In the December 13, 2004 Issue:

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North Dakota Gov. Includes $50M for Centers of Excellence in Budget Request
In an effort to increase the economic impact of the state's university-based research, Gov. John Hoeven has included $50 million in his 2005-07 budget request to create Centers of Excellence on each of the North Dakota 's college campuses.

First proposed by the governor during his state of the state address nearly one year ago, (see the SSTI Weekly Digest for Jan. 16, 2004), the centers are envisioned as hubs for education, research, training and job creation. Individual center activities would be focused in targeted sectors, such as technology, aerospace, value-added agriculture, energy, advanced manufacturing and tourism.

To provide at once such a substantial sum for a state with a population of about 634,000, Gov. Hoeven recommends the initial $50 million be borrowed from the Bank of North Dakota and repaid through the biennial appropriations to the state's Department of Commerce. The 2005-07 request includes $5 million toward that obligation.

Gov. Hoeven anticipates the state's contribution would be matched on a two-to-one basis by federal and private sector resources.

Also included in the governor's recommended budget is an increase of nearly $29 million in core funding for the North Dakota University system. The governor is recommending $388.2 million for the higher education general fund, up from $361.5 million for the current budget cycle. The increase maintains the universities' share of the state's recurring revenues at 21 percent.

Gov. Hoeven's 2005-07 budget is available at: http://governor.state.nd.us

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Oregon Gov. Recommends $9M for Investments in Commercialized Research
Commercialized research and Oregon's first signature research center are among those initiatives slated for funding in the governor's 2005-07 proposed biennial budget for the Oregon Economic and Community Development Department (OECDD). Gov. Ted Kulongoski's recommended budget, the "Oregon Principles," is centered around six core principles for targeted investments to deliver a strong return on taxpayer dollars.

Gov. Kulongoski recommended $18.4 million in 2005-07 General Fund support for OECDD, a slight increase from the $18.1 million 2003-05 approved budget. Also included is $9 million from the Lottery Fund for a pre-seed or "proof of concept" fund for commercializing research into business ventