In the November 8, 2002 Issue:
- Governors-elect Outline Support for Tech-Based Economic Development
- State Tech-based ED Measures Pass, Fail in 2002 General Election
- North Carolina Outlines Broad Biotech, TBED Strategy
- Manufacturing Output and College Graduates: Is There A Relationship?
- Useful Stats I: S&E Doctorate Awards by State
- Useful Stats II: Innovation Indices Revisited
- Washington Tech Center Seeks Federal Program Development Manager
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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Governors-elect Outline Support for Tech-Based Economic Development
While the 2002 election marked the return of Republican control of the U.S. Senate and the departure of a number of governors that had been strong supporters of investing in science and technology (e.g., John Engler of Michigan, Angus King of Maine, and Roy Barnes of Georgia), it may also mark the beginning point of a new group of governors that embrace technology-based economic development as a focal point of their administrations.Of the 24 new governors, 14 outlined specific initiatives designed to build tech-based economies. Holding with tradition, support for science and technology crossed party lines and geographic region. Developing more capital sources for companies was raised by seven during their campaigns. Bringing broadband to all sections of the state was also a common theme with six indicating this as a major goal for their administration. Other areas of emphasis included working to better commercialize university technology, encouraging entrepreneurship, and expanding R&D tax incentives.
A sampling of some governors-elect positions on issues of interest to the tech-based economic development community follows:
Alaska
Governor-elect Frank Murkowski (R) called for developing technology industries as part of Alaska’s resource economy and creating businesses that export that technology in such industries as telemedicine, commercial fishing, and oil and gas. He also advocated increasing laboratory capabilities at the University of Alaska to leverage public and private grants for medical and technological research.Georgia
Governor-elect Sonny Perdue (R) wants to provide high-speed internet access statewide through tax incentives and public-private partnerships.Hawaii
Governor-elect Linda Lingle (R) supports state and federal matching funds for research to create new industries in agricultural science, biotechnology and pharmaceutical products; aggressive marketing programs that provide incentives for high technology investments; and, more state and federal funds for research activities at the University of Hawaii, technical assistance programs and technology transfer efforts.Illinois
Governor-elect Rod Blagojevich (D) campaigned on a Partnership for a New Economy that includes the creation of a public-private $200 million Illinois Opportunity Fund and 20 Entrepreneurship Centers and improving high-speed internet infrastructure by laying fiber optic conduit with every road project.Kansas
Governor-elect Kathleen Sebelius (D) called for broadband accessibility statewide.Maine
Governor-elect John Baldacci (D) wants to increase investment in R&D by 50 percent in the first two years of the administration.Michigan
Governor-elect Jennifer Granholm (D) outlined an economic development plan that: builds on the success of the Life Sciences Corridor by adding a high-technology corridor that leverages the automotive industry and a homeland security technology corridor to create a Michigan Technology Tri-Corridor; creates a seed development fund; and, provides high-speed internet access statewide.Minnesota
Governor-elect Tim Pawlenty (R) says hopes to provide job growth with an agenda that stimulates more R&D through the use of incentives and promotes more aggressive deployment of research into the local economy.New Hampshire
Governor-elect Craig Benson (R) supports the creation of an angel investment network, a venture capital network, business incubators and putting them on-line, and urging the retirement system to invest in the state and encouraging small business development through advocacy, incubators, and reduction of workers’ compensation costs.New Mexico
Governor-elect Bill Richardson (D) is committed to providing seed capital and mezzanine financing to new or expanding companies and creating a partnership between state government, the federal labs, the state’s research universities, military bases and private investors into a New Mexico Technology Corporation.Pennsylvania
Governor-elect Ed Rendell (D) campaigned on: the creation of a new investment tax credit program and expansion of the R&D tax credit program by $45 million; creation of a public-private venture fund; providing funding for statewide accessibility of telecommunications infrastructure; and, creation of an Economic Development Cabinet to oversee and coordinate all programs and agencies.Tennessee
Governor-elect Phil Bredesen (D) is committed to supporting small business, technology development and entrepreneurs.Vermont
Governor-elect Jim Douglas (R) called for attracting venture capital to finance entrepreneurs; enhancing and re-targeting R&D efforts that translate into new companies and jobs; creating a technology advisory board; supporting collaboration between public, private and non-profit and education institutions to deploy technology infrastructure and information transfer between organizations; and, encouraging technology research to create new technology-based ventures.Wisconsin
Governor-elect Jim Doyle (D) campaigned for an economic plan that focuses on: creating an Office of Entrepreneurial Development; generating and commercializing new ideas in concert with University of Wisconsin; supporting biotechnology R&D and expanding the R&D tax credit; enhancing technology transfer programs; strengthening angel investor networks; capturing SBIR grants; making broadband accessible statewide; and, promoting and nurturing industry clusters.
