In the December 6, 2004 Issue:

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The Challenges of Measuring Competitiveness
An SSTI Editorial
Whether it is explicitly stated or implicitly understood, one of the distinctions between technology-based economic development (TBED) and more traditional economic development functions is TBED's goal of encouraging the creation of high-skill, high-wage jobs to raise the standard of living for the state or region's residents. An area's income levels and its positive change over time could be considered measures of success toward that goal.

But should affluence be the measure of competitiveness? The Boston-based Beacon Hill Institute (BHI) answers yes in its fourth annual indicator report, Metro Area and State Competitiveness Report 2004. Authors Jonathan Haughton and Cagdas Sirin define competitiveness as "the policies and conditions that ensure and sustain a higher level of per capita income and its continued growth.”

In actuality, median household income in the U.S. has declined in real terms each year since 2000 by an aggregate 3.4 percent (source: Economic Policy Institute). Apply the BHI definition of competitiveness and one would have to conclude the U.S. is increasingly non-competitive in the global market.

We'd argue that, instead, the decline in household income means we are losing our affluence. That loss might make us more competitive through lower wages but threatens our standard of living.

The words competitiveness and compete are so often used in economic development policy today that they have lost much of their meaning or impact. Advances in information and communications technology, as well as international free-trade policies, make some of our long-held notions of competitiveness inconsistent with reality, anyway. Add the falling value of the dollar, Congress's recent cuts for scientific research, and the rapid adoption of policies and programs by many countries to encourage education, innovation, research and investment (see related article below), and it would appear the U.S. should prepare for more challenges in the future.

How does the U.S. compete in a truly global market while simultaneously maintaining or, more importantly, increasing its standard of living? Our sense is the second part of the question has been lost in much of the debate in Washington. We look forward to seeing how the Council on Competitiveness addresses the question next week with the release of the final report for its National Innovation Initiative.

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From Armenia to Zambia, Most of World Embracing Innovation
It may not be getting much attention from the White House or Congress, but encouraging innovation and technology-based economic development through coordinated national strategies and initiatives is very much on the legislative agenda of many other countries around the world. Recent highlights from the past few weeks include (all dollar figures are for U.S. equivalencies):

Armenia
A Nov. 26 press statement by the Arminfo News Agency reports the Armenian Ministry of Trade and Economic Development is working on enabling legislation to authorize several programs to support the financing of "commercial directions for science." The main emphasis of the draft - to be considered by the legislature this year and included in the FY 2006 budget request - is to support research in key technologies such as physics, radio physics and biotechnology; create a technology transfer system; and establish scientific technoparks.

Brazil
Last month, the Senate approved legislation authorizing incentives to encourage research and innovation through public-private partnerships, reports Gazeta Mercantil Online. The legislation, however, did not specify what incentives were approved. Once he has signed the bill, President Luiz Inacio Lula da Silva will have 120 days to submit details for the fiscal incentives his administration would like to implement to stimulate the development of cooperative projects between domestic companies, public entities devoted to scientific and technological research, and private nonprofit organizations.

China
The Chinese government is planning to set up a venture capital fund of 1 billion yuan ($122 million) a year to support Chinese fledging companies, according to the SinoCast China Business Daily News. China's Ministry of Finance will be responsible for providing capital for the fund, while the Ministry of Information Industry will allocate the fund. The Daily News reports the government has strongly supported investments in the domestic chip industry recently because China must import a great deal of expensive chip products to satisfy the increasing demands in computer markets and other sectors.

Republic of Korea
As part of the steps in building a knowledge-based industrial network between companies and universities, the Ministry of Commerce, Industry and Energy (MOCIE) will create cluster complexes within eight cities by 2008, the Korea Times recently reported. Under the plan, MOCIE will set up public research and development centers at each cluster corresponding to the unique characteristics of each region. The ministry expects the complexes to create 37,000 new jobs and $116.1 billion in exports by 2008, with the complexes housing medical equipment firms, optical product makers, high-end digital and electronics outfits, and a state-of-the-art machinery industry. The goal is to make "Korean versions of the Silicon Valley," according to the Times.

