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entists and engineers, and the overall benefits which accrue from the investment 

 to the American people. NSF carefully tracks when funding expires for a given re- 

 search facility so that rigorous examination of its efficiency, effectiveness and impor- 

 tance to the community can be undertaken in an appropriate time frame. 



INDUSTRIAL SUPPORT FOR BASIC RESEARCH 



QUESTION: Industrial support for basic research has been declining in 

 recent years, particularly as large industrial labs, like the Bell labs, have 

 been downsized, reoriented or closed. Is NSF concerned about these 

 changes; does it place new pressures on NSF in its attempt to ensure the 

 strength of U.S. research in the major fields of science and engineering? 



ANSWER: NSF collects and disseminates data on industry R&D through the 

 Science Resource Studies Division (SRS). SRS data show that over the past decade, 

 industry's share of basic research has fluctuated between 24 and 30 percent. Indus- 

 try activity in 1995 was within this range — 25 percent ($7.2 billion). Industry shares 

 of academic and nonprofit basic research support have also been roughly steady over 

 the past decade. 



NSF is very concerned about this issue and tracks the funding data carefully. 

 NSF sponsors forums to discuss the implications of these data such as the recent 

 American Enterprise Institute-Brookings Institution conference on the economic. re- 

 turns to research. NSF is also working with the National Science and Technology 

 Council's Committee on Fundamental Science to understand better the needs of the 

 industrial sector for fundamental research in various areas. 



While NSF data do not show a substantial decline in overall industry funding for 

 basic research, funding has declined in certain industries and in some of the large 

 industrial labs. This can have a major impact on research in specific fields of science 

 and engineering. For example, industry has made major investments in fundamen- 

 tal research in communications which has contributed to revolutionizing several 

 fields. Over 80 percent of this industry's R&D expenditures come from AT&T and 

 Bellcore, both of which are at risk because of major organizational changes triggered 

 by deregulation. These changes form the backdrop for NSF's activities in networking 

 and communications research. 



Some studies indicate that Federal and private sector investments are directly 

 correlated. Reductions in federal funding for basic research could trigger reductions 

 in related industry-funded research which builds upon fundamental research. For 

 example, the biotechnology industry has reported that it has almost completely 

 mined the existing biological knowledge base. NSF plays a key role in creating this 

 knowledge base and has responsibility for several areas of basic biology not covered 

 by other federal agencies. 



Reductions in industry- funded research can affect NSF in several ways. There can 

 be increased competition for NSF grants as some exceptional industrial scientists 

 move to universities. There can also be pressure for NSF to assume the activities 

 of some of the large company R&D labs. In most cases, this is not appropriate since 

 the research was targeted to goals focused on the companies' market sectors. NSF's 

 research activities must be consistent with the agency's mission and goals and 

 NSF's role as public steward of the nation's science and engineering enterprise. 



COOPERATION WITH INDUSTRY 



QUESTION: Are there ways in which NSF can work closely with industry 

 to maximize the investment in R&D and, if so, what do you believe are the 

 appropriate ways for the Foundation and industry to come together? 



ANSWER: NSF is examining how it can best work with the private sector to 

 maximize national benefits from the investment in science and engineering research 

 and education. In areas in which industry and NSF have shared goals, partnerships 

 may help to enhance research productivity and offset funding reductions. Coopera- 

 tion can also facilitate efforts to develop world class research facilities and a world 

 class work force. NSF encourages private sector participation in a number of its ac- 

 tivities, particularly large-scale efforts such as centers, groups, and systemic edu- 

 cation reform. NSF also works closely with industry to define educational needs and 

 to provide students with hands-on science experiences. 



NSF has developed many mechanisms for industry participation including: 



• Industry/University Cooperative Research Centers; 



• Small Business Innovation Research Program; 



• Engineering Research Centers; 



• Science and Technology Centers; 



• Grant Opportunities for Academic Liaison with Industry; and 



