Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules

Pierre Azoulay, Joshua S. Graff Zivin, Danielle Li, Bhaven N. Sampat

NBER Working Paper No. 20889
Issued in January 2015, Revised in January 2017
NBER Program(s):Health Care, Public Economics, Productivity, Innovation, and Entrepreneurship

We quantify the impact of scientific grant funding at the National Institutes of Health (NIH) on patenting by pharmaceutical and biotechnology firms. Our paper makes two contributions. First, we use newly constructed bibliometric data to develop a method for flexibly linking specific grant expenditures to private-sector innovations. Second, we take advantage of idiosyncratic rigidities in the rules governing NIH peer review to generate exogenous variation in funding across research areas. Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 2.3 patents. Though valuing patents is difficult, we report a range of estimates for the private value of these patents using different approaches.

download in pdf format
   (3029 K)

email paper

A non-technical summary of this paper is available in the May 2015 NBER Digest.  You can sign up to receive the NBER Digest by email.

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20889

Published: Pierre Azoulay & Joshua S Graff Zivin & Danielle Li & Bhaven N Sampat, 2019. "Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules," The Review of Economic Studies, vol 86(1), pages 117-152.

Users who downloaded this paper also downloaded* these:
Goldschlag, Lane, Weinberg, and Zolas w23018 Proximity and Economic Activity: An Analysis of Vendor‐University Transactions
Jones w11359 Age and Great Invention
Arora, Belenzon, and Patacconi w20902 Killing the Golden Goose? The Decline of Science in Corporate R&D
Packalen and Bhattacharya w20920 Age and the Trying Out of New Ideas
Sampat and Williams w21666 How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us