Local Innovation Spillovers of NIH Funding

• In Event: Innovation in the Public, Private, and Nonprofit Sectors

Abstract

Federal funding for medical research through the National Institutes of Health (NIH) more than doubled in real terms from the mid-1990s to 2003, surging from approximately $24 billion to over $44 billion in 2023 dollars. This paper examines the geographic spillovers of NIH funding on local innovation outcomes. Combining comprehensive NIH grant data from 1985 to 2016 with patent and firm data, we employ a shift-share instrumental variable approach to identify causal effects of NIH funding on patent approval and firm creation in the medical and medical-adjacent sectors. Specifically, we instrument for county-level NIH funding by exploiting exogenous nationwide funding shocks during the study period, interacted with cross-county variation in historical funding patterns based on pre-period allocations. While our results are preliminary (but will be complete by the time of the conference), we find positive local effects of NIH funding on innovation and firm creation. Our findings underscore the spatial implications of government-funded medical research.

Authors

• Emiliano Harris, Cornell University
  Presenting Author

• Gautier Guillaume Lenfant, Cornell University
  Non-Presenting Co-Author