In the October 25, 2004 Issue:

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TBED Election Issues across the States
While the presidential election has been dominating the news, voters across the country will be acting on an array of tech-based economic development issues on Election Day next week. The largest is an initiative in California that would provide up to $3 billion for embryonic stem cell research. If approved by California voters, Proposition 71 would have the potential of significantly changing the landscape of where stem cell research is carried out and have significant economic development implications.

Under current federal regulations, federal funding for embryonic stem cell research is limited to a specific set of already existing lines. With $300 million in new state funding for the next 10 years, Proposition 71 could prove to be an irresistible force for researchers, setting California up to be the focal point for stem cell research in the U.S. Even if federal restrictions are eased, California's funding may put it in a dominant position as it will be better able to leverage funding from the National Institutes of Health.

Other significant ballot measures are highlighted below:

Arizona
Voters will decide on a constitutional amendment to allow for transfer of newly developed technologies at public universities to the private sector. Arizona’s constitution currently prohibits universities from accepting stock or other equity from private companies as consideration for the transfer of university-developed technology. Gov. Janet Napolitano supports Proposition 102 as a means to stimulate the economy and attract new businesses to the state.

Arkansas
Amendment Two would allow the General Assembly to approve the issuance of general obligation bonds to fund the infrastructure necessary for any economic development project in which a company commits to hire at least 500 new employees and invest more than $500 million in capital expenditures. The maximum amount of bonds that could be issued would be equal to 5 percent of the state general revenues during the most recent year, which currently is about $200 million in bonds. Emerging technologies such as nanotechnology and biotechnology could benefit from the amendment, proponents argue.

California
As mentioned earlier, Proposition 71 would establish the California Institute for Regenerative Medicine to regulate stem cell research and provide funding through grants and loans for research and research facilities. Also included in the proposition is the constitutional right to conduct stem cell research; establishment of an oversight committee to govern the Institute; a general loan fund of up to $3 million for initial administration and implementation costs; authorization to issue general obligation bonds to finance Institute activities of up to $3 billion; and appropriation of monies from the General Fund to pay for the bonds. Gov. Arnold Schwarzenegger recently announced his support for the measure (see the June 7 issue of the Digest).

Separate ballot initiatives to prohibit the propagation, cultivation, raising or growing of genetically modified organisms are being considered in four California counties. The ordinances would make it unlawful for any person, firm or corporation to propagate, cultivate, raise or grow genetically modified organisms. Genetically modified organisms are defined as specific organisms whose native intrinsic DNA has been intentionally altered or amended with non-species specific DNA. If the Humboldt County measure passes, harvesting biotech crops would be considered a criminal charge, constituting a fine or possible jail time. Following Mendocino County, which passed the nation’s first ban in March, the counties of Butte, Marin and San Luis Obispo would call for a fine and destruction of the biotech crops if the measures pass.

Maine
Voters in Maine will decide on Question 1, which would limit property taxes to 1 percent of the assessed value of the property. This initiative limits the ad valorem taxes levied on real or personal property to a maximum rate of 1 percent of the value of the property. The base value of the property would be the 1996-97 assessed value. The initiative also would prohibit any change in the maximum property tax rate except by a two-thirds vote of all voters in a statewide referendum. The Maine Center for Economic Policy says estimates indicate the proposal would require reducing local revenues by at least $600 million, or one-third of current tax collections. Proponents argue that by instituting a 1 percent tax cap, property tax bills would become predictable and would remain at a reasonable level.

Rhode Island
Approval of Ballot Question 13 would allow the State of Rhode Island to authorize $50 million in bonds for the creation of a biotechnology and life sciences center at the University of Rhode Island. The Rhode Island Technology Council and the University have campaigned for the referendum, saying it is crucial to the state. Creating competition for the measure are 11 other initiatives seeking voter approval for issuance of bonds. According to the University of Rhode Island, the 165,000-square-foot facility will house classrooms, high-tech specialty laboratories, core support instrumentation, faculty offices, incubator space for technology commercialization, and a 400-seat auditorium. It also will support new scientific discoveries, provide work force training, and support job creation in the life sciences.

Utah
Similar to Proposition 102 in Arizona, Utah’s Amendment Two would amend the constitution to authorize the state or a public institution of higher education to acquire an ownership interest in a private business in exchange for rights to intellectual property developed by the state or public institution of higher education (see the March 12 issue of the Digest).

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New Reports Show U.S. Tech Job Loss, Offshoring Escalating
Separate reports released in the past two weeks, one by a national outsourcing firm and the other by a Congressionally mandated commission, reveal efforts to create jobs faster than they are being eliminated remains a challenge for many sectors of the U.S. economy.

Quarterly Figures for Information & Communications Tech Job Cuts
Computer and related high-wage tech job cuts jumped 60 percent in the third quarter, according to the latest quarterly survey by Challenger, Gray & Christmas. The 54,701 positions lost during the summer brings the total to 118,427 so far this year.

The largest number of layoff intentions were at computer companies, which planned 30,624 cuts in the third quarter (127 percent increase over the previous quarter). Also seeing increased job cutting are telecommunications (+8 percent to 19,825) and electronics (+75 percent to 4,092).

