CAMBRIDGE, Mass. -- In recent years federal funding of R&D has fallen victim to the balanced-budget gods. With the prospect of that trend continuing (See "R&D Funding Faces Hard Times: The Road to 2002 Is All Downhill," Photonics Spectra, June 1996, p. 11), MIT has issued a 36-page report outlining the economic impact on companies that were either established by MIT faculty or staff or spun off from university laboratories. According to the report, photonics plays no small role in that impact.Luminaries such as Digital Equipment, Hewlett-Packard, Raytheon and Texas Instruments -- all having ties with MIT -- generated $232 million in sales in 1994 and currently employ 1.1 million people worldwide. If MIT-related companies were a country, it would have almost the same gross domestic product as South Africa, said Ken Campbell, MIT spokesman.The report divided the companies into categories, with photonics firms falling under the electronics group. Electronics-related firms accounted for about $129 billion of worldwide sales, with revenues of photonics firms estimated at more than $5 billion. Photonics-related spinoffs include Boston Scientific; EG&G, including its astrophysics research, optoelectronics and Reticon arms; General Scanning Inc.; II-VI Inc.; Inframetrics; Kemet Corp.; Spectra-Physics; Thermo Spectra Co.; and Watkins Johnson Inc.Federal supportMIT believes that the report speaks volumes about the importance of Washington support, not just for research institutions, but for American society as a whole. "There is a huge national benefit for funding research," Campbell explained. "We felt that it would be useful for bringing across the idea that a research university like MIT is not just a local phenomenon." More than 70 percent of MIT's high-tech research sponsorship comes from federal dollars.Although the MIT report is the first of its kind, it won't be the last, as American research universities scramble to prove their right to their fair share of an ever-shrinking pie."No one has really paid attention to [the economic impact of spinoff photonics companies] in the last few years," said Rob Goodwin, director of technology transfer at the University of Rochester in New York. "But a report like MIT's tells Washington they're getting a twentyfold return on investment." The University of Rochester has spawned such photonics companies as Gradient Lens Corp. and Rochester Photonics. (Ironically, it was Eastman Kodak that was responsible for the creation of the university and not vice versa.)Universities have noticed a trend not only in the amount of support from Washington, but in the focus of specific technologies and applications. "Interest on the part of legislation is to have science relate to the public as much as possible," said Robert Robb, director of the University of Michigan's Technology Management office in Ann Arbor. "But that doesn't necessarily mean ignoring the need for basic research. The strongest areas of research and development, like computer science, information science and biotechnology, all have roots firmly planted in the academic community, and that won't be ignored."