Pakistan
The Pakistani government recently announced the creation of three separate funds totaling $275 million to promote small business enterprises. Dr. Salman Shah, advisor to the Prime Minister of Finance, said the government has adopted a five-point economic strategy with small and medium enterprises as the focus of industrial development geared toward agriculture, industry, telecommunications and information technology services. The funds include an Asian Development Bank $75 million credit guarantee fund, Government of Pakistan $100 million business development fund, and a $100 million fund for technology, marketing information and innovation.

Singapore
To create 15 world-class biotech companies by 2010, the Singapore Economic Development Board (EDB) is focusing on attracting investors and talent through tax breaks, grants and other financial incentives, according to Voice of America News (VOA). In 2003, EDB opened Biopolis, a $300 million high-tech complex of research buildings with the capacity for 2,000 scientists. VOA reports at least six of world's largest pharma companies have opened facilities in the nation. However, venture capitalists and other investors are still wary about investing in this industry, potentially due to competition from India and its lower R&D costs, VOA states. To promote the industry, biotech companies have created BioSingapore, a networking association that offers investment propositions in which investors may see a return more quickly.

Taiwan
Bouyed by expectations of at least 6 percent growth for the Taiwanese economy in 2004, President Chen Shui-ban announced that genome-based biotechnological research will play a crucial role in advancing Taiwan in the field of life sciences research for the 21st Century, reports Asia Pulse. The opening of the Genomics Research Center will provide a technological platform for Taiwan's biotechnology industry, Chen said, and will help in developing Taiwan into the Asia-Pacific hub for biotech venture investment and research and development operations. The country has set a goal of attracting $4.54 billion in foreign investment in five years and launching 500 biotech firms by 2013.

In addition, the Department of Industrial Technology recently approved matching funding for 28 research and development programs proposed by small businesses. In accordance with the approved funds, small businesses expect to hire an additional 13,000 researchers in the field of innovation, which could be helpful in raising technological standards and industrial competitiveness and producing industrial upgrades.

Wales
Economic Development Minister Andrew Davies launched a new 10-year development strategy developed by the North Wales Economic Forum to improve the competitiveness and productivity of businesses, reports the Liverpool Daily Post. Objectives for the strategy include increasing the number of new companies in the region; boosting the number of high-growth start-ups; improving the competitiveness and productivity of existing firms; developing a world-class innovation support structure; and raising worker skills, particularly in the knowledge and technology sectors.

Zambia
Stressing the need for innovation in today's competitive marketplace, World Bank country representative Ohene Nyanin introduced an initiative to promote innovations into development for the African country of Zambia. According to the Times of Zambia, the initiative "Together, Turning Ideas into Action," will enable different development agencies and the private sector to interact with small and large non-governmental organizations, small and medium enterprises, faith-based organizations, academia, and the government to generate innovative development ideas. Similar efforts are being launched in Malawi and Zimbabwe.

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SBA Changes Rules for SBIR
Friday's issue of the Idaho SBIR Competition Newsletter brought to our attention two announcements from the SBA regarding the SBIR Program. Proposed changes for the program were included in the Dec. 3 online issue of the Federal Register. We reprint an extended excerpt of the text from the Idaho SBIR Competition Newsletter verbatim below, with our great appreciation for the work of Dr. Chris Busch, consultant to the University of Idaho EPSCoR Program, and Dr. Jean'ne Shreeve, Idaho EPSCoR/IDeA project director.

The SBA rule change published today (3 Dec 2004) in the Federal Register establishes the following requirement for an SBIR awardee:

It must be a for-profit business concern that is at least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States (as the regulations currently require); or it must be a for-profit business concern that is at least 51% owned and controlled by another for-profit business concern that is at least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States.

The first part of the rule above is the present rule. The second part (italicized) reflects the changes in the rule. The rule is to take effect 3 Jan 2005.

As a result of the rule change, subsidiaries may now be eligible for SBIR competition. Previously, all subsidiaries were ineligible. Subsidiaries of parent small businesses that are owned by SBIR-eligible venture capital firms also would be eligible. For venture capital firms to be SBIR-eligible, they must satisfy the first part of the rule cited above.

