Commentary by Sujai Shivakumar, Charles Wessner, Shruti Sharma, and Chris Borges

Published October 29, 2025

Universities are among the United States' most enduring sources of competitive advantage and a key pillar of the nation's innovation system. Home to more than 35 of the world's top 100 research universities, the United States owes many of its most transformative inventions of the past century to universities-from the internet and Global Positioning System (GPS) to CRISPR gene editing and mRNA vaccines. These breakthroughs, along with countless others to come out of university labs, have delivered significant benefits to the United States: new industries, sustained economic growth, and strengthened defense capabilities. Indeed, by advancing frontier technologies and training the next generation of scientists, engineers, and business leaders, universities help sustain U.S. leadership in strategic domains such as semiconductors, AI, quantum computing, and biotechnology, thereby strengthening the United States' ability to compete with rivals and safeguarding its security interests.

The foundation of this remarkable performance is federally funded university research. By combining steady and substantial federal investment, a sophisticated system of technology commercialization, and world-class talent and facilities, university research transforms public funding into lasting economic, health, and national security benefits. While no other nation does this as well as or at the scale of the United States, China is now rapidly emerging as a peer competitor.

Driving Economic Returns

The returns on university research are substantial. Per the Association of University Technology Managers, in the 25 years between 1996 and 2020, university research generated 554,000 invention disclosures, 141,000 U.S. patents, and 15,000 startups. These inventions and new companies generated up to $1 trillion in GDP and $1.9 trillion in gross industrial output, while supporting 6.5 million jobs for U.S. workers. Put differently, every single day, federally supported university research helps launch three new startups and two new products into the economy.

Some of these innovations have fundamentally reshaped industries, if not created entirely new ones. For example, at Stanford University, federal support from the National Science Foundation's Digital Libraries Initiative enabled graduate students Larry Page and Sergey Brin to create the algorithm that became the foundation of Google's search engine. In 2024 alone, Google Search, Google Play, Google Cloud, YouTube, and Google advertising tools collectively supported over $850 billion in economic activity for millions of U.S. businesses, nonprofits, publishers, creators, and developers. These massive economic returns stem from early federal research investments.

This has happened numerous times. Federally funded biomedical research at the University of California, Berkeley (UC-Berkeley), and the Broad Institute helped pioneer CRISPR-Cas9 gene-editing technology, a breakthrough that is revolutionizing medicine, agriculture, and biotechnology by enabling precise, low-cost genome editing. For instance, the U.S. Food and Drug Administration approved Casgevy in December 2023 as the first CRISPR/Cas9-based gene therapy for sickle cell disease in patients 12 and older, making it a landmark medical application of CRISPR technology. Meanwhile, in agriculture, CRISPR/Cas has been used to generate disease-resistant rice by disrupting susceptibility genes, thus reducing the crop's vulnerability to pathogens. Together, these breakthroughs deliver tangible benefits to the health, well-being, and productivity of Americans.

Based on these outcomes, taxpayer investment in university research is not only repaid but multiplied, boosting economic growth and wellbeing.

Anchoring Regional Growth

An easily overlooked benefit of university research is its contribution to regional economic development. Unlike private firms that might relocate to follow market conditions, startups based on university-created innovations often remain rooted in the communities where they are founded. One study found that 68 percent of life sciences companies spun out of U.S. universities remained within 60 miles of their parent institutions. This means federal funding does not just drive national competitiveness, but also helps build durable local economies.

Indeed, universities anchor local tech economies throughout the country:

• In Colorado, the University of Colorado, Boulder's Venture Partners program has generated more than 220 startups, while Colorado State research has supported innovative companies such as KromaTiD, which is advancing gene therapy safety worldwide.
• Universities in North Carolina have launched 756 start-ups since 1998, helping transform Research Triangle Park into a biotech hub that now generates $82 billion in economic impact annually while supporting over 200,000 jobs.
• To address the growing challenge of rare earths, Purdue University's patented separation technologies, exclusively licensed to ReElement Technologies, have enabled the Indiana-based company to become the United States' most advanced rare earth refining firm.

These examples demonstrate that university research drives regional growth and generates tangible benefits that multiply the return on taxpayer investments many times over.

Building National Competitiveness and Security

University research is essential to U.S. national security and international competitiveness as well. The United States' leading universities drive innovation across technologies critical to national defense, such as semiconductors, advanced communications, quantum computing, and biotechnology. Often, these advances occur through public-private partnerships and workforce initiatives.

