US Federal research & development funding: Strategic trade policy tool, by-product of military competition,or politics as usual?

Abstract

ABSTRACT Svensson (1998, Kyklos 51(2): 259–75) asked whether strategic trade theory or aspects of sectors' political influence accounted for OECD governments' research and development funding, but he did not consider the roles of military spending or electoral politics. We examine US government research and development (R&D) expenditures during 1958–1998 to assess all these perspectives. Because expenditures were often undisclosed, disclosure itself must also be modeled. Disclosure and reported spending levels are affected by the same considerations that affect funding for other programs. While some variables invoked by strategic trade theory or models of arms races have their expected relation to reported funding, the marginal effects of employment, political concentration, and electoral votes are far larger. For the US it thus appears that the role of strategic trade policy or military security in government R&D expenditure patterns is relatively modest. Its government R&D funding is largely a matter of politics as usual.