Although the growth of civilian research funding has been 

 substantial, further expansion of this component of the Federal 

 budget appears to be needed — now and for some time into the future. 

 This applies particularly to civilian problem areas for which existing 

 market mechanisms and incentives for research do not exist or are too 

 weak to elicit the necessary action from the private sector. 



The Federal Government, in addition, should continue tc^ assume 

 major responsibility for support of "untargeted" basic research, 

 because of the broad and multipurpose uses of the results, and because 

 investment by the private sector is limited by the inability to capture 

 the full returns from such research. 



Role of Private Industry 



Only a fraction of the increase in national research expenditures 

 needs to come, or should come, from the Federal budget. Private 

 industry should provide a significant part of the overall funding. 

 Greater investment in research by the private sector could be fostered 

 through government policies, regulations, and incentives that create a 

 favorable climate for innovation and investment. 



It is believed that the expanded effort by industry should 

 emphasize the development of new and improved products and 

 services and the enhancement of productivity. These actions, 

 combined with enlarged production capacity in some industries, could 

 help measurably in controlling inflation and strengthening the 

 Nation's position in international trade. 



Role of the University 



The principal role for the universities is in the area of basic 

 research. These institutions should continue to have prime 

 responsibility for conducting basic research, by virtue of their unique 

 capabilities and traditions in this area. 



A part of the aggregate R&D activity of the Nation must be 

 reserved for long-term basic research that is not tied specifically to 

 present problems. Basic research, by expanding scientific knowledge, 

 provides optional responses to unforeseen challenges that will arise in 

 the future. Such research, in addition, supplies indispensable 

 knowledge for intelligent and efficient planning and direction of the 

 rest of the R&D effort. In this regard, the results from basic research 

 constitute the infrastructure on which the whole system of innovation 

 and rational management of technology is based. 



56 



U.S. GOVERNMENT PRINTING OFFICE : 1975 0-568-953 



