In the June 21, 2002 Issue:

Copyright State Science & Technology Institute 2003. 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 State Legislation Gives Green Light to TBED in Kentucky, Oregon
While tight state budgets have slowed the number of tech-based economic development programs being created by states, Kentucky and Oregon have both approved new laws designed to encourage the growth of technology companies.

Kentucky
Kentucky Governor Paul Patton has signed into law House Bill (HB) 525, economic development legislation, designed to attract high-tech, new economy companies to the state that provide high quality, high paying jobs. The legislation is designed to help Kentucky develop a business culture that promotes research and development and an entrepreneurial climate that allows new ideas to flourish.

Specifically, HB 525 does the following:

Oregon
In Oregon, voters passed two measures on May 21 intended to attract investment in biotechnology and higher education.

Ballot Measure 10 amends the Oregon constitution to allow the state's public universities and colleges "to hold and dispose of stock received in exchange for technology they create." The measure is designed to encourage the commercialization of technology discovered by Oregon's schools but prevent the schools from using taxpayers' money to invest in stock.

Another ballot, Measure 11, gives Oregon the opportunity to raise $200 million for the Oregon Health Sciences University (OHSU) by creating an exception to the debt limit for general obligation bonds to finance OHSU and its medical research. The measure enables the state to save $31.5 million in interest costs anticipated for the life of the bonds.

With passage of Measure 10, Oregon becomes the twenty-fourth state to allow public universities to raise nontax revenue by accepting stock from companies wishing to buy, market or license technology.

More information on the legislation approved in Kentucky and Oregon, respectively, is available at <http://www.one-ky.com> and <http://www.sos.state.or.us/>.

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Biotech Initiatives: A Global Competition
Publisher's Note: While more than 40 states are working to encourage the creation and growth of biotechnology companies, as we have said over the years, the U.S. is competing in a global economy. This is just as true in technology as in textiles. The fact that the recently concluded BIO annual conference was held in Toronto only underscores the point. Over the years, the SSTI Weekly Digest has featured selected international initiatives as a gentle reminder to policymakers that the U.S. is not alone in this effort. Below, we feature two European efforts focused on biotechnology.

Biosaxony
Biosaxony is a geographic region that is becoming a gateway for biotech development throughout Europe, the U.S. and Canada. The German state of Saxony invested more than $450 million over a period of five years to develop a high concentration of R&D companies who are partnering with academia to pioneer advances in biotechnology. Germany itself boasts 360 biotech and health technology companies, up from 279 just two years ago.

The British owned DNA engineering company Gene Bridges recently moved its headquarters to Biosaxony to take advantage of the area's concentration of biotech expertise. Similarly, the Canada owned genomics company Cenix BioScience was recently located to the region for the same reason. U.S. companies also are eyeing Biosaxony, due to the low-cost facilities and access to experts in fields such as bioinformatics, tissue engineering and drug discovery.

The main focus of Germany's multi-million dollar initiative lies in the subsidized establishment of regional biotech centers in Leipzig and Dresden. "Biocity Leipzig," for example, is concentrating heavily on research in the field of environmental biotechnology and biomedicine and, at the same time, is establishing an incubator for start-up companies. Although the site is not yet finished, many companies have already begun securing long-term leases.

ScanBalt Initiative
Meanwhile, biotechnology leaders in Denmark, Estonia, Finland, Germany, Iceland, Lithuania, Norway, Poland, Latvia, St. Petersburg and Sweden have launched the ScanBalt Initiative to foster greater cooperation in attracting and supporting biotechnology research and development in the region.

The ScanBalt Initiative follows major investment by the European Union in the biotechnology industry in Scandinavia and the Baltic States and is one of several high profile economic partnerships among EU member states and potential members that have arisen in conjunction with the EU's proposed next wave of expansion. ScanBalt's mission will be to promote knowledge formation, education and research within biotech and life sciences and to shape a competitive life sciences/biotech-industrial region for ScanBalt inhabitants.

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BHI Report Gives View of States' Competitiveness
A study released by the Beacon Hill Institute at Suffolk University in Boston is one of the more recent efforts to examine all aspects of U.S. states and their economies. Entitled State Competitiveness Report 2001, the study defines competitiveness as the ability to ensure and sustain a high level of per capita income and its continued growth.

The BHI report combines more than three dozen variables into nine subindexes: government and fiscal policy, institutions, infrastructure, human resources, technology, finance, openness, domestic competition and environmental policy. Using the nine subindexes, each of which represents an element of competitiveness, the authors made an overall index and ranked the states according to their overall competitiveness.

Among the study's key findings are:

State Competitiveness Report 2001 includes several useful tables, presenting results by state for overall competitiveness and for each of the subindexes. The report is available at: http://www.beaconhill.org/

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U.S. Broadband Infrastructure Gets Review in Brookings Paper
Videoconferencing, videotelephony, Internet-based audio and video entertainment, local wireless data services and telecommuting — all are part of the "last mile" broadband services that Charles Ferguson assesses in a recent working paper for The Brookings Institution.

In The United States Broadband Problem: Analysis and Policy Recommendations, Ferguson argues that broadband services are hampered by a slow rate of deployment and technological progress. Monopolistic structure, entrenched management and political power of the incumbent local exchange carrier (ILEC) and cable television (CATV) sectors, he says, are principally responsible for the problem. Moreover, these industries are "worsened by major deficiencies in the policy and regulatory systems covering (them)."

