In the March 7, 2003 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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Commerce's TA and NTIA Would Merge under Secretary's Proposal
To better formulate technology and telecommunications policy, U.S. Secretary of Commerce Don Evans has proposed merging the Department's Technology Administration (TA), the National Telecommunications and Information Administration (NTIA), and the e-commerce policy functions of the International Trade Administration (ITA) into a single agency. The merger is intended to complement the recent convergence in the private sector of technology and communications companies.

Secretary Evans is proposing to reorganize departmental personnel and management to facilitate coordination in domestic and international policy development. Under Secretary of Technology Phil Bond would oversee the new agency that would focus on such issues as technical standards, spectrum management, and technology and e-commerce policy issues.

"The synergy between technology and telecommunications is a global reality," Under Secretary Bond said in a press statement. "Bringing TA together with the NTIA and a portion of ITA will enhance the Administration's focus on issues critical to our innovation economy and America's technological leadership."

The reorganization plan requires Congressional approval.

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Utah Holds the Line on S&T Funding, Offers $100 Million for VC
In these tight state fiscal times, many government functions would view level funding with the previous year as very good news. Since tech-based economic development (TBED) programs are investments toward economic prosperity, conventional wisdom would hold that legislatures would shield these types of investments from deep cuts. The current discussions to eliminate the Colorado Governor's Office of Technology and the entire Texas Department of Commerce, however, suggest that the jury is still out on how future-looking state budgets will be for next year.

Utah's TBED efforts, on the other hand, received encouraging news earlier this week as the Utah State Legislature passed the state's FY 2003-04 appropriations bill. The 17-year-old Centers of Excellence Program secured $2 million, consistent with the current fiscal year's funding level. Funding for other science and technology efforts run by the Department of Community and Economic Development, including the Utah Technology Alliance and the Utah Science Advisor's Office, received an additional $1.2 million.

During the 2002-03 fiscal year, the Utah Centers of Excellence Program supported 15 active centers for use in bringing significant new technologies closer to the marketplace. In addition, the program funded $25,000 in planning grants and a $165,000 commercialization consulting effort.

Utah's Centers of Excellence program has received considerable attention across the TBED community for its unique design and record of success. According to the latest annual report, "the 16 Centers received matching funds of $20.5 million, resulting in a matching fund ratio of 11:1, and (despite the recession) spun out eight new Utah companies. Over the first 16 years of the program, the Centers of Excellence have generated 179 patents, resulting in 204 license agreements, and 150 Utah-based companies have been created to license and market proprietary technology from the program. As of the last audit (2001), those companies directly employed over 1,300 persons in the state, at an average wage of $68,000."

The state legislature also passed the Utah Venture Capital Enhancement Act, which creates the Utah Capital Investment Board and a $100 million five-year fund of funds to encourage more venture capital activity in the state. The act authorizes the organization of the Utah Capital Investment Corporation and provides for the issuance of contingent tax credits to investors in the Utah fund of funds. The act is intended to attract investment in tech firms in fields such as life sciences, advanced manufacturing and information technology sectors.

Governor Mike Leavitt is expected to sign the Act. H.B 240 Substitute is available at: http://www.le.state.ut.us/~2003/htmdoc/hbillhtm/HB0240S1.htm

More information on the Utah Centers of Excellence Program is available at: http://dced.utah.gov/techdev/

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Minnesota Governor Outlines Biosciences Activities
Minnesota Governor Tim Pawlenty recently unveiled a plan to help make Minnesota a leader in biosciences. Governor Pawlenty says the state's history, expertise and economic infrastructure make it better prepared than most other states to capitalize on the bioscience industry.

Presenting his ideas to the Minnesota Biotechnology Industry Organization (MNBIO) last week, Governor Pawlenty said bioscience advances represent the next frontier and that they will "revolutionize big parts of (the state's) economy within the next two decades."

The governor's proposal includes the following:

Governor Pawlenty's biosciences announcement is available at: http://www.governor.state.mn.us/

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'WIN-WIN' Situation Created for Wisconsin Technology Council
The Wisconsin Venture Network (WVN) in Milwaukee has folded into the Wisconsin Innovation Network (WIN) Foundation in Madison, and the combined WIN entity has become a subsidiary of the Wisconsin Technology Council.

