In the December 20, 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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Bioscience Initiative Pushes for Jobs in Baltimore
Placing a high priority on the biosciences as a measure for long-term economic development, the Baltimore Workforce Investment Board (BWIB) has released a strategic plan that aims to ensure growth, in part, by securing a highly motivated and well trained workforce for the city's bioscience sector.

Conducted by two consulting firms, the Baltimore Bioscience Initiative finds that the city and surrounding region already have a sizable employment base of approximately 11,000 people. The majority of this workforce is housed at university medical schools and hospitals and National Institutes of Health (NIH) laboratories, the report states. Of the 78 companies (4,800 employees) that make up the bioscience sector, however, 12-15 percent of their workforce is comprised of low-skill workers, such as lab assistants, technicians, production technicians and clinical technicians.

In preparing the plan, the consultants studied economic and demographic trend information in the Baltimore area and conducted interviews with human resources directors of major employers and directors of major education and training providers. The consultants also reviewed best practices for similar training initiatives and visited two areas with reputable programs, Berkeley, CA, and Spokane, WA. The Baltimore Bioscience Coalition, a group of stakeholders, subsequently was formed to assist in developing the plan.

The outlook for the biosciences in Baltimore is very promising, according to the plan. Continued growth of the area's nonprofit sector, rapid increases in NIH funding, and emerging young biotech companies from R&D firms are all positive signs. Plans also are in the works for an R&D park near Johns Hopkins Medical School and development around the University of Maryland medical campus, and some construction of the 600,000 sq. ft. of lab and office space planned for these facilities already is underway. The researchers estimate cumulative growth will increase 25 percent by 2005 and 40 percent by 2007.

What is lacking in the effort to bolster this growth, the report suggests, are "more vigorous technology commercialization efforts from the research-rich base, better entrepreneurial support services, greater access to investment capital, larger stock of laboratory space and a stronger leadership base in the bioscience community." The report adds that small biotech companies "simply do not have the resources or the need for technician level workers."

Baltimore should model the efforts in Berkeley and Spokane, the researchers say. The projects in those locations reveal several applicable lessons: initiatives and programs must be employer-driven; programs must reflect shifts in technology and markets; and healthy relationships among employers, educational institutions and other area players must be present.

A new nonprofit corporation called BHR2 (Bio Human Resource 2), created as part of the consultants' sectoral employment plan for Baltimore, would help facilitate the above lessons. BHR2 would act as an extension of bio employers' human resource departments, serving to recruit and retain qualified candidates, and would work with a Baltimore Bio HR Network to be supervised by the Maryland Bioscience Alliance.

The report also recommends establishing a Bio Pilot Program that would consist of a biosciences leadership steering group, a similar HR network as that of BHR2, and a coordinated program for employment and training services. The city could apply for a $100,000 Department of Labor (DOL) grant and use $180,000 in existing training funds to get the pilot program started. For the entire strategic plan, the researchers say implementing the training portion will require five to 10 years.

BWIB was created in September 2000 following legislation under the Workforce Investment Act to form such boards. Funding for the Baltimore Bioscience Initiative, as well as the blueprint for the Bio Pilot Program, came from a DOL planning grant. Both reports are available at http://www.baltoworkforce.com.

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connectkentucky Plan Prepares State for Tech-driven Economy
Sixty-nine percent of Kentucky businesses use computer technology to handle some of their business functions, but only 36 percent use the Internet and little more than 20 percent have a website, according to a report released by Governor Paul Patton's Office for the New Economy. Kentucky Prepares for the Networked World, which details computer, Internet and website use among the state's businesses, shows more than 50 percent see "no need" to use the Internet.

The report is part of the governor's connectkentucky strategic plan that is designed to give Kentucky a sophisticated information network. It was commissioned by a steering committee to respond to the governor's request to assess the condition of the Kentucky's Internet highways, high-speed on-ramps to the highways and current use of the Internet by business, government and consumers.

