Funding of science
Research funding is a term that generally encompasses any funding for scientific research in the areas of natural science, technology, and social science. While different methods can be used to disburse funding, the term generally connotes funding obtained through a competitive process, in which potential research projects are evaluated, with only the most promising and economically viable receiving funding. Usually, it is measured through gross domestic expenditure on research and development. GERD includes R&D performed within a country and funded from abroad but excludes payments for R&D performed abroad.
The largest share of research funding comes from two major sources: corporations and government. A smaller amount of scientific research is funded by charitable foundations, especially in relation to developing cures for diseases such as cancer, malaria, and AIDS.
According to the Organisation for Economic Co-operation and Development, more than 60% of research and development in scientific and technical fields is carried out by industry, and 20% and 10% respectively by universities and government. Comparatively, in countries with a relatively lower national GDP, such as Portugal and Mexico, the industry contribution is significantly lower. The government funding proportion in certain industries is higher, and it dominates research in the social sciences and humanities. In commercial research and development, all but the most research-oriented corporations focus more heavily on near-term commercialization possibilities rather than "blue-sky" ideas or technologies.
History
Conducting research requires funds. The funding trend for research has gone from a closed patronage system, to which only a few could contribute, to an open system with multiple funding possibilities.In the early Zhou dynasty, government officials used their resources to fund schools of thought of which they were patrons. The bulk of their philosophies is still relevant today, including Confucianism, Legalism, and Taoism.
During the Mayan Empire, scientific research was funded for religious purposes. Research there developed a Venus Table, showing precise astronomical data about the position of Venus in the sky. In Cairo, the Mamluk Sultan Qalawun funded a monumental hospital, patronizing the medical sciences over the religious sciences. Furthermore, Tycho Brahe was given an estate by his royal patron King Frederik II, which was used to build Uraniborg, an early research institute.
The age of the academies
Between 1700 and 1799, scientific academies became central creators of scientific knowledge. Funded by state sponsorship, academic societies were free to manage scientific developments. Membership was exclusive in terms of gender, race, and class, but academies opened the world of research up beyond the traditional patronage system.In 1799, French inventor and mechanical engineer Louis-Nicolas Robert patented the paper machine. When he quarreled over invention ownership, he sought financing from the Fourdrinier brothers. In 19th-century Europe, businessmen financed the application of science to industry.
In the eighteenth and nineteenth centuries, as the pace of technological progress increased before and during the Industrial Revolution, most scientific and technological research was carried out by individual inventors using their own funds. A system of patents was developed to allow inventors a period of time to commercialize their inventions and recoup a profit, although in practice, many found this difficult.
The Manhattan Project had cost $27 billion and employed 130,000 people, many of them scientists charged with producing the first nuclear weapons. In 1945, 70 scientists signed the Szilard petition, asking President Truman to make a demonstration of the power of the bomb before using it. Most of the signers lost their jobs in military research.
In the twentieth century, scientific and technological research became increasingly systematized, as corporations developed and discovered that continuous investment in research and development could be a key element of competitive success. It remained the case, however, that imitation by competitors - circumventing or simply flouting patents, especially those registered abroad - was often just as successful a strategy for companies focused on innovation in matters of organization and production technique, or even in marketing.
Nowadays, in 2025, a growing number of funders have decided to make research outcomes transparent and accessible in data repositories or Open-access. Moreover, some researchers turn to crowdfunding in search of new projects to fund. Private and public foundations, governments, and others sponsor opportunities for researchers. As new funding sources become available, the research community grows and becomes accessible to a wider and more diverse group of scientists.
Methodology to measure science funding
The guidelines for R&D data collections are laid down in the Frascati Manual published by the OECD. In the publication, R&D denotes three types of activities: basic research, applied research, and experimental development. This definition does not cover innovation, but it may feed into the innovative process. Additionally, the business sector innovation has a dedicated OECD manual.The most frequently used measurement for R&D is gross domestic expenditure on research and development. GERD is often represented in GERD-to-GDP ratios, as it allows for easier comparisons between countries. The data collection for GERD is based on reporting by performers. GERD differentiates according to the funding sector and the sector of performance. The two may coincide, for example, when the government funds government-performed R&D.
Government funded science may also be measured by the Government budget appropriations and outlays for R&D. GBARD is a funder-based method, it denotes what governments committed to R&D. GERD-source of funding-government and GBARD are not directly comparable. On data collection, GERD is performer based, GBARD is funder. The level of government considered also differs: GERD may include spending by all levels of the government, whereas GBARD excludes the local level and often lacks state level data. On geographic coverage, GERD takes into account performance within the territory of a country whereas GBARD also payments to the Rest of the world.
Furthermore, several comparisons on the effectiveness of both the different sources of funding and sectors of performance as well as their interplay have been made. The analysis often boils down to whether public and private finance show crowding-in or crowding-out patterns.
Funding types: public and private
Public/State Funding
Public funding refers to activities financed by tax-payers money. This is primarily the case when the source of funds is channeled through government agencies. Higher education institutions are usually not completely publicly financed as they charge tuition fees and may receive funds from non-public sources.Rationale for funding
R&D is a costly, and long-term investment to which disruptions are harmful.The public sector has multiple reasons to fund science. The private sector is said to focus on the closer to the market stage of R&D policy, where appropriability hence private returns are high. Basic research is weak on appropriability and so remains risky and under-financed. Consequently, although governmental sponsorship of research may provide support across the R&D value chain, it is often characterized as a market failure induced intervention. Market incentives to invest in early-stage research are low. The theory of public goods seconds this argument. Publicly funded research often supports research fields where social rate of return may be higher than private rate of return. Appropriability potential is the potential for an entity to capture the value of an innovation or research outcome. The general free rider problem of public goods is a threat especially in case of global public goods such as climate change research, which may lower incentives to invest by both the private sector but also other governments.
In endogenous growth theories, R&D contributes to growth. Some have depicted this relationship in the inverse, claiming that growth drives innovation. As of 2013, science workers applying their knowledge may be considered an economic driver. When this knowledge and/or human capital emigrates, countries face the so-called brain–drain. Science policy can assist to avoid this as large shares of governmental R&D is spent on researchers and supporting staff personnel salaries. In this sense, science funding is not only discretionary spending but also has elements of entitlement spending.
R&D funded and especially performed by the State may allow greater influence over its direction. This is particularly important in the case of R&D contributing to public goods. However, the ability of governments have been criticized over whether they are best positioned to pick winners and losers. In the EU, dedicated safeguards have been enacted under a dedicated form of competition law called State Aid. State Aid safeguards business activities from governmental interventions. This invention was largely driven by the German ordoliberal school as to eliminate state subsidies advocated by the French dirigiste. Threats to global public goods has refueled the debate on the role of governments beyond a mere market failure fixer, the so-called mission-driven policies.