This paper studies the effects of the NSF Science Development Program on universities and local innovation, combining historical data from scientific publications, doctoral dissertations, and patents. Introduced in 1965, the program awarded large institutional grants to natural science and engineering departments at U.S. research universities. I exploit top ranked universities excluded from the program as a comparison group in a difference-indifferences research design. First, I find that Science Development awards increased faculty size, the number of PhDs awarded, and publications at funded universities. Second, I find a patenting increase in commuting zones hosting funded universities, primarily attributable to incumbent firms located near those institutions, and driven by commuting zones with established R&D-intensive sectors. I find a larger effect in technology fields with high exposure to local universities' research. I provide evidence indicating two main mechanisms behind the patenting increase: greater reliance on scientific knowledge in patenting and the employment of local PhD graduates in industrial R&D.
Grabriele Cristelli
14 January 2026 Paper Number POIDWP132
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