• Quantum Computing: The University of Chicago, MIT, and UC-Berkeley are at the forefront of quantum computing, leading national consortia that link academic research with federal laboratories and industry partners to accelerate breakthroughs in quantum information science.
• Semiconductor Manufacturing: Rensselaer Polytechnic Institute and SUNY Polytech are partnering with the Albany Nano Center, the most advanced semiconductor research center in the United States, with unique prototyping and manufacturing capabilities invaluable for large and small companies' development of cutting-edge products. Similarly, Arizona State University has partnered with Applied Materials to build a state-of-the-art semiconductor manufacturing research and prototyping facility, creating a hub to accelerate the movement of innovations from lab to fab and strengthening the U.S. global position in microelectronics.
• Semiconductor Advanced Packaging: Purdue University is advancing semiconductor advanced packaging capabilities through a new research and development (R&D) facility developed in cooperation with SK Hynix. This effort addresses a major gap in the U.S. microelectronics ecosystem and expands U.S. capabilities in high-performance chip manufacturing for AI applications.
• Skilled Workforce Development: Ohio State University and Intel are partnering to train the next generation of semiconductor fabrication specialists and develop new device technologies that anchor Ohio's growing role in the national chip ecosystem.

These examples illustrate U.S. universities' hands-on engagement with industry in partnerships that enable the United States to remain at the forefront of international competition in semiconductor development and production.

In strengthening national competitiveness, the security dimension of university research has become increasingly salient. U.S. universities are now key nodes not only of innovation but also of national security-hosting federally funded defense research, sensitive dual-use projects, and partnerships with emerging technology firms. Safeguarding these research ecosystems against intellectual property theft, cyber intrusions, and undue foreign influence is therefore critical to maintaining U.S. technological leadership. Efforts by the Departments of Defense and Commerce, as well as initiatives such as the National Science and Technology Council's Research Security Subcommittee, reflect a growing recognition that academic openness and research integrity must be balanced with national security imperatives. Strengthening these protections, while preserving the collaborative and international character that underpins U.S. innovation, is central to the broader strategy of linking university research to economic and strategic resilience.

Moving University Research into the Marketplace

While federally funded university research is critical, it is just one node, albeit a central one, in the broader U.S. innovation ecosystem. Complementary policies, incentives, and institutional capabilities are needed to transform the new knowledge generated at universities into new products and services for the market. This process does not happen automatically; it relies on institutional and market incentives backed by a steady stream of federal research investments to create the knowledge essential for the United States to maintain its position in today's unprecedented competition for global technological leadership.

One key enabler of the commercialization of the knowledge generated by federal investment is the U.S. patent system, a tool designed to bridge the gap between early-stage discoveries in the lab and the immense investments required to bring new technologies to market. By turning ideas into property that can be protected and safely shared, patents allow researchers and firms to cooperate to develop new technologies. Patents also offer the prospect of exclusivity for a limited period, attracting the investment required to commercialize and scale new products and services.

Federal programs such as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) initiatives have also proven highly effective in moving university research from the lab to the marketplace. These programs provide early-stage funding and foster partnerships between academic institutions and small businesses, helping bridge the "valley of death" between discovery and commercialization. Over the past four decades, SBIR and STTR awards have supported thousands of university spinouts and startups, accelerating innovation in fields such as advanced materials, clean energy, life sciences, and information technology.

The New Challenge from China

Recognizing the power of universities to advance national goals, China is expanding its university system. In an attempt to shift its economy towards higher-value industries and develop a larger pool of highly skilled talent, China is supporting its universities through sustained government policies and investment. This strategy appears to be succeeding. Chinese universities are rapidly climbing global rankings-Tsinghua, Peking, and Zhejiang now consistently rank among the world's top 50. Meanwhile, Beijing continues to expand its R&D spending, with the goal of surpassing U.S. research output.

As strategic competitors like China increasingly employ their universities to cultivate a technological edge, the United States needs to recognize and reinforce its own strengths. U.S. universities are indispensable in the global technology competition. For instance, Purdue University's research on critical minerals and sustainable extraction methods is contributing directly to supply chain security. Similarly, federally supported breakthroughs in quantum information science at institutions like the University of Chicago are laying the foundation for secure communications and next-generation computing. These university-driven innovations ultimately become the technologies and the competencies that underpin military readiness and long-term national security, ensuring that the United States can compete with and counter rivals on multiple fronts.

