Business Impact
United States
Spooked by terrorist attacks, the U.S. is devoting much of its R&D to defense and homeland security.
American technology – just like its foreign policy, domestic politics, and popular culture – has been swept up into what President George W. Bush calls “the global war on terror.” The U.S. R&D establishment has narrowed its interests in the years since September 11, 2001, concentrating its resources on technologies that provide security: weapons systems, defenses against biological weapons, biometrics, network security. The U.S. government’s research-and-development budget is now bluntly militaristic. In fiscal year 2005, federal R&D spending rose 4.8 percent to $132.2 billion, but 80 percent of that increase went to defense research. And most of that increase is committed to the development of new weaponry, like the ballistic-missile defense system. In all, the government will spend 57 percent of its R&D budget for 2005, or a record $75 billion, on defense-related projects. President Bush’s proposed 2006 budget, now being debated in Congress, would introduce cuts to many civilian programs but spend an additional $600 million on defense research.
The Department of Homeland Security is particularly flush: its 2005 R&D budget increased 20 percent from the previous year. In 2005, the new Homeland Security Advanced Research Projects Agency (HSARPA) received $300 million. But the administration plans to give the agency an extraordinary $1 billion in 2006. HSARPA is concentrating on late-stage technologies that the government could procure in only three to five years. But according to Lita Nelsen, director of MIT’s Technology Licensing Office, such a near-term focus is “robbing from the future, because that’s not basic, curiosity-driven research.”
The data support Nelsen’s contention. The National Science Foundation had its 2005 R&D budget cut by .3 percent in 2005, and the National Institutes of Health (NIH) enjoyed a budget increase of only 1.8 percent. It will get worse: the government plans to increase NIH’s budget by only .7 percent in 2006.
The U.S. government’s preoccupation with security would be less important if the private sector were investing in basic research. It is not: for years, corporate R&D has stressed return on investment through the timely creation of new products. And U.S. venture capitalists have responded to government and corporate demand by disproportionately funding security-related startups. Since 2000, according to Venture Economics, communications funding has dropped 83 percent, and software investment is down 77 percent; but during the same period, defense investment fell only 58 percent. Fields like robotics, nanotechnology, and genomic medicine are underfunded. Venture capitalists have a “lemminglike instinct when it comes to investment themes,” admits Bill Kaiser, a general partner at Greylock Partners in Waltham, MA.
The U.S. obsession with security may yet yield wondrous technologies; it has happened before. “Uncle Sam might be investing in the next Internet,” Nelsen says. Ken Morse, managing director of the MIT Entrepreneurship Center, insists that security investment “is a good thing.” After all, he says, “thoughtful government funding years ago has spawned cool companies.”
Recent funding of defense and security has already produced technologies for civilian use. Lincoln Laboratory, a research institution at MIT that works mainly with the Department of Defense, has created several interesting “dual use” technologies. Using luminescent proteins produced by a jellyfish gene, for instance, the lab has developed a biosensor that glows in the presence of biowarfare agents. In 2003, the device, known as Canary (which stands for “cellular analysis and notification of antigen risks and yields”), was licensed to Innovative Biosensors in College Park, MD. The company believes it may be useful for medical diagnosis, too.
But technologists worried about the future of innovation in the United States may share Nelsen’s gloomy assessment. “Everyone is frightened that some Iraqi is going to put anthrax in our hamburger meat,” driving up spending on defense and security, she says. “But in the meantime, what’s happening to the other technologies?”
Jason Pontin is editor in chief of Technology Review.