Comments Sought on VC Eligibility
SBA also published today (3 Dec 2004) in the Federal Register an “Advance notice of proposed rulemaking” that seeks comments on SBIR eligibility for businesses majority-owned by venture capital companies. Specifically, the SBA is seeking comments on whether it should provide an exclusion from affiliation with venture capital companies in determining small business eligibility for the SBIR Program.

Comments must be received by SBA by 1 Feb 2005.

This announcement also is available on the Federal Register website: http://www.access.gpo.gov/su_docs/fedreg/a041203c.html

Comments identified by RIN 3245-ZA02 may be submitted by any of the following methods:
Federal eRulemaking Web Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail or FAX (202-205-6930):
Include RIN 3245-ZA02 in the subject line of the message.
restructure.sizestandandards@sba.gov.
Mail or Hand Courier:
Gary M. Jackson, Assistant Administrator for Size Standards
409 Third Street, SW.
Washington, DC 20416.

SSTI encourages all interested parties to comment.

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AUTM Releases 2003 Survey
Firm starts down, growth slows for many other measures

Even with record participation from 165 U.S. universities and 32 research hospitals, the 13th annual licensing survey conducted by the Association of University of Technology Managers (AUTM) reveals a 6.7 percent drop in the number of start-up companies created with technology licensed from the responding schools.

AUTM Licensing Survey: FY 2003 provides information about licensing activities at a record-high 197 U.S. and 38 Canadian universities, hospitals and research institutions. The survey is presented in two separate reports for U.S. and Canadian institutions for the first time.

In addition to licenses and options executed, the survey tracks new commercial products, new companies established, and royalty revenue.

The U.S. report reveals continued growth in the academic technology transfer field. Data from fiscal year 2003 shows U.S. establishments continue to experience increased investment in such areas as research funding, which was up 10.1 percent over the prior year. In FY 2003, U.S. offices also experienced growth in invention disclosures (up 7.7 percent), patent applications (up 8.2 percent), and license income (up 5.5 percent).

The results indicate slower growth than in past years. AUTM suggests this is due to difficult economic conditions or the maturing of the technology transfer field.

New to the AUTM survey summary for 2003 are 25 technology transfer success stories in the U.S. and Canada. A 66-page public version of the summary, minus Canadian data, is available for download at: http://www.autm.net/surveys/03/FY03SurveySummaryPublic.pdf

The full report of the AUTM Licensing Survey: FY 2003 will be available for purchase from AUTM at http://www.autm.net. More information regarding the Canadian section of the survey summary will be available in the coming months.

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Venture Capitalist Donates $22M for USC Tech Commercialization Center
For many university tech transfer operations, the need to generate revenues to support the office and attempt to meet the often pie-in-the-sky expectations of school administrators can force licensing efforts toward only the biggest deals. Thanks to a large donation to serve as an endowment, the University of Southern California (USC) Viterbi School of Engineering will be able to count on $1 million in interest income to support its technology transfer activities.

USC alumnus and successful venture capitalist Mark Stevens donated $22 million to the school for the creation of a technology commercialization institute. The Mark and Mary Stevens Institute for Technology Commercialization (SITeC) will have a dual mission -- provide a professional staff to help researchers and commercialize new technologies. Staff at the institute will provide a full range of consulting services, from market analyses to third-party investor introductions, effectively building new links to industry in addressing the overlapping technical, legal and business aspects of commercializing.

One of the changes for universities in the 21st Century, Stevens said, will be a shift toward interdisciplinary study. SITeC can be a key element in taking ideas from the various schools and turning them into technologies, he added. The institute will collaborate with the Marshall School of Business and the Gould School of Law in order to strengthen tech transfer capabilities university-wide.

In addition to providing services, SITeC will stress a curriculum known as the "Stevens education." The curriculum includes course work in technological entrepreneurship and offers optional minors at all levels. It also provides faculty workshops and courses.

University officials noted the institute is a resource for the entire campus, as non-engineering students also will be able to take SITeC courses. Curriculum will focus on the technological aspects of tech transfer such as the methods for assessing market readiness, legal aspects, intellectual property protection, licensing and royalties along with operational aspects such as business plan development, marketing, management, valuation and feasibility aspects, and ethics.

Stevens is a partner at Sequoia Capital and a member of the USC Viterbi School of Engineering Board of Councilors and the USC Board of Trustees. More information about SITeC is available at: http://www.viterbi.usc.edu/research/sitec/

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Guidance, Flexibility Offered for Coping with S&T Convergence
Universities encouraged to reform interdisciplinary, multi-institution approaches

On the heels of a report from the National Academy of Sciences (NAS) urging reform for interdisciplinary research, Congress gave its final approval of a bill designed to effectively promote collaborative research among universities and the public and private sectors. The Cooperative Research and Technology Enhancement (CREATE) Act of 2004 would allow the government to approve patent applications of inventions that have been made collaboratively among multiple organizations (see the June 28, 2004 issue of the Digest). The bill currently awaits the signature of President Bush.

The NAS report, Facilitating Interdisciplinary Research, states that hiring policies, promotion, tenure and resource allocation that favor traditional disciplines all impede interdisciplinary research at many institutions. The report identifies steps individuals and institutions can take to enable interdisciplinary programs to be conducted and evaluated more effectively.

Suggestions for reform are provided for everyone who plays a key role in the research process, including students, postdoctoral scholars, researchers, educators, funding organizations, professional societies and journal editors. Among the recommendations are:

In addition, academic institutions should explore new models that foster and reward interdisciplinary interactions, the authors say. Industrial and national laboratories, they contend, often operate successfully because their research goals are established and pursued in terms of projects rather than by discipline.

Facilitating Interdisciplinary Research is available online or for purchase from National Academies Press at: http://www.nap.edu/

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People

Michelle Bauer, executive director of the Tampa Bay Technology Forum, announced she will resign from her position in early 2005.

Jeff Edwards recently was named interim president and CEO of the Economic Development Corp. of Utah (EDCU). Edwards replaces Christopher Roybal, who will serve as the senior adviser for economic development for Gov. Jon Huntsman Jr., starting next year.

David Gibson, chief business officer of The Governor's Office of Economic Opportunity in Montana, has accepted a new position as associate commissioner for economic development. Beginning Jan. 3, Gibson will serve under Commissioner of Higher Education Sheila Stearns.

Dr. John Reed, president and CEO of The Burnham Institute, was appointed to the Independent Citizen's Oversight Committee that will govern the California Institute for Regenerative Medicine created last month.

Patrick Tam resigned last month as executive director of the Spokane Intercollegiate Research and Technology Institute.

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Job Postings

Chief Executive Officer
Oklahoma Center for the Advancement of Science and Technology
The Oklahoma Science & Technology Research and Development (OSTRaD) Board is accepting applications for the position of Chief Executive Officer (CEO) of the Oklahoma Center for the Advancement of Science and Technology and the Oklahoma Institute of Technology. The CEO also serves as the Executive Director of the OSTRaD Board. Candidates are sought who have an education in an appropriate field and substantial managerial experience in developing and managing research and technology development programs. Preference will be given to candidates who have an earned degree, preferably doctorate, in a field of science or engineering. Applications are due by Feb. 28, 2005.

Associate Vice President for Economic Development
University of Massachusetts (UMASS) System
The President’s Office of the five-campus UMASS system is seeking a dynamic and entrepreneurial professional to help promote collaboration among the five campuses, private universities and industry. The focus of this new position will be on promoting strategic alliances in areas of science and technology important to the economic and workforce development of Massachusetts. Preferred qualifications include: a master's degree; 5-10 years experience in economic development; training or experience in science, technology and related issues; and the ability to work successfully in developing programs and generating resources in an entrepreneurial academic environment. Review of applications will begin immediately and continue until the position is filled.

More information on both positions, including contact information, is available through SSTI's Job Corner at: http://www.ssti.org/posting.htm

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