Overall, the state is on par with national averages in business use of computer technology and the Internet, yet significant regional differences remain, the report states. The survey results show more than 60 percent of Kentucky's city and county governments do not have a website. In addition, of those that do have a website, the vast majority provide only basic information, not the e-government services that keep citizens from having to visit the local courthouse or city hall.

Several strategic goals are outlined in the report:

Each goal also has success measures that outline how the connectkentucky Steering Committee will measure their progress in the future.

Kentucky Prepares for the Networked World contains some helpful maps showing the degree of Internet access in all of the state's 120 counties. The report is available at http://www.connectkentucky.org.

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NSF Finds Top R&D-performing States Have Diverse R&D Patterns
The patterns of research and development (R&D) activities vary considerably among those states with the most R&D expenditures, the National Science Foundation's (NSF) latest InfoBrief reports. In 2000, 87 percent of the nation's total R&D investment of $265 billion occurred in 20 states. Only 4 percent of the U.S. R&D total was accounted for by the 20 lowest ranking states. California led all states with more than $55 billion in expenditures, a 14.9 percent increase over its 1999 total; the 2000 total equals more than one-fifth of the U.S. total.

Those states with $10 billion or more in R&D investments in 2000 include Michigan ($18.892B), New York ($13.556B), New Jersey ($13.133B), Massachusetts ($13.004B), Illinois ($12.767B), Texas ($11.552B) and Washington ($10.516B). Among these states, New Jersey showed the greatest growth with a 24.7 percent increase between 1999 and 2000. New York, Texas and Pennsylvania, which ranked ninth at $9.842 billion in R&D expenditures, all experienced declines.

Most of Michigan's industry R&D is accounted for by manufacturing industries (89 percent), according to the InfoBrief. Seventy-three percent of that total can be attributed to the transportation equipment industry, which accounts for only 15 percent of the nation's total industry R&D. Manufacturing as a whole accounts for 62 percent of the U.S. total.

For comparison, Washington has more of its industry R&D concentrated in nonmanufacturing industries. Most of the state's $6 billion-plus nonmanufacturing R&D in 2000 went to software research and development investment. Only 33 percent could be attributed to manufacturing industries — a figure less than that which the nation as a whole has in these industries.

Other leading states demonstrate similar diverse industry R&D patterns. Massachusetts, for example, has 43 percent of its industry R&D in computer and electronic products, while the industry accounts for only 23 percent of the nation's total. New Jersey and Pennsylvania, respectively having 25 percent and 33 percent shares in the chemicals industry, show a marked increase over the 10 percent national total for the industry. Chemicals is the largest single manufacturing industry in both of these states, NSF reports.

The full InfoBrief, NSF 03-303, is available at: http://www.nsf.gov/pubsys/ods/getpub.cfm?nsf03303

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Innovation Index Gives Ontario Edge as Innovation Leader in Canada
Ontario is performing from a base of strength in its transition to a knowledge-based economy, according to the Ontario Innovation Index recently released by the Ontario Science and Innovation Council (OSIC). Using 30 indicators, the report measures all aspects of the province's innovation system, from community awareness and support for science and technology (S&T) to levels of investment to support its infrastructure. It also looks at Ontario's incentives for commercialization and growth, innovative performance and innovation outcomes.

"The purpose of the index is to provide us with an ongoing portrait of Ontario's innovation environment," Dr. Suzanne Fortier, chair of OSIC, said in a press statement. "This allows the province to compare itself to other jurisdictions that are also leaders in science and innovation. We hope this will be a useful tool for government, academia and the private sector to gauge Ontario's strengths and key areas for improvement."

Ontario's base of strength – comprised of tax cuts, educational opportunities, investments in research and development (R&D), and programs that help finance S&T initiatives – gets treatment in the index. The province can improve its performance in areas such as venture capital investments, shortages of qualified science teachers and information transfers from universities to the private sector, and high technology exports, the index states.