Current Threats to University-Driven Innovation and U.S. Security

At this critical moment, the United States should reinforce its university-based innovation capabilities. Proposed cuts to federal research agencies such as the National Science Foundation (NSF), the National Institutes of Health (NIH), and the Department of Energy's Office of Science risk undermining one of the nation's most productive sources of discovery and talent development. These institutions fund the fundamental research that fuels breakthroughs in critical and emerging technologies, from quantum to advanced manufacturing.

At the same time, new policy proposals threaten to disrupt the patent system and weaken the mechanisms that enable universities and private partners to translate research into real-world innovations. These include proposals to expand the use of "march-in rights" to control prices, along with recent ideas to tax university-generated intellectual property or impose new levies on patent revenues under the assumption that universities profit disproportionately from federally funded research.

Together, these fiscal and policy pressures risk eroding the foundations of the United States' innovation ecosystem at a moment when global competition for technological leadership is intensifying. If policies that weaken patent protections or destabilize incentives for university research are implemented, the long-standing benefits of federally funded research-such as new industries, high-skilled jobs, and strengthened national security-could quickly erode, leaving a critical gap in the United States' technological and economic leadership.

Conclusion

Sustaining U.S. competitiveness requires strengthening the university research ecosystem that transforms federal dollars into tangible public benefits.

• Investing in National Research Agencies: Increasing and sustaining investments in agencies like the NSF and NIH that support university R&D ensures a steady pipeline of fundamental discoveries and high-skilled workers. Such predictable funding allows universities to pursue long-term, high-risk research that fuels breakthroughs in critical technologies such as AI, semiconductors, and quantum computers and communications. All are essential for the economy of tomorrow.
• Expanding R&D Tax Credits: Expanding R&D tax credits with targeted incentives to encourage companies to collaborate with universities could draw more private capital into early-stage research. Enhanced credits for industry-university partnerships, sponsored research, or patent licensing can help accelerate the scaling and commercialization of promising innovations.
• Supporting Regional Tech Hubs:Investing in regional technology and innovation hubs that connect universities to local industry ensures that federal R&D dollars translate into jobs and growth across the country. These hubs strengthen regional economies by fostering collaboration among startups, manufacturers, and research institutions, and by helping communities beyond traditional innovation centers benefit from federal investments.
• Strengthening SBIR and STTR Programs:Strengthening commercialization pathways, such as the SBIR and STTR programs, by providing larger and longer-term awards, helps bridge the gap between discovery and market adoption. These programs enable university spinouts and small firms to develop, prototype, and scale federally funded technologies, ultimately attracting private investment and creating high-value jobs.
• Maintaining the Integrity of the Bayh-Dole Act:Preserving the patent incentives established under the Bayh-Dole Act is essential to ensure that federally funded inventions continue to reach the marketplace. Misusing "march-in rights" as a price-control mechanism would undermine the system that encourages universities and private industry to collaborate, deterring investment and delaying the development of new medicines, technologies, and products that benefit the public.
• Retaining Scientific and Technical Talent: A final dimension of competitiveness lies in sustaining the flow of scientific and technical talent into U.S. research institutions. International students and scholars have long been an engine of discovery and entrepreneurship, comprising more than half of graduate enrollments in key STEM fields and contributing disproportionately to patents, startups, and federally funded research. Yet, tightening immigration pathways and rising global competition for skilled researchers have introduced new vulnerabilities in this system. Maintaining U.S. leadership will require modernizing visa and immigration frameworks, strengthening pathways from education to employment, and ensuring that the United States remains the preferred destination for top global talent. At the same time, greater investment in homegrown talent pipelines-through scholarships, fellowships, and research apprenticeships-will be essential to complement international inflows and build a resilient innovation workforce capable of sustaining both economic dynamism and national security.

By generating frontier knowledge, training specialized talent, and fostering new industries, federally funded research creates new domains that disrupt and redefine global power in the twenty-first century. University research is a proven job creator, an engine of regional economic growth, and a generator of entirely new industries that also advance public health, improve wellbeing, and bolster national security. To sustain these benefits, the U.S. innovation ecosystem must be upgraded to better align with the demands of today's global, knowledge-based competition for technological advantage. To meet the China challenge for technological leadership, the United States should invest more in university R&D and support programs and incentives that move ideas from labs to markets, thereby ensuring that universities can continue to translate public funding into lasting economic and societal gains.

Sujai Shivakumar is the director and senior fellow of Renewing American Innovation at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Charles Wessner is a senior advisor (non-resident) for the Renewing American Innovation program at CSIS. Shruti Sharma is a research intern with Renewing American Innovation at CSIS. Chris Borges is an associate fellow with the Economics Program and Scholl Chair in International Business at CSIS.

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