Ferguson observes that the rate of technological progress generally has declined since the Telecommunications Act of 1996, a measure that was expected to yield "a modern, decentralized, competitive, and technologically dynamic industry." The ILEC and CATV industries, he states, are largely dominant and tend not to compete with each other. And, saying that less than 15 percent of U.S. residences have faster Internet access via cable modems or ADSL, Ferguson asserts the state of broadband digital infrastructure "is indeed a problem."

If broadband performance is not improved, Ferguson contends, then U.S. productivity growth may decrease at least 1 percent each year. He adds that other areas such as public safety, military preparedness and energy security might also be adversely affected and that a major broadband bottleneck will further digital divide problems.

Ferguson addresses the need for structural reforms in industry, policy and regulatory systems. Among his policy recommendations are:

The United States Broadband Problem: Analysis and Policy Recommendations is available at: http://www.brookings.edu/views/papers/ferguson/working_paper_20020531.pdf

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Useful Stats: Federal Funds for R&D for Fiscal Years 2000-2002
The National Science Foundation has released a new set of statistical tables that show research and development (R&D) funding levels, reported by 31 federal agencies for the last three fiscal years.

Federal Funds for Research and Development: Fiscal Years 2000, 2001, and 2002 offers R&D totals in terms of both outlays and obligations. The R&D obligation data are categorized according to character of work (basic research, applied research, and development), performer, field of science or engineering (for research but not for development), and federal R&D funding by state. The report also shows obligations for research performance at colleges and universities by fields of science or engineering, and additional data is given for R&D plant.

SSTI has prepared a table comparing FY 2000 state rankings for federal obligations for R&D and R&D plant. The rankings reveal that California, Maryland, Virginia, Massachusetts and New York, respectively, had the most in total federal obligations.

Federal Funds for Research and Development: Fiscal Years 2000, 2001, and 2002 is available at: http://www.nsf.gov/sbe/srs/nsf02321/htmstart.htm

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State & Local Tech-based ED RoundUp

Albuquerque, New Mexico
Tenants of the Sante Fe Business Incubator have seen their one-story building increase from 10,000 sq. ft. to 30,000 sq. ft., according to a story by the Albuquerque Journal. The expansion is part of a $2.5 million project funded by the federal Economic Development Administration (EDA), the Regional Development Corporation and other agencies.

Arizona
The U.S. Women's Chamber of Commerce has started the Women's Business Growth Leadership Council to help boost women owned business revenue in Arizona, the Business Journal in Phoenix reported. The group is designed to help women better obtain financing and procurement opportunities from the government and large corporations.

Grand Rapids, Michigan
Grand Valley State University, First Power and Siemens Corporation recently announced their plan for a long-term partnership that will focus on research and development of new energy technologies to be highlighted at a new Energy Center of Excellence in Muskegon. The plan calls for a research institute to explore alternative sources of energy, a business incubator to develop energy-related ventures, a resource base, an education and training center, and a conference center. The Center would serve as international energy technology destination.

New Jersey
Administrators and students at the state's colleges and universities await the launching of NJEDge.Net, a $100-million high-speed inter-campus Internet network set to be fully operational by September. A recent article in The Chronicle of Higher Education reported 37 two- and four-year institutions will benefit from the project. All participants will receive high-quality video and data transmission and will be able to share research, resources and equipment.

Primary and secondary schools also will benefit from NJEDge.Net, and corporations may access the network to search for specific research and academic programs, according to the Chronicle. In addition, workers across the state will be able to sharpen their skills through distance-education programs.

The $100-million cost is being divided between improving participants' broadband infrastructure and constructing inter-campus connections. Member institutions are funding half the cost, while a matching grant from the state's Higher Education Technology Infrastructure Fund is covering the other half.

Oakland, California
A new association, the Bay Area Incubator Alliance (BAIA), is providing a structure for educating fledgling businesses, the Oakland Tribune reported. Quarterly meetings held by BAIA will enable participants to share knowledge and acquire strategies for obtaining greater access to capital. BAIA initially convened in April for a meeting that entertained 10 incubating institutions, most of which are serving technology-related startups.

Oklahoma City
The growing Oklahoma Health Center Research Park will be bolstered by a new $16 million research building to have 125,000 sq. ft. of leasable space, according to the Daily Oklahoman. Approved by the Oklahoma City Urban Renewal Authority, the research building is anticipated to be completed by spring 2003.

Stillwater, Oklahoma
The Oklahoma Technology and Research Park (OTRP) has been awarded a $1.25 million EDA grant for developing an additional 80 acres to accommodate new tech-based companies. The project includes site work, an access roadway, and an accelerator building. OTRP, which is operated by Oklahoma State University, Meridian Technology Center, and the City of Stillwater, presently is home for 13 innovative companies based on various technology platforms.

West Virginia
A technology park in Montgomery, an economically depressed community in the upper Kanawha Valley, may soon benefit from a $2.8 million request for expansion, according to the Charleston Daily Mail. Members of the state's Economic Development Grant Committee are considering a request put forth by the Upper Kanawha Valley Economic Development Corporation to use the funds to build a second office building and parking lots for housing three more companies. The $2.8 million would come from $200 million in total available funds for the project. UKVEDC is hopeful the project will yield 200 jobs and have an overall economic impact of $18.7 million, annually.

Wisconsin
The state Department of Commerce has awarded a total of $55,000 in economic development grants for the creation of two incubators in Madison, a story in the Wisconsin State Journal reported. The nonprofit Genesis Development Corp. will use a $10,000 grant toward an incubator for up to 30 high-tech companies and light manufacturers, and the Technology Education and Commerce Center will construct an incubator at Madison Area Technical College, using a $45,000 grant.

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