwindled even in fields where the region
has been particularly strong. For example, New England universities conducted a robust 12.3
percent of all environmental sciences R&D at U.S. universities in 1995. But that was down
from 13.7 percent in 1990. Similarly, the region's share of R&D in physical sciences slid from
1 1.6 percent in 1990 to 10.1 percent in 1995.

ln the process, New England's prominence as a place to study science and engineering has also
suffered. The region's share ofgraduate science and engineering enrollment, which bounces
around from year to year more than the steadily sinking R&D share, stood at 7.2 percent in
1995, down from 7.8 percent in the mid-1980s.

All in all,
the new R&D data point to a redistribution of American science and research power
away from New England (where university R&D grew by a relatively sluggish 27 percent
during the first half of the 1990s) and toward regions like the Mountain states (where it grew by
46 percent).

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.//ww. BusinessToday.com/editors/6ditors.htm No Headline. Friday, October 10, 199;

Part of New England's problem continues to be its overdependence on Washinglon for R&D
support. In 1995, federal agencies such as the National Institutes of Health, NSF, NASA and
the departments of Defense, Energy and Agriculture supplied 68 cents of every $1 that New
England universities spent on research, compared with 6l cents nationally.

This historical overdependence on Washington will sting New England, as relatively scarce
federal R&D dollars are shifted toward the politically ascendant regions of the South and West
and their up-and-coming research universities.

Indeed, during the past l0 years, federal support for university R&D has grown by 1 18 percent
nationally, but by just 76 percent in New England.

Moreover, federal agencies increasingly favor universities that can leverage federal money with
state matching funds - and in New England, such matching funds are few and far between.

New England state capitals and municipalities supplied under 3 percent of R&D funds at the
region's universities in 1995, compared with 8 percent nationally. In Massachusetts, state and
local support amounts to about one penny of every dollar of university research conducted in
the state.

It's important for the region's business and political leaders to form a united regional front in
Washington to press for federal R&D support. But the surest way for New England to
recapture its R&D leadership may be to push for stepped-up investment on the state level, while
cultivating support from the other key source of R&D support: private industry.

John O. Harney is the executive editor of Connection: New Etryland's .loumal of Higher
Education and Ecotnntic DeveLopment. Connection is the quarter\' journal of the New
England Board of Higher Education.

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