But Scott L. Zeger, Johns Hopkins' vice provost for research, expects that the major agencies funding its research — such as the National Institutes of Health and NASA — will soon see cuts of perhaps 2 percent or more. So Hopkins is expanding its horizons. It's collaborating with venture capitalists and companies much earlier in its research-and-development efforts in the hope of translating more of its discoveries into products and services, and more quickly.

"We're bringing them into the planning phase so as they listen to what we're trying to do, they can help us understand what the market needs," Zeger said. "While it's a difficult time, I think difficult times generate innovation."

Defense contractors are also heading down new avenues. Bethesda-based Lockheed Martin Corp. is working to increase its international sales from 15 percent of revenue to 20 percent, and on Tuesday it expanded its health care offerings by acquiring a California company that provides medical evaluation services to government agencies.

But Lockheed and others are also cutting back. One in four of Lockheed's executives took a buyout last year. Northrop Grumman Corp. — which, like Lockheed, is one of the largest private employers in Maryland — announced in May that it would reduce Baltimore-area employment by 500 workers through buyouts and layoffs.

Uncertainty about defense spending looms large.

"We really feel like it's incredibly important to Maryland's status as a top employer for high-tech jobs to avoid massive, across-the-board cuts in the defense budget," said Chris Williams, a Lockheed spokesman.

Fuller, the George Mason economist, thinks the effect of government cutbacks will accelerate over the next several years. But he doesn't expect they will be "bloody and wholesale."

What Maryland needs to do now, he said, is focus on areas of strength — such as biotechnology — that could flourish even when federal revenues do not.

"It's only reasonable to expect that the gravy train has come to an end, and we need to move on," Fuller said.



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