In the April 27, 2001 Issue:

Copyright State Science & Technology Institute 2002. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.

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New Hampshire’s First ED Plan Focuses on the New Economy
Earlier this month Governor Jeanne Shaheen released New Hampshire in the New Economy: A Vision for Expanded Prosperity, the first-ever comprehensive economic development plan for the State of New Hampshire. The plan calls for New Hampshire state government to focus its activities toward encouraging innovation, strengthening education and workforce development, retaining and protecting the quality of life, and extending economic opportunity to every citizen in every part of the state.

The plan’s 39 recommendations are divided among six categories. Specific recommendations relating to tech-based economic development are highlighted below.

Maintaining A Strong Economy

Developing a Globally Competitive Workforce

Addressing Economic Disparities

Encourage the development of organizations such as the Women's Rural Entrepreneurial Network.

Integrating Telecommunications

Additional categories include Preserving Our Quality of Life and Place and Investing in Essential Infrastructure.

While releasing the plan earlier this month, Governor Jeanne Shaheen also announced that she will soon name a New Hampshire Economic Advisory Council to advise the Governor on continuing implementation of the plan’s recommendations.

More than 500 businesses and households provided input in formulating the plan’s recommendations.

Support for the plan’s two-year development came from a $100,000 grant from the U.S. Department of Commerce. A copy of New Hampshire in the New Economy can be downloaded from: http://www.state.nh.us/governor/neweconomy.html

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 SBA Releases FAST Solicitation
The Small Business Administration (SBA) will distribute up to $3.4 million for small technology business development efforts across as many as 30 states through the first Federal and State Technology Partnership (FAST) request for proposals, released online Tuesday. Proposals are due Thursday, June 7, 2001. Individual state awards will range from $100,000 - $150,000.

FAST, included in legislation reauthorizing the Small Business Innovation Research (SBIR) Program last December, provides matching funds to enable states to augment or expand their tech business assistance and SBIR outreach efforts. Recognizing the priority nearly every state has placed on encouraging technological innovation and commercialization by small businesses, the Science and Technology Council of the States made the FAST program’s creation a top priority during last year’s SBIR reauthorization by Congress.

Which of the three tiers of matching funding requirements a state must follow for a FAST award is based on the state’s national ranking in the number of SBIR Phase I awards received. Fifty percent of the match can be in-kind contributions while the balance must be direct cash expenditures.

The Program Announcement has several elements to ensure the activities included in a state’s FAST proposal are integrated into the state’s existing support structure for technology development and commercialization.

Proposals will be screened by SBA staff for completeness and eligibility. Responsive proposals will then be scored by a FAST Review Committee comprised of experts from inside and external to the federal government. Final award determinations will be made by a triumvirate of the SBA, the National Science Foundation and the Department of Defense.

Award decisions will be made before September 30, 2001.

Questions concerning technical section of the FAST solicitation should be directed to Ms. Cherina Hunter, FAST Program Manager in the SBA Office of Technology (202) 205-7344. The FAST solicitation, supporting documents, and award statistics by state can be downloaded from the SBA Office of Technology website: http://www.sba.gov/sbir/

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 Congress Considers IT Training Tax Credit
Legislation for the Technology Education and Training Act, introduced earlier this week by a bipartisan group of six Senators, calls for the creation of a income tax credit for businesses to offset information technology training expenses of their workers and trainees. The credit would be equal to 100 percent of the first $1,500 a business spends to train an individual worker. The credit would increase to $2,000 per individual if the training program offered by the business is located in a specially designated area, including existing Empowerment Zones.

Because the credit would apply to programs which lead to certification in information technology (IT), the bill, if passed, also would encourage businesses to form partnerships with schools, universities and job training programs.

Bill sponsor Kent Conrad (D-ND) was joined by cosponsors Senator Olympia Snowe (R-N.H.), Senator Harry Reid (D-NV), Senator Tim Johnson (D-S.D.), Senator Mike DeWine (R-OH) and Senator John D. Rockefeller IV (D-WV) in introducing the bill on Tuesday.

The bill, S. 762, was referred to the Committee on Finance.

More information is available at: HTTP://conrad.senate.gov/~conrad/releases/01/03/2001424A06.html

Additional information on S. 762 will be available soon at http://thomas.loc.gov/

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 Vermont Leads Manufacturing Exports, Study Finds
Long-held opinions are hard to change. The state of the US manufacturing sector is a good example. Many people, particularly those in the Northeast and Midwest, hold tightly to memories of mass layoffs and factory closings nearly 20 years ago.

After two decades of transformation, today’s manufacturing sector is quite different. In fact, manufacturing exports, including food production and processing, have enjoyed positive annual growth rates in all but one state since 1986, point out the authors of Comparing Manufacturing Export Growth Across States: What Accounts for the Differences?, a recent journal article from the Federal Reserve Bank of St. Louis. Nationally, manufacturing exports as a share of Gross Domestic Product grew from 4.1 percent in 1986 to 7.0 percent in 1998.