Ontario performs well in its level of R&D investments in comparison with other Canadian provinces, according to the index. In 1999, its level of R&D expenditures per capita was tops in the country, and its ratio of R&D expenditures to provincial gross domestic product (GDP) of 2 percent was second only to Quebec. However, the province "is a relative under-performer when compared to jurisdictions such as California, Massachusetts and Michigan," using the same measure of R&D expenditures as a percentage of GDP.

On November 5, Ontario's first international summit on innovation, Ontario's Innovation Challenge, Bright Ideas - Brighter Futures, enabled industry clusters to learn best practices from innovation leaders and experts from around the world. The event was marked by the release of a report by the Task Force on Competitiveness, Productivity and Economic Progress, an independent group to benchmark and measure Ontario's economic performance. Comparing Ontario with other provinces and U.S. states, the task force addresses in their report the challenges the province faces in the Knowledge Economy and offers recommendations in some key areas.

OSIC was created in June 2000 with a mandate to provide government with advice on S&T policy and how to make Ontario more competitive. Both the Ontario Innovation Index and the task force report are available at http://www.ontario-canada.com.

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New Markets Tax Credit Program Gets U.S. GAO Review
The U.S. General Accounting Office (GAO) has released a report describing its efforts to evaluate the New Markets Tax Credit (NMTC) Program created by Congress in 2000. The NMTC program, which has total equity of $15 billion, permits taxpayers to receive a credit against federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the taxpayer's investment must in turn be used by the CDE to provide investments in low-income communities. Credit to the taxpayer totals 39 percent of the investment and is claimed over a seven-year credit period.

The GAO report attempts to highlight the NMTC program's goals, design and progress and – as mandated by the Community Renewal Tax Relief Act that brought the program into existence – to review how the program may be evaluated for effectiveness and compliance. The GAO says the program's goals are not explicitly stated in the 2000 legislation but that program supporters contend the goals are "to direct new business capital to low-income communities, facilitate economic development in these communities, and encourage investment in high-risk areas."

The report adds, "Although the legislation authorizing the NMTC Program requires that the investments be made in businesses and communities that meet certain eligibility standards, it does not specify that the investment be new capital, that performance measures be established to show that investment leads to economic development, or that the investment be in high-risk areas within eligible communities."

Applications received in response to the NMTC program go through a competitive review process to identify those applicants that the Community Development Financial Institutions (CDFI) Fund finds best suited to have the greatest impact by facilitating the flow of private sector capital into low-income rural and urban communities. The CDFI Fund, which administers the program with the Internal Revenue Service (IRS) and the Department of Treasury's Office of Tax Policy, uses some criteria for allocating the credits, but it is not required to do so by the program legislation. These criteria, the GAO notes, reflect the program's goals.

Evaluating the NMTC program's effectiveness can present difficulties, the GAO report states. Among the challenges is establishing a criterion that can gauge the extent to which economic development would occur in communities receiving investment if the program did not exist. Another difficulty exists in the NMTC program's relatively small potential to stimulate economic activity for a whole region, since investment is spread out over seven years. The GAO observes that "$15 billion of potential new investment – over seven years – may be too small to have a measurable impact in a target area that the CDFI Fund estimates could include 35 percent of the U.S. population and 40 percent of the land area."

Similar difficulties exist in evaluating the program's compliance, according to the GAO, and these challenges are further complicated when investors, CDEs and businesses "are involved at different levels of the program, and (the IRS and CDFI Fund) will have responsibility for administering, monitoring and enforcing compliance."

The report suggests that because some methods to evaluate the NMTC program have significant limitations, definitive conclusions cannot be reached. However, it leaves open the possibility that other evidence may attest to the program's effectiveness or compliance. For example, data on whether or not investors receiving credit had previously made similar investments in low-income communities can be a measure of effectiveness.

The CDFI Fund has not made its first credit allocations for the NMTC program, which is still in its early stages. The GAO report (GAO-03-223R) is available at http://www.gao.gov. More information on the NMTC program is available at: http://www.cdfifund.gov/programs/nmtc/

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Academic Freedom and Homeland Security
Security analysts and policy makers have been concerned with information published in the open scientific literature since WWII and the Cold War. Recently the focus has shifted towards information and research in the biosciences because of the dramatic advances and potential application of this information to bioterrorism. The likelihood of government-imposed restraints on the dissemination of scientific information is of great concern to the academic research community and has become a delicate subject between national security officials and the academic community.

Some arguments for and against restricting publication of "sensitive" research were outlined at a recent conference hosted by the Monterey Institute’s Center for Nonproliferation Studies.

Arguments for restricting publication include: scientific advances available in the open scientific literature could assist in the development of new types weapons used for bioterrorism. (A report on the Workshop on Guidelines for the Publication of Scientific Research Potentially Related to Biological and Toxin Warfare is available at: http://www.homelandsecurity.org/journal/)

Those arguments against restricting publication include: restricting the publication of research contradicts the norms of the scientific community and impedes advances, restricting publication would discourage long-term efforts in areas that could be open to censorship, and controls on scientific knowledge could create an artificial sense of security and delay research needed to develop countermeasures.

At the recent Federal Biodefense Research FY 2003 Conference, Ronald Atlas, President of the American Society for Microbiology, addressed some of the concerns of the academic community especially in microbiology. For instance, he said it is only legal to possess certain agents or pathogens for “bona fide” research (per USA Patriot Act). This may lead to two questions: (1) what constitutes “bona fide” research and (2) does research that one plans for the future constitute “bona fide” research or justify keeping restricted pathogens in a lab freezer?

Another major concern is nothing clearly defines "sensitive information" in the life sciences, Atlas said. Many controversial papers that have been published could be construed as providing dangerous information, he said. However, the free flow of information is important in the academic community, especially across national boundaries, as international collaborations and partnerships are sought.

Atlas provided additional questions that strike at the center of this debate:

Atlas urged the scientific community to come together to establish the norms, standards and a framework to ensure that critical information is withheld from terrorists while continuing the advancement of biomedical research. This cannot be done alone and a dialogue must be established with the national security community.

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Does the “Cluster” Concept Address Equity?
A new report, Just Clusters: Economic Development Strategies that Reach More People and Places, from Regional Technology Strategies, Inc. (RTS) finds that while cluster-based economic development strategies have the potential to expand opportunities for disadvantaged populations and rural regions, most current cluster strategies do not pay attention to equity issues. The project was made possible through a grant from the Ford Foundation.

Just Clusters stems from a question put to almost two dozen leading cluster experts: “Are clusters equitable and just tools for economic development or do they skew resources to those who are already better off?” Clusters refer to the competitive advantages that firms acquire when there are significant concentrations of other similar or related and interdependent businesses in a geographic region.

The collaborative result of a two-day meeting of 23 practitioners, researchers and policy makers, the report looks at the implications of cluster strategies for low- and middle- income people, economically distressed urban and rural places, and small enterprises.

Participants concluded there are considerable barriers to making clusters more inclusive, including inadequate skills, distance, exclusion from social networks, and lack of access to capital. The report suggests actions to overcome such obstacles and to shift outcomes toward people, places and firms left behind in last decade’s economic growth. Possible actions are, for example, qualifying more disadvantaged people for employment in a cluster’s firms through community colleges or engaging organizations that support firms’ modernization and innovation in activities that broaden their impact.

Just Clusters concludes that cluster strategies can encompass equity concerns, but only when the intent is there from the start.  The simple presence of clusters only provides limited promise for disadvantaged regions. Clusters can provide a means for future success of a less fortunate area; however, this will not occur without a concentrated effort. The key is to “figure out how to best use the cluster framework to get more people onto and up career ladders, small firms on growth paths, and isolated places into successful regional production systems.”

Just Clusters can be downloaded at: http://www.rtsinc.org/whatsnew.html

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