Gates on Basic Research

In his recent lecture to the senate, Bill Gates emphasized the need for the U.S. government to increase spending on basic research. Gates calls for an annual increase of 10% for the next seven years; doubling the amount spent on basic research. He feels that this is crucial in order that the U.S. remain a global technology leader.

Gates points out that industrial R&D has increased dramatically over the past 30 years, now making up for two-thirds of total R&D in the U.S. Microsoft itself invests over $6 billion in R&D annually. To a large extent this has been encouraged by the R&D tax credit, a credit which expires at the end of 2007 but which congress will most likely extend. This is of course a federal subsidy of industrial R&D.

Gates' implication is that the government pay for and manage basic research and industry manage applied research with a subsidy from the government. He states that the U.S.' current technological position as a global heavy weight is the result of investments in basic research make years ago. Although there is no doubt that the federal government spends billions in support of basic research and that industry spends twice as much on applied research, how much is actually transferred between the two? Will the transfer of ideas between academia and industry increase proportionally by doubling federal spending in basic research?

Gates' wish is that the U.S. find and commercially develop new and innovative products. His solution is to improve education, loosen immigration policy and increase R&D spending. All in the effort to produce maybe one Google. Meanwhile, Microsoft CEO Steve Ballmer is calling Google "insane" in its efforts to double their staff in the next year. Maybe, but perhaps Google is simply doing in-house what Gates is proposing the U.S. government do with tax-payer funding. Google or the government, you choose.

Flat NIH Budget

A front page article in today's Denver Post Scientists fight for research funding describes the situation at research labs dependent upon National Institutes of Health grants to fund basic research. How this made it onto the front page is baffling to me since the story is a couple years old (see Fewer Grants Force Younger Scientists to Leave Academia, WSJ, July 27, 2004). Although research capacity has been growing rapidly over the past few years, the NIH budget has been flat since 2004 creating greater competition for NIH grants.

Dr. Elias A. Zerhouni, director of the National Institutes of Health, explained the situation last September and has offered strategies. Funding of basic research has actually increased by 2% in the overall NIH budget since 1998 (54% to 56%) and applied research has increased by 1% (40% to 41%) with infrastructure decreasing by 3% (6% to 3%).

With growth stagnant in the overall NIH budget, funding of new projects and new scientists will decrease just at a time when many scientists in training through the high growth years are coming on-line. If, as the Post article suggests, there is sufficient need in the private sector, young scientists will migrate over. However, given the rigid requirements of an academic career, it is doubtful that they will return when funding levels resume.

Applied Research

In contrast to basic research, applied research is directed toward a specific goal; a solution to a problem. Whereas basic research's mission is the advancement of knowledge, applied research is intended to answer more specific questions. Nevertheless, applied research is still "research" in that it is required to explore new areas of knowledge in order to fulfill its stated goal. Applied research does not imply that the target solution will be found; there are often unforeseen obstacles in reaching the target. However, with a specific target directing the effort there is a higher likelihood of obtaining the goal than with a basic research project.

Applied research fits between basic research and an engineered project. An engineered project has much of the obstacles well defined before the project begins. Although a bridge may never have been built in a certain area, the bridge building technologies and processes have been well developed and don't usually involve large amounts of unexplored territory. Drug development can be considered applied research because it starts with the target of creating a certain response in humans but may also have many unknown effects which are found along the development process.

Basic research is conducted primarily by non-profit research organizations, i.e. government labs and universities which do not require a commercial product as the end result of their efforts. Government agencies may fund basic research at for-profit companies, however, for-profit companies often find it difficult to fund basic research since the profit motive precludes the unfettered advancement of knowledge in favor of advancement of knowledge about an area that may discover a profitable product.

Non-profit research institutions often engage in applied research, sometimes as an extension of knowledge or experience gained through basic research. Because of the experience gained though their basic research, the institution is many times the best qualified to carry out the applied research. However, although they are both considered "research," the skills and processes involved in carrying out basic and applied research are quite different and an institution adept at one may be equally inept at the other. Institutions that are skilled at basic research can resolve this deficiency by transferring their technology to a commercial enterprise who will direct the knowledge obtained from the basic research toward a commercial product. Again using drug development as an example; a research institution may discovery a technology, biological target, novel compound or gene through basic research and transfer this knowledge to a company that will use this knowledge to develop it into a drug for treating disease. Although the discovery of the knowledge is a critical part of the process, it is by no means a certain commercial success. Conversely, a company adept in moving an existing discovery through the drug development process in an efficient, consistent manner may spend many years and millions of dollars trying to come up with a single new discovery. This points to one of the many instances of where creativity and productivity often clash.