The annual growth rate for manufacturing exports varied widely across the states. New Mexico experienced the greatest change during the ten years of 1988-1998, achieving an annual rate of 28.2 percent. Only Alaska witnessed a decline in manufacturing exports during the period.

A more accurate picture of the comparative changes across states, however, is presented by examining manufacturing exports as a share of Gross State Product (GSP). In 1998, Vermont had the greatest share of its GSP resulting from manufacturing exports at 23.80 percent. Manufacturing exports exceeded 10 percent of GSP in only three other states: Washington (20.24 %), Utah (12.72%) and Michigan (10.39%).

With a 13.72 point difference between 1988 and 1998, Vermont also enjoyed the greatest gain in percentage points for manufacturing exports during the time period. The second highest change in percentage points was a distant 3.89 points in Washington.

Manufacturing exports are increasing in importance for state economies in all but six states. Alaska, Delaware, District of Columbia, Louisiana, Michigan, and Montana – experienced a drop over the ten years in the share of GSP from manufacturing exports.

A closer examination of the data
To find explanations of why manufacturing export growth varied across the states was the purpose of writing Comparing Manufacturing Export Growth Across States: What Accounts for the Differences?, published in the January/February issue of the bimonthly Review. Federal Reserve Bank of St. Louis staff Cletus Coughlin and Patricia Pollard conducted a shift-share analysis to isolate the effects that may account for the differences among the states and the national average.

A state’s net relative change in manufacturing exports can be explained, the authors say, by:

For 36 of the states, the article reports, the industry mix of the individual state became more similar to the national average from 1988-1998. The increased diversification of manufacturing exports within states may help insulate them from downturns in any particular sector. The increased homogeneity of the country’s manufacturing exports, however, indicates the industry mix is likely to be less important in accounting for future growth on the state level. Where exports are shipped is likely to become increasingly more important.

The competitive effect, the article states, is of increasing importance and more research on the determining factors for the effect would be useful in understanding state export performance. One economic explanation found in earlier studies that is highlighted in the article is “states with larger increases in human capital per worker have seen their industries outperform the corresponding national industries in terms of export growth.”

The article, presenting the findings of the shift-share analysis, the net relative change of each state’s manufacturing exports between 1988 and 1998, and several additional tables for all 50 states and the District of Columbia, can be downloaded at: http://www.stls.frb.org/docs/publications/review/01/0101cc.pdf

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 State Round Up

Colorado
The Bill and Melinda Gates Foundation is donating $8 million over five years to support the creation of four “high tech” high schools around the state. Modeled after San Diego’s High Tech High, the Colorado schools will have teacher-to-student ratios of 1:15 and the same teacher will work with the students for four years. Students would have individualized workstations and practical internship experience will be built into the curriculum. The state is providing an $8 million match for the grant. Marc Holtzman, the Governor’s Secretary for Technology, is chairing the effort.

The Gates grant will also support the creation of a charter school network and breaking three large public schools into smaller multiplex schools managed by a private organization. For more information, see: http://www.gatesfoundation.org/

Michigan
To entice technology cluster development, the Michigan Economic Development Corp (MEDC) has announced the creation of 11 SmartZones, areas with existing clusters of high-tech companies, universities, and research institutions that can use special tax credits to attract additional out-of-state tech companies and investment. In addition to marketing assistance from MEDC, the SmartZones have access to a $50 million Core Community Fund, to support tech business start-up and entrepreneurship. See: http://medc.michigan.org/

New York
Doubling the state’s $50 million commitment, IBM will invest more than $100 million in a Center of Excellence in Nanoelectronics at the State University of New York at Albany. The Center will create the only university-based 300 millimeter computer wafer pilot prototyping facility in the world. It also will provide laboratory and clean room space for research, build incubator space for high-tech company spin-offs, and create a state-of-the-art workforce development program at U Albany and associated community colleges. The announcement comes shortly after IBM's decision to build a $2.5 billion chip fabrication facility in East Fishkill, New York. This is the second center of excellence launched by the state this year (see February 16, 2001 edition of the SSTI Weekly Digest). See the April 23, press release on the new Albany Center of Excellence at: http://www.state.ny.us/governor/

Texas
Nicknamed the “Texas Needs Nerds” bill in local media, SB 353, already passed by the state Senate was approved unanimously without amendment by the House Committee on Higher Education last week. The bill calls for the creation of a $5 million fund to support programs that increase enrollment and retain graduates in engineering and computer sciences, particularly among women and minority students. Administered by the Texas Higher Education Coordinating Board, the fund’s investments in programs would be matched 1:1 by private industry. To encourage cooperation and coordination among the private sector and the state’s public engineering and computer science schools, the bill also calls for the creation of a Texas Engineering & Technical Consortium. To read the bill visit: http://www.capitol.state.tx.us/

West Virginia
The Economic Development Administration and the Appalachian Regional Commission have awarded a combined $2.35 million to the Upper Kanawha Valley Economic Development Corporation to build a new, 36,000-sq. ft., high-tech business incubator in Montgomery. Incubator tenants will be assisted by the West Virginia Institute of Technology.

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