In the September 20, 2004 Issue:

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MEP, ATP Sail Through Senate Appropriations
Both the Manufacturing Extension Partnership (MEP) and the Advanced Technology Program (ATP) would see budget increases in FY 2005 if the version of the Commerce, Justice, State Appropriations Bill that passed the Senate Appropriations Committee last week survives what is expected to be a contentious conference with the House on an mega-omnibus appropriations bill sometime after the election.

The Senate Appropriations Committee approved $112 million for MEP, $6 million more than the House approved and nearly $73 million more than was requested by the Bush Administration. Opposition from the White House to at least the House figures is likely to be muted as President Bush's opponent, Sen. John Kerry, has made doubling the federal funds available to MEP part of his presidential campaign platform.

Additionally, the Senate took considerable exception to the Administration's plans for MEP after the program funding level was cut by 63 percent last year. Language from the committee's report on the bill explicitly states, "The Committee also recommends bill language prohibiting the Secretary of Commerce from recompeting any existing Manufacturing Extension Center prior to 2007. Of the funds recommended, $6,000,000 is provided to ensure small and rural States receive necessary manufacturing assistance and services. The Committee has reviewed the Department of Commerce's report `Manufacturing in America' recommendations and is concerned that it is reorganizing the MEP program around a regional approach. The Committee recognizes that the original concept of 12 regional centers for MEP is not the best model to address the needs of small and medium-sized manufacturers. The Committee supported MEP's expansion in order to equalize services to all types of manufacturers across the country. The Committee directs the Undersecretary of Technology Administration and NIST to provide the necessary coverage for small and medium-sized manufacturers. In addition, the Committee is concerned about the ability of small and rural States to provide adequate `matching' funds. The Committee directs MEP to develop a program which will provide additional assistance to small and rural States and report back to the Committees on Appropriations by December 31, 2004, with an implementation plan."

Regarding ATP, the Senate appropriation figures of $203 million -- a 14 percent increase above FY 2004 appropriations -- may have a tougher ride in conference, however, since both the Administration and the House of Representatives have chosen to terminate the program. The Advanced Technology Program provides early stage investments to industry for the development of innovative technologies that promise significant commercial payoffs and widespread benefits for the nation.

Side Note on SBIR FAST and Technical Assistance (Rural Outreach): Both programs are funded by name in the Senate version of the bill at $2 million and $250,000 respectively.

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Report Finds Info Tech Lost 403,000 Jobs Since Bubble Burst
More than half since recession "officially" ended
There is little comforting news in a new statistical report for workers in the U.S. information and communication technologies (ICT) sector. Researchers from the University of Illinois-Chicago found the sector lost 403,300 jobs between March 2001 and April 2004.

A staggering 200,000 of the high-wage jobs were lost since the recession was officially declared over in November 2001, making the notion of a jobless recovery a significant understatement for the sector.

The resilience of the regional ICT sectors and the overall economies of the seven profiled metropolitan areas are being tested with the incredible losses suffered since the bubble burst in March 2001. The following list presents the percentage change in total ICT employment between March 2001 and April 2004 for the seven primary metropolitan statistical areas (PMSA):

For the nation, a reduction of 18.8 percent of the total ICT workforce was lost during the three-year period.

America's High-Tech Bust, commissioned by the Washington Alliance of Technology Workers and funded by the Ford Foundation, is available at: http://www.washtech.org/reports/

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U.S. Colleges and Universities Boast High Entry Rates, Less Attainment
While it appears that federal programs in the U.S. have succeeded in efforts to increase enrollment in higher education, the nation has fallen behind in retaining college graduates, according to a new report from the Organisation for Economic Co-operation and Development (OECD).

Education at a Glance 2004 is a comprehensive report on education systems within the organization’s 30 member countries. Statistics in the report provide a basis for policy debate and decisions, according to OECD, and this year’s report highlights factors affecting the future supply of qualified people and the relationship between educational attainment, employment and earnings.

U.S. Secretary of Education Rod Paige said the report confirms that in every country, education and earnings are strongly linked and the benefits are not limited to individuals, but include increased workforce productivity and technological progress.

Although the U.S. has an above average rate of entry in higher education, the dropout rate from first-degree programs is 34 percent -- higher than the OECD average of 30 percent and almost six times higher than in Japan, which has only a 6 percent dropout rate.

The U.S. reported a 64 percent entry rate, a figure reported on a new basis this year, which includes entry to associate and bachelor degree programs. Average entry rates for OECD countries are around 50 percent, measuring only bachelor degree programs or higher. Australia had the highest entry rate with 77 percent, followed by Finland with 71 percent and Iceland with 72 percent.

U.S. attainment rates among those aged 55-64 and 45-54 ranked first; however, no gain was reported for younger age groups as the U.S. still ranks second behind Norway among 25- to 34 year-olds. According to the report, other countries with lower levels are closing the gap. Korea, for example, ranks 21st in attainment for 55- to 64-year-olds but is tied for third with Canada among 25- to 34-year-olds.

The report suggests that the financial pressures facing higher education expansion provide an added strain in retaining graduates. In seven of 24 OECD countries, spending on higher education institutions has not kept pace with expansion of enrollment, resulting in decreased expenditure per student since 1995, the report shows.

Findings also indicate that more people worldwide are completing university courses and other forms of higher education, although progress is uneven across countries with some nations falling significantly behind. Across OECD countries, 32 percent completed a first university-level degree and enrollment increased more than 50 percent between 1995-2002 in the Czech Republic, Greece, Hungary, Korea, and Poland. However, in eight OECD countries, the report shows that 20 percent or more of those aged 20-24 have lower than secondary school qualifications. Mexico fared worst, with 70 percent of the population extending into this category.

Education at a Glance 2004 can be purchased from OECD at http://www.oecd.org.

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Manufacturing and the Future of the Industrial State: A Michigan Case Study
During the recent past, heavy loss of manufacturing jobs has created considerable economic upheaval in several states, particularly the industrial heartland of the country where manufacturing represents more of a state's private payrolls than the national average. Michigan, alone, lost 18 percent of its manufacturing-related jobs from 2000 to 2003, a staggering 163,000 mostly high-wage jobs. Still, the manufacturing sector comprises 17 percent of the total jobs in the Great Lakes state.

Stemming the loss of manufacturing operations across the U.S. through improved technological competitiveness and leaner production processes is a goal of many state and federal tax credits, policies and programs, such as the successful NIST Manufacturing Extension Partnership and its network of 400 state and regional affiliate centers.

A new research paper from the University of Michigan dares to ask whether manufacturing can be a driver for future U.S. economic growth and, if so, if it should be the focus of development policy, based on the economic performance of states with high manufacturing concentrations.

A New Path to Prosperity? Manufacturing and Knowledge-Based Industries As Drivers of Economic Growth strongly suggests that a concentration of high-paying, knowledge-based industries, rather than manufacturing, is now the most reliable pathway to prosperity for Michigan and other states.

Written by Donald Grimes, an economist at the University of Michigan Institute of Labor and Industrial Relations, and Lou Glazer, president of Michigan Future Inc., A New Path to Prosperity? compares Michigan's economic performance with those of other states from 1969 to 2001. They also compare manufacturing as an engine of economic growth with high-paying, knowledge-based industries, such as information, financial activities, professional and technical services and management of companies.

According to the study, Michigan's per capita income from 1969 to 2001 grew nearly 12 percent slower than the national average ­- only four states had a worse performance. Specifically, the study found that:

The researchers say knowledge-based industries and young professionals will be the most important drivers of future economic growth, with communities having high concentrations of both likely to be more prosperous.

"It seems that the best use of policy-makers' time and attention with respect to the economy might come from developing a new agenda on how best to grow a knowledge-based economy in Michigan," Glazer said.

The 18-page paper is available at: http://www.ilir.umich.edu/ilir/lmr/MichBoomYears/Prosperity.pdf

SSTI Annual Conference plug:  Fortunately, for tech-based economic development professionals in states and regions within states that are attempting to transform their economies, SSTI's upcoming annual conference presents a convenient one-stop experience for identifying the right tools, selecting the best approaches and sharing the hard lessons learned with more than 300 of your peers from across the country. The event is only three weeks away so register soon: http://www.ssti.org/conference04.htm [expired]

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Malaysia Outlines Aggressive S&T Efforts in 2005 Budget
Seekers for evidence of the increasingly global nature of competition on the research and innovation levels need look no further than some recent announcements stemming from Malaysia. As part of its 2005 budget plan, the Malaysian government aims to create a new matching grant program for private R&D in January, triple financial support for its Small and Medium-sized Industry Fund, encourage government-linked companies to investment up to 10 percent of profits into research efforts over the next five years, and increase government support for research through the Ministry of Science, Technology and Innovations.

The economic development component of the Ninth Malaysian Plan, introduced by Prime Minister Dato’ Seri Abdullah Ahmad Badawi on Sept. 10, outlines several significant investments and initiatives. Highlights include:

[Note: For comparison, Malaysia has a population of about 25 million, roughly one-twelfth the size of the U.S. On a per capita equivalency basis, the U.S. government investment would be a $6.3 billion new entrepreneur fund.]

An English translation of the Prime Minister's Budget speech is available at: http://www.pmo.gov.my/WebNotesApp/PMMain.nsf/hv_PMKiniSemasaNew/962E479E589E396B48256F0C0001BD31

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Resource for Entrepreneurship Education and Community Colleges
The role community colleges play in building tech economies has grown substantially during the past decade beyond important, yet traditional, worker training programs. A new compendium from the National Association for Community College Entrepreneurship (NACCE) provides several examples of efforts by its 14-member community colleges and technical schools to foster entrepreneurship. Highlighted programs include:

Profiles of Programs in Entrepreneurship Education includes contact information for each of the 18 activities covered in the 81-page report: http://www.nacce.com/PDF/Profiles.pdf

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Minnesota Cluster-Entrepreneurship Conference Presentations Available
The presentations from last week's conference, Knowledge Clusters and Entrepreneurship in Regional Economic Development, now available online, provide a good introduction to many of the topics and issues to be discussed at SSTI's annual conference, Building Tech-based Economies: Preparing for Tomorrow's Challenges, in Philadelphia, Oct. 13-15.

Organized by the Humphrey Institute of Public Affairs at the University of Minnesota, the Clusters conference included case studies on U.S. and Irish clusters and entrepreneurship as well as:

The papers and Powerpoint presentations are available at: http://www.knowledgeclusters.com/

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