State Tech-based ED Measures Pass, Fail in 2002 General Election
Some of the 200-plus ballot measures decided in the 2002 General Election held Tuesday were dedicated to promoting tech-based economic development (TBED). The results were generally mixed, however. Promoters of Michigan's Life Sciences Corridor were pleased with the failure of an initiative that would have dictated the allocation of the state's tobacco settlement funds, including a smaller amount than the state is currently spending on life sciences research. However, the stock market's decline over the last two years may have played a role in voters' rejection of several investment-related measures. Below, SSTI highlights some of the TBED- and university-related measures and initiatives that were addressed by voters in a dozen states.Those that passed include the following:
- Arizona voters passed Proposition 104, which exempts from aggregate state spending limits the revenue derived from a sales tax rate increase for education approved by voters in 2000.
- Voters in California gave way to Proposition 47, a measure allowing the state to issue $13.05 billion of general obligation bonds toward construction and renovation of education facilities. The measure reserves $1.65 billion of that total for college campuses. The Governor and Legislature would choose the specific projects to be funded by the bond dollars.
- In Florida, Constitutional Amendment 11 restructures governance of the state's institutions of higher education. The amendment provides a local 13-member board of trustees to administer each of the state's public universities and a 17-member governing board to oversee the entire university system to prevent wasteful duplication of facilities or programs. In addition, the measure provides procedures for selecting board members, including a student and faculty representative for each board.
- In Georgia, Constitutional Amendment 3 will allow counties and municipalities to create redevelopment tax incentive programs for blighted property. Under the programs, properties in blighted condition will be subject to increased taxes, and formerly blighted property will benefit from decreased tax burdens.
- A majority of voters in Virginia answered yes to Question 1, allowing the Commonwealth the right to sell up to $900.5 million in bonds to pay for capital projects at public institutions of higher education, museums and other educational facilities. Such projects may include renovation of instructional facilities and construction of new research space. And,
- Voters in West Virginia approved Amendment 1, which permits the State Legislature to authorize county commissions and municipalities to create a new economic development measure for creating jobs. With the amendment's passage, county commissions and municipalities may redirect specific new property tax revenues from approved projects or project areas to help finance development or redevelopment projects.
The following measures failed to sway enough voters for passage:
- In Louisiana, a constitutional amendment designed to give public higher education institutions the flexibility to invest in stocks failed by a narrow margin. Receiving 49 percent of the vote, Amendment 8 would have allowed colleges and universities or their management boards to invest up to 50 percent of gifts and grants, endowments and other permanent funds in stocks. The state's public colleges are not permitted to make such investments.
- Michigan voters denied passage of Proposal 02-4, a constitutional amendment that would have reallocated 90 percent (approx. $297 million) of tobacco settlement revenue toward health care related purposes. Approximately 73 percent ($215.7 million) of the revenue presently is appropriated for merit-based scholarships for the state's college students, while approximately $50 million each year supports the state's life science initiative.
- Additional funding for life science research in Missouri took a hit as Proposition A, a measure for implementing a tax of 2.75 cents per cigarette (55 cents per pack) and 20 percent on other tobacco products, failed to pass. The revenues would have expanded the states support for biomedical/biotech research, among other purposes.
- In Montana, a constitutional amendment that would have permitted additional funds, including those from the permanent public school trust and the university system, to be invested in private corporate capital stock failed.