Members of both the WVN and WIN approved the merger in separate votes last week. The merger means WIN now is formally a part of the Tech Council and there are two WIN chapters — one in Milwaukee and another in Madison.

The Madison WIN will be administered through the Tech Council, but the Milwaukee chapter will retain a local board of directors and control of its monthly programs. Over time, WIN hopes to form chapters in other Wisconsin cities where technology-based economic development is a priority.

The WIN Foundation was formed in 1984 and has focused on technology-based economic development efforts in the Madison area. It assists companies and individuals in the areas of capital, networking, information and business consultation referrals. WIN programs include the Wisconsin Life Sciences Venture Conference and monthly High-Tech Consortium luncheons. With the assistance of the Milwaukee chapter, WIN and the Tech Council will sponsor the first Entrepreneurs Conference in Milwaukee June 4-5.

Like the WIN Foundation in Madison, the Wisconsin Venture Network (now WIN-Milwaukee) was founded in 1984 and also hosts a monthly luncheon meeting to provide education and networking opportunities for business owners and entrepreneurs. With the merger, WIN-Milwaukee expects to offer additional programs, networking opportunities and resources.

The Wisconsin Technology Council is the leading catalyst for the creation, development and retention of science- and technology-based businesses in Wisconsin. It is an independent, nonprofit and non-partisan group that serves as the science and technology policy advisor to Governor Jim Doyle and the State Legislature. With a president and 12-member executive committee managing day-to-day operations, the Tech Council is comprised of three-dozen members who are leaders of high-tech businesses, higher education, venture capital and government.

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Entrepreneurial Activity and Regional Economic Growth Linked
A higher rate of entrepreneurial activity is strongly connected with faster growth of a local economy, the U.S. Census Bureau reports in Endogenous Growth and Entrepreneurial Activity in Cities. The recent working paper, prepared by the Bureau's Center for Economic Studies, examines the connection between knowledge spillover and economic growth in a regional economy. The study concludes that variation in the level of entrepreneurial activity, a diverse mix of industries, and the amount of human capital are positively correlated to growth rates.

Three major findings are presented:

The analysis also suggests that new firms play a vital role in exploiting knowledge spillovers within a region, and that entrepreneurship may be the critical link through which these externalities aid economic growth. Further analysis should concentrate on entrepreneurship to better understand the role of knowledge spillovers in regional economic growth, the study concludes.

The study draws on a very unique data set constructed by the Bureau of Census. The Longitudinal Establishment and Enterprise Microdata (LEEM) has multiple years of annual data for every U.S. private sector (non-farm) business with employees. Using a LEEM file that tracks employment, payroll, firm affiliation and employment for more than 11 million organizations between 1989 and 1996, the authors analyze data for 394 local economic areas and six broad industrial sectors.

Endogenous Growth and Entrepreneurial Activity in Cities can be downloaded at: http://www.ces.census.gov/index.php/ces/1.00/cespapers?detail_key=101665

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Twin Cities' Competitiveness Assessed by Great North Alliance
Despite an economic slowdown, the Twin Cities is more competitive than it was a year ago, according to a study released by the Great North Alliance, a regional civic leadership organization. Conducted annually, the Great North Opportunity Forecast uses regional productivity and innovation to predict future competitiveness and opportunity.

The 2002-03 forecast measures 58 key indicators of the regional economy of the Twin Cities and divides the indicators into four areas — current performance, development capacity, innovation capacity and resource flow. Innovation capacity, for example, includes 18 indicators measuring inspiration, invention, and entrepreneurial development. In each area, the Twin Cities' performance is compared against 11 similar sized high-growth regions around the U.S., including Atlanta, Austin, Boston, Chicago, Dallas, Denver, Orange County (CA), Phoenix, Raleigh, Salt Lake City and Seattle.

