Puerto Rico faces setback as federal R&D cuts loom
* Editor’s Note: This is the latest edition of “Al Punto,” a periodic publication by economic research firm Estudios Técnicos Inc. on current affairs.
In addition to the private sector, the federal government provides considerable support for a wide range of scientific and engineering research (R&D), for which Congress annually allocates budgetary appropriations.
Part of this funding is received in Puerto Rico by eligible institutions and research centers, particularly academic and healthcare institutions. Funding is concentrated in a few agencies.
For the 2024 federal fiscal year, $200.3 billion had been approved in the United States, of which 51.0% was for research funded by the Department of Defense. The other federal agencies that provide a significant portion of this funding are the National Institute of Health, the National Science Foundation, and the Department of Energy, which together provide 36% of federally funded R&D.
This importance will be affected in one way or another by the budget proposals contemplated by Republicans in Congress, and the one submitted on May 2 by President Trump. The effects would be negative for federal R&D funding.
The budget proposal submitted by Trump proposes, in the case of the National Institutes of Health, an $18 billion reduction compared to what is allocated for the current 2025 budget. And although $27 billion in funding for NIH research would be maintained, it establishes that the focus of its research will be reformed to make it consistent with his Make America Healthy Again plan. In the case of the National Science Foundation, a $3.479 billion cut is proposed for general and education research, which includes university institutions.
Although the federal funds Puerto Rico receives for R&D are not significant, they are important for institutions and research centers, particularly when equivalent state funding sources are lacking.
In fiscal year 2024, institutions and companies in Puerto Rico received $86.6 million in federal R&D funding. The two main sources are the NIH and the NSF, agencies that, as we saw earlier, will see their funding reduced or, in the case of the NIH, a refocusing of their research activities.
In a context where federal R&D funding is the primary source for institutions and businesses in Puerto Rico, these changes would have the effect, among others, of delaying or postponing ongoing research and programs. Although the United States is the economy that invests the most in R&D, these proposals will reduce that activity both in the United States and in Puerto Rico.
Author Graham Castillo is president of Estudios Técnicos Inc.