- In North Dakota, voters turned down Measure 3, an initiative to establish a program that would provide partial reimbursement of student loan payments. Supporters had hoped the "anti-brain drain" measure would help entice younger college graduates to remain in the state after school. Under the program's terms, residents under 30 years old who graduated from accredited post-secondary schools would have been eligible for $1,000 per year for up to five years. And,
- In Oregon, the people voted against Ballot Measure 18, which would have allowed or expanded the potential to create geographic areas or zones with lower taxes.
More information on the 2002 General Election, including a searchable state listing of all ballot measures and legislative races, is available at http://www.ncsl.org.
North Carolina Outlines Broad Biotech, TBED Strategy
Biotechnology has enormous potential for North Carolina's future, but the state's economic development strategy must be broader than any single industry and must include growth-from-within strategies, concludes a report published by the Institute for Emerging Issues at North Carolina State University.The institute, a public policy initiative of NC State, is an outgrowth of the college's annual Emerging Issues Forum. Biotechnology and Humanity at the Crossroads of a New Era stems from the 2002 Forum, a panel discussion that resulted in five policy recommendations for North Carolina:
- Review all science- and technology-driven efforts to spur economic development, strengthening growth-from-within strategies;
- Increase support for science classes in grades K-12, biomanufacturing at community colleges, and investment in research universities;
- Develop new ways to boost technology transfer and commercialization;
- Implement a statewide strategy for the state's colleges and universities to contribute to regional economic development; and,
- Encourage greater public debate about biotechnology among colleges, universities and biotechnology companies.
Director of the Institute for Emerging Issues Noah Pickus, who authored the report, states that while biotechnology is not the only industry where meeting these challenges will be critical, biotech "serves as an example of why the state needs new approaches." Most of North Carolina's biotechnology companies are smaller, homegrown operations that originated with university research discoveries — a fact the report uses to suggest economic development policy should be expanded to include a greater emphasis on growth-from-within strategies.
"Similarly, the old selling points no longer sell as well," the report adds. "Neither California nor Massachusetts is noted for low costs, ease of doing business, (or) low taxes . . . yet they dominate the biotechnology industry."
The report also calls attention to the dilemma of how best to capitalize on the concentration of biotechnology in the Research Triangle while addressing the need for statewide economic growth. It emphasizes the need for regions to develop their own niches and spotlights both the technological advances at UNC-Charlotte and the multi-sector approach to treating biotechnology as a means for community development now being pioneered in western North Carolina.
A new approach for fostering high-growth entrepreneurial firms and applying new technologies to traditional industries is especially important, given North Carolina's present economic crisis, the report concludes.
Copies of Biotechnology and Humanity are available at http://www.ncsu.edu/iei.
Manufacturing Output and College Graduates: Is There A Relationship?
An increase in a city's share of college educated workers results in an increase in manufacturing output in that city, according to a report released by the National Bureau of Economic Research. Human Capital Spillovers in Manufacturing: Evidence from Plant-Level Production Functions, authored by Enrico Moretti, bolsters the notion that spillover of knowledge through human capital is important to tech-based economic development (TBED) and that knowledge spillovers play a critical role in many theories of regional growth (i.e. endogenous growth theory, clusters).Moretti is interested in exploring the effect the education of a workforce has on human capital spillovers at the U.S. city level. The author compares the productivity of manufacturing plants to the city's share of college graduates as an indicator of human capital spillovers. Moretti finds that a 1 percent increase in a city’s share of college graduates is associated with a 0.5 percentage point increase in manufacturing output.
Moretti's work is based on the notion that if spillovers exist, plants in cities with a higher level of human capital can be more productive than similar plants in cities with less human capital utilizing the same inputs. The author concludes that the productivity of plants in cities with a large share of college graduates increases more than the output of plants in cities with a small contingent of college graduates.
The presumed existence of spillovers has provided a critical foundation for many TBED policies: research such as Moretti's supports arguments for why state and local governments should be involved in many aspects of encouraging the growth of a tech-based economy. For instance, the policy implications of Moretti's work would argue for increasing academic research capacity, and the number of college graduates that reside in an area, as well as working with manufacturers and industrial facilities through programs such as the Manufacturing Extension Partnership, run through the National Institute of Standards and Technology.