The Twin Cities is capturing a larger share of resources from equity and financial markets than it has in recent years, the findings show, but the region's ranking has fallen in some areas of competitiveness, such as the number of those with B.A. degrees. It also has slipped in its share of high skilled occupations and the productivity of its work force, according to the forecast. In terms of overall competitiveness, however, the region ranks in the top quartile in 18 and the top half in 23 of the 58 benchmarking indicators. Its performance among the other 11 regions is said to be "better than average."

Using the benchmarking information, opinion leaders identified six critical success factors that must be effectively managed to sustain regional competitiveness: workforce quality; amenities and quality of life; research and development intensity; infrastructure; basic services and deployment of new technologies; investment climate; and global linkages and mindset.

The Great North Alliance is an association of CEOs from business, labor, government, academia and nonprofits that works to advance Twin Cities' regional competitiveness in the global innovation economy. To download the Alliance's forecast, visit http://www.thegreatnorth.com/.

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U.S. Launches Digital Freedom Initiative in Senegal
Earlier this week U.S. Department of Commerce Secretary Don Evans announced the Digital Freedom Initiative (DFI) would be piloted in Senegal, a democratic secular nation in which 94 percent of the population is Muslim. DFI is designed to promote economic growth by transferring the benefits of information and communication technology (ICT) to entrepreneurs and small businesses in the developing world.

The new initiative leverages the leadership of the U.S. government, the creativity and resources of America's leading companies, and the vision and energy of entrepreneurs in developing countries. If the three-year pilot project is successful in Senegal, it could be rolled out to 20 countries in the next five years. Key elements include:

As a joint program involving the Commerce and State departments, the Agency for International Development, USA Freedom Corps, and the Peace Corps, DFI's pilot project also will train and equip the 130 Peace Corps Volunteers in Senegal who require laptops and other technology to perform their service duties.

Senegal was selected to launch the initiative because of its political stability and existing high-level commitment to encouraging economic prosperity through technology. For example, the President of Senegal, Abdoulaye Wade, chairs the ICT committee of the New Partnership for Africa’s Development (NEPAD). The DFI website says that since 1996, Senegal has been one of the leading African countries to make significant investments in technology and is currently benefiting from a relatively high rate of penetration and growth of technology-related services. More than 10,000 mostly entrepreneur-managed phone shops, many equipped with Internet access, serve poor urban and rural populations.

More information on DFI, including contact information for businesses and volunteers interested in getting involved, is available at http://www.dfi.gov/.

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Useful Stats: 2-year and 4-year College Affordability by State
The National Center for Public Policy and Higher Education recently released The Rising Price of Higher Education, which documents the rising costs of public education in the U.S. Using the data found in the report, SSTI has constructed a 50-state table presenting a comparison of the cost of tuition and fees at 2- and 4-year public institutions in 2001-02 vs 2002-03.

For 4-year institutions, Massachusetts shows the greatest change, 23.7 percent, between the last two academic years. Missouri's average public tuition and fees for 4-year institutions in 2002-03 reflects a 20.1 percent increase over the previous year. In the same category, New Jersey tops all states with the highest average ($6,533), as its overall increase was 13.4 percent.

New Hampshire leads all states in average 2-year public tuition and fees ($4,429), but South Carolina and Massachusetts boast the greatest change in such costs, 26.2 percent and 25.5 percent, respectively.

The table is located at: http://www.ssti.org/Digest/Tables/030703t.htm

The Rising Costs of Public Education report can be downloaded at: http://www.highereducation.org/reports/affordability_supplement/index.shtml

On a related note, Rep. Howard "Buck" McKeon (R-CA) has announced he will introduce federal legislation that would impose price controls on university tuitions. The College Affordability in Higher Education Act of 2003 will officially be unveiled Saturday in a speech to the Education Finance Council in California.

McKeon's bill calls for creating a "College Affordability Index" to serve as a standard measurement for institutions of higher education whose tuitions and fees increase beyond reasonable rates. If an institution increases its cost of attendance by twice the rate of inflation, that institution must provide the Department of Education with an explanatory statement and a strategic plan to hold down future tuition increases and improve the affordability of their college or university. If the rate of increase is not reduced (to less than two times the rate of inflation) within one year, sanctions are triggered, including withdrawal of its eligibility for government financial assistance.

More information will be available at: http://www.house.gov/mckeon/

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