Money for Science? the Impact of Research Grants on Academic Output*

FISCAL STUDIES, vol. 29, no. 1, pp. 75–87 (2008) 0143-5671 Money for Science? The Impact of Research Grants on Academic Output* DANIEL CHUDNOVSKY,† ANDRÉS LÓPEZ,‡ MARTÍN A. ROSSI§ and DIEGO UBFAL◊ †Universidad de San Andrés; Centro de Investigaciones para la Transformación ([email protected]) ‡Universidad de Buenos Aires; Centro de Investigaciones para la Transformación ([email protected]) §Universidad de San Andrés ([email protected]) ◊University of California at Los Angeles ([email protected]) Abstract This paper evaluates the impact of subsidies on the academic performance of researchers in Argentina. Academic performance is measured in terms of number of publications and in terms of impact factors in peer-reviewed journals. The performance of researchers with financially supported projects is compared with that of a control group of researchers who submitted projects accepted in terms of quality but not supported because of shortage of funds. We use non-experimental data and a difference-in-differences approach along with propensity score matching techniques, where we control for pre-programme observable attributes as well as for researchers’ time-invariant unobservable characteristics. Our findings suggest a positive *Submitted July 2007. The comments of Samuel Berlinski (the editor), Sebastián Galiani, Alessandro Maffioli and two anonymous referees are gratefully acknowledged. The authors wish to thank Kimberly Jedlicka for editorial assistance. This study was originally developed as part of the project ‘IDB’s Science and Technology Programs: An Evaluation of the Technology Development Funds and Competitive Research Grants’, financed by the Office of Evaluation and Oversight of the Inter-American Development Bank. JEL classification number: H50. © 2008 The Authors Journal compilation © Institute for Fiscal Studies, 2008. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford, OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA 76 Fiscal Studies and statistically significant effect of subsidy on academic performance, especially for young researchers. I. Introduction As the seminal articles by Nelson (1959) and Arrow (1962) showed many decades ago, scientific knowledge – the product par excellence of scientific research – may be conceived as a durable public good: the exclusion of its use is expensive, non-rival and cumulative. Non-perfect exclusion generates a difference between the private marginal return and the social marginal return, with consequent underinvestment in non-regulated markets. The non- rival and cumulative character intensifies the difficulty of compensating for the non-appropriable profits. The misallocation problem is exacerbated by the uncertainty and indivisibilities associated with the investment in knowledge. Thus the failure of the market system to achieve an optimal resource allocation for scientific activity provides a rationale for public funding of science. As public resources are spent in funding academic research, it is natural to question the results obtained with these resources. There are few studies that have analysed the impact of public funding on scientific research, and all of them have focused on developed countries. Arora, David and Gambardella (1998) evaluate the effect of an Italian programme funding academic biotechnology research and find a low average elasticity of research output with respect to funding. Arora and Gambardella (2006) assess the impact of National Science Foundation (NSF) funding on basic economic research in the US, finding a positive impact for young economists. Jacob and Lefgren (2007) show that National Institutes of Health (NIH) post-doctoral fellowships increase publications and citations by about 20 per cent in the five years following grant application, but they do not find a significant impact for NIH research grants.1 Finally, Goldfarb (2001) measures the impact of a NASA aerospace engineering programme and finds a positive effect on the number of publications, though there is evidence that higher quantity was achieved at the expense of the quality of publications. Our study contributes to this literature by evaluating econometrically, for the first time to our knowledge, the impact of scientific research grants on academic performance in a developing country. In particular, we study the impact that the subsidies granted by the Fund for Scientific and Technological Research (Fondo para la Investigación Cientifica y 1Pion (2001) finds that NIH pre-doctoral support has no impact on publications and citations of funded students compared with other doctoral students and a low positive impact in their future careers. In the same direction, Carter, Winkler and Biddle-Zehner (1987) find a non-significant effect of NIH career development awards on publication-based measures of research productivity. © 2008 The Authors Journal compilation © Institute for Fiscal Studies, 2008 Impact of research grants on academic output 77 Tecnológica, FONCyT) have had on the academic performance of supported researchers in Argentina. Researchers in developing countries face more difficult constraints on undertaking scientific activity than those in developed countries, which underscores the relevance of public funding programmes. In developing countries, there are fewer private funding mechanisms for science than in developed countries, while the infrastructure conditions for scientific research (as well as the access to inputs and specialised publications) are often poor due to budget restrictions. The plan for the remainder of the paper is as follows. Section II introduces some general data on Argentina’s science and technology capabilities and explains the main features of the FONCyT subsidies programme. The database we use is described in Section III, while our methodology and results are presented in Section IV. Some concluding comments are made in Section V. II. FONCyT: a brief description Argentina’s level of expenditure on research and development (R&D) activities amounts to nearly 0.5 per cent of its GDP. This is a low level when compared not only with developed countries (where often more than 2 per cent of GDP is devoted to R&D) but also with some neighbouring developing countries such as Brazil (0.9 per cent) and Chile (0.6 per cent).2 An increasing part of the funds available for R&D activities in Argentina comes from the National Agency of Scientific and Technological Promotion (Agencia Nacional de Promoción Cientifica y Tecnológica, ANPCYT), created in the mid-1990s. The ANPCYT administers two funds – the Argentine Technological Fund (Fondo Tecnológico Argentino, FONTAR), which gives credits and subsidies to technological projects, and FONCyT, which is dedicated to granting funds in the form of non-reimbursable subsidies to scientific research projects. These projects must be developed by researchers working at public or private, non-profit organisations located in Argentina. The activities of FONCyT began in 1997. One of the objectives of its creation was to develop an instance of public funding of science on the basis of competitive mechanisms, based on quality evaluation through peer review and pertinence criteria.3 In this paper, we evaluate the impact of the 2Source: Red de Indicadores de Ciencia y Tecnología (RICYT), http://www.ricyt.edu.ar/. 3Before the creation of FONCyT, the main source of public funding for scientific research was the National Council of Technical and Scientific Research (Consejo Nacional de Investigaciones Cientificas y Técnicas, CONICET), an institution that started to operate in 1958 and that is based on the formula of ‘career researchers’ under which scientists are permanent staff of the federal government. © 2008 The Authors Journal compilation © Institute for Fiscal Studies, 2008 78 Fiscal Studies Scientific and Technological Research Projects (Proyectos de Investigación Cientifica y Tecnológica, PICTs) funded by FONCyT in 1998 and 1999. The PICTs represented almost 75 per cent of all the funding granted by FONCyT from 1998 to 2004 and include four different categories of projects: research projects in any area of scientific and/or technological knowledge; research projects on specific sectors and topics;4 research projects in priority regions; and projects co-financed within the framework of agreements with public and private organisations or companies. The projects are divided according to the experience of the group of researchers, distinguishing consolidated groups from groups of recent formation (after 1994). During the period under analysis, the maximum amount of subsidy was $50,000 per year, for a maximum of three years.5 It is possible to use the subsidy of FONCyT to fund inputs, purchase of bibliographical material, publication expenses, scholarships, trips to participate in scientific conferences, specialised technical services, and equipment. The salaries of the researchers are not fundable. A condition of receiving the subsidy is to be able to rely on a permanent source of income from the institution in which the researcher works. The process of selecting projects to be funded can be summarised in three steps. The first involves admissibility: at this stage, it is verified that the project fulfils the minimum requirements that constitute the admission criteria.6 Once the project is admitted, the next step is peer evaluation of its quality; only those projects evaluated as good, very good or excellent are considered for funding. The final step is the evaluation of project pertinence

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