Moretti analyzes the consistency of his results through four specification checks. The author separately analyzes components of his results to reinforce his conclusions regarding the effect of human capital spillovers on manufacturing productivity. The results of some of these checks have additional policy implications for TBED practitioners.
For example, one of Moretti's specification tests relays that spillovers between plants that rarely interact are zero, while spillovers between plants that often interact are significant. This finding is particularly encouraging for the field given much of the work or benefit of many technology-based economic development programs, regional technology councils, and industry-university research consortia is intended to encourage collaboration and strategic alliances among local businesses and industries.
Moretti also supports his results by verifying that the estimated spillovers are greater in single-unit plants than multi-unit plants. Multi-unit establishments may have plants in cities across the country, and decisions affecting that firm are probably made where the headquarters is located, Moretti observes. In addition, spillovers are greater for high-tech plants and more knowledge intensive industries, while they are virtually zero for low-tech plants.
The fourth specification test conveys that the density of physical capital outside a plant has no effect on a plant's productivity in the model. The author is interested if the stock of physical capital outside of a plant is associated with an increase in productivity. Since the author’s results show no effect of physical stock on plant productivity, then the estimates are theoretically capturing only human capital externalities in the author’s research.
The complete paper can be downloaded at: http://papers.nber.org/papers/W9316
Useful Stats I: S&E Doctorate Awards by State
The National Science Foundation (NSF) has released a statistical report on Science and Engineering Doctorate Awards: 2001. The data show trends in science and engineering (S&E) doctorate awards by S&E field and recipient characteristics, institutions awarding doctorates, and postgraduation plans of recipients.The new NSF report includes an 18-page Table 6, which presents the distribution of doctorates awarded in 2001 by institution, by state and by major field. SSTI has prepared an abbreviated table providing a state-by-state ranking for doctorates awarded by major field. The SSTI table also includes the values and state rankings for the total S&E doctorates awarded per 100,000 residents within each state, using the 2001 population estimates from the U.S. Census Bureau.
SSTI's table is available at: http://www.ssti.org/Digest/Tables/110802t.htm
NSF's Science and Engineering Doctorate Awards: 2001 is available at: http://www.nsf.gov/pubsys/ods/getpub.cfm?nsf03300
Useful Stats II: Innovation Indices Revisited
We appreciated hearing from so many of our readers that last week's special Digest issue on innovation indices was particularly timely or useful. As an additional resource on the topic, SSTI has prepared three matrices presenting the common indicators included in the national, state and local indicator reports referenced in the issue. These guides may help those working to develop their own S&T report cards or innovation studies to identify more easily how particular indicators are used in the reports.Each matrix is provided on its own webpage, links are provided below. They also will be incorporated in the archived edition of the November 1, 2002 special issue of the SSTI Weekly Digest, which is available at: http://www.ssti.org/Digest/2002/110102.htm
- SSTI's Matrix of Common Indicators for Local Indices: http://www.ssti.org/Digest/Tables/localmatrix.htm
- SSTI's Matrix of Common Indicators for State Indices: http://www.ssti.org/Digest/Tables/statematrix.htm
- SSTI's Matrix of Common Indicators for National Indices: http://www.ssti.org/Digest/Tables/nationalmatrix.htm
Washington Tech Center Seeks Federal Program Development Manager
The Washington Technology Center (WTC), the state's science and technology organization that stimulates growth in the state, is seeking someone to become Federal Program Development Manager. WTC helps Washington companies develop commercially viable technology through statewide programs and services. The purpose of the position is to ensure that appropriate federal programs and funding opportunities are identified and funding secured for WTC programs. The position provides the necessary program development activity to ensure strong and sustainable support of WTC business areas.The person selected for this position must be willing to travel extensively, operating from either Seattle or Washington D.C. Salary and benefits are competitive. Salary is commensurate with qualifications and experience. More information, including the full job description, is available at: http://www.watechcenter.org/wtc/employment.html
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