The year-to-date total jobs cut account for 16 percent of the 724,320 announcements for all industries
in the first nine months of 2004.

U.S. Job Losses from Offshoring Double between 2001 and 2004
The latest study released by the U.S.-China Economic and Security Review Commission states during 2004, the U.S. will lose as many as 406,000 jobs as they are shifted from the U.S. to other countries. The figure compares to 204,000 jobs in 2001. Nearly one-fourth of the 2004 job losses are expected to go to China. Mexico and India are the other significant beneficiaries of the offshoring trend.

While the conventional wisdom in the U.S. is that companies need to offshore jobs to remain competitive, the report also says businesses engaged in production shifts "tend to be large, publicly held, highly profitable, and well established... The principal motive for production shifts to China is cost reduction rather than producing for the Chinese market."

Other key findings include:

The entire report and additional information on the Congressionally mandated Commission is available at: http://www.uscc.gov/.

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FY 2004 TOP Awards to Address Digital Divide in 22 States, D.C.
Earlier this month, the U.S. Department of Commerce's National Telecommunications and Information Administration announced $14.4 million in Technology Opportunities Program (TOP) grants to 27 organizations in 22 states and the District of Columbia. Historically, TOP has been one of the most competitive tech-based economic development grant programs offered by the federal government, and 2004 was no exception – 494 applications were received, requesting $277.1 million.

This year's grantees represent a variety of nonprofit organizations and public institutions, including hospitals, K-12 schools, libraries, universities, public safety agencies, community technology providers, and city and county governments. Partnerships with the private sector and state and local organizations are required, leveraging the $14.4 million in federal funds with commitments in non-federal matching funds totaling $16.9 million.

Examples of economic development related projects funded through this year's grant winners include: web-authoring jobs for people with disabilities; certification for aspiring telehealth technicians; and tech-enabled enterprise development for agricultural workers. Recipients will use state-of-the-art telecommunications, broadband and other information technologies to demonstrate particular applications that can be replicated in other communities and states across the country.

Funded projects in the Economic Development, Jobs, and Workforce Training category include:

More information on all 494 applicants, including the 27 successful TOP projects, is available at: http://www.ntia.doc.gov/otiahome/top/whatsnew/whatsnew.htm#FY2004_Awards

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Kentucky Plans Statewide Broadband Deployment by 2007
According to Gov. Ernie Fletcher, Kentucky is on the wrong side of a widening digital divide as the Commonwealth ranks 44th in its proportion of high-tech companies, 45th in household computer use, and 43rd in citizen Internet use. To help improve these figures, the governor has called for a broadband deployment and adoption plan that will leverage state, federal and private investment to have full, statewide broadband deployment by 2007.

The plan, Prescription for Innovation: Delivering Broadband Technology for a 21st Century, will address challenges of Kentucky businesses and residents by identifying their needs and implementing community-specific plans. Building upon the success of the rural broadband bill signed earlier this year (see the May 24 issue of the Digest), the plan will address the supply-side and demand-side issues resulting from full deployment and increased adoption.

ConnectKentucky, a quasi-public tech-based economic development alliance, has been charged with implementing the plan. Through collaboration with the Kentucky Infrastructure Authority and the Commonwealth Office of Technology, ConnectKentucky will begin the physical mapping process in November on a county-by-county basis to produce a comprehensive GIS-based assessment. Following the assessment, ConnectKentucky will meet with county leaders to identify gaps in existing infrastructure and to ensure each county has broadband availability.

Full broadband deployment in the state is expected to result in 14,000 jobs and $5 billion in additional Gross State Product annually, according to reports from TeleNomic Research and Criterion Economics LLC.

More information is available at: http://www.connectkentucky.org

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Biopharmaceutical Industry Forecasted to Strengthen State, U.S. Economy
The biopharmaceutical industry is poised to become an important source of economic growth in regions that are successful in nurturing it, according to a recent report from the Milken Institute. With so many states and communities focusing significant financial resources toward developing bio-based economies, the industry analysis is likely to be welcome news.

Biopharmaceutical Industry Contributions to State and U.S. Economics demonstrates the strong economic impact that the biopharmaceutical industry already has on state and U.S. economies. In addition, the report includes 10-year projections that maintain the total employment impact by 2014 will increase to more than 3.6 million and real output will reach $305.1 billion -- assuming government policies continue to encourage basic and applied R&D in the biopharmaceutical field.

The report contends growth in the sector will not be evenly distributed across the country, however, and provides a state-by-state analysis of the industry’s economic impact in four main areas, including industry geographic location and performance, innovation pipeline, multiplier and tax impact, and 10-year industry projections.

In measuring the states, the report shows California had the highest employment in biopharmaceuticals in 2003 with 70,000 jobs and Connecticut had the highest industry wage per employee of $120,100 annually. California also generated the most jobs by the industry across all sectors with 317,000, and New Jersey reported the greatest industry real output of $10.3 billion.

The research and manufacturing of this industry is concentrated in its traditional roots of the New York-New Jersey-Philadelphia corridor, the report indicates, while biotech start-up firms are largely clustered around leading research universities in the San Francisco Bay Area, San Diego, New York, Boston, Raleigh-Durham-Chapel Hill, and Seattle. However, in 2003, Maryland emerged as the location of a dynamic biopharmaceutical cluster in the U.S. with more than 10,000 employees in the field and a 10-year employment growth rate of 46 percent.

According to industry projections, Nevada, Vermont, Florida and West Virginia are all on the edge of developing important biopharmaceutical economies in the near future.

Biopharmaceutical Industry Contributions to State and U.S. Economics is available in full from the Milken Institute at: http://www.milkeninstitute.org/

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Finland Tops World Competitiveness Rankings
Finland remains the most competitive economy in the world and tops the rankings for the second consecutive year in The Global Competitiveness Report 2004-2005, released earlier this month by the World Economic Forum (WEF). The U.S. is in second position, followed by Sweden, Taiwan, Denmark and Norway, respectively.

The rankings are drawn from the results of the Executive Opinion Survey, a comprehensive survey conducted by WEF that polled more than 8,700 business leaders in 104 economies worldwide. The survey questionnaire is designed to capture those factors affecting an economy’s business environment that are key determinants of sustained economic growth. Particular attention is placed on elements of the macroeconomic environment, the quality of public institutions underpinning the development process, and the level of technological readiness and innovation.

Finland holds the top spot in the Growth Competitiveness Index rankings for the third time in the last four years. The country is very well managed at the macroeconomic level, the WEF report states, but it also scores high in those measures that assess the quality of its public institutions. In addition, its private sector is said to have a high proclivity for adopting new technologies and nurturing a culture of innovation.

Like Finland, the U.S. also held onto its same ranking for the second consecutive year. WEF contends the nation's overall technological supremacy is partly offset by a weaker performance in those areas that capture the quality of its public institutions and the stability of the macroeconomic environment.

The 2004 WEF report includes detailed country profiles for each of the 104 economies featured in it. In addition, the report contains various studies addressing different aspects of competitiveness and data tables with global rankings on more than 100 indicators.

The nonprofit WEF is comprised of business, political, intellectual and other leaders. An executive summary of The Global Competitiveness Report and other backgrounders are available at http://www.weforum.org/gcp. The full report is available for purchase from the publisher at http://www.palgrave.com/worldeconomicforum.

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Princeton Review Identifies Top 25 Campuses for Entrepreneurship
The University of North Carolina-Chapel Hill received top honors as the most entrepreneurial campus in a Princeton Review survey of 357 schools and universities across the country. Moving UNC-Chapel Hill to the top of the list were such things as offering entrepreneurship as a major for its undergraduate business degree and several programs to help students launch their own careers as entrepreneurs.

With the exception of the Pacific Northwest, every section of the country is well represented among the remaining top 24 schools, in rank order: 2.) University of Notre Dame; 3.) Louisiana State University and A&M College; 4.) Northeastern University; 5.) Indiana University-Bloomington; 6.) Carnegie Mellon University; 7.) Syracuse University; 8.) University of Arizona; 9.) University of Iowa; 10.) University of New Hampshire; 11.) Xavier University; 12.) University of San Francisco; 13.) University of New Mexico; 14.) University of North Dakota; 15.) University of Dayton; 16.) Stanford University; 17.) Georgia Institute of Technology; 18.) Stevens Institute of Technology; 19.) Loyola Marymount University; 20.) Temple University; 21.) University of Illinois at Urbana-Champaign; 22.) University of Missouri-Rolla; 23.) Drexel University; 24.) Bradley University; and 25.) Boston University.

The full criteria used by the Princeton Review includes:

While any ranking based on subjective review criteria that also uses superlatives like "Most" or "Best" are likely to draw critics, the examples the Princeton Review uses for why it considered these particular 25 campuses as most entrepreneurial may spark new initiatives at other schools across the country.

More information, including a web video "Universities for the Entrepreneurially Minded," is available at: http://www.forbes.com/entrepreneur

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People

Mark Benedetto, president of the University of Sioux Falls, has been elected chairman of the Sioux Falls Area Chamber of Commerce.

Julie Coons is the new president of the Technology Council of Maryland. Coons most recently served as executive vice president of PCIA -- the Wireless Infrastructure Association.

The Great Lakes Entrepreneur's Quest has hired Arthur DeMonte as its first executive director. DeMonte was global director of the e-Business Technology Center at Dow Chemical.

Norma Grace, vice chancellor for technology and economic development at the University of New Orleans, has been elected as the 2004-05 president of the Association of University Research Parks.

The South Dakota School of Mines and Technology has named Dr. Gautam Pillay to the new position of vice president for research. Pillay was executive director of the Inland Northwest Research Alliance.

Duane Roth is the new executive director of UCSD CONNECT. Roth was CEO of Alliance Pharmaceuticals in San Diego.

Michael Terry, president and CEO of EmergeMemphis, has announced he will resign at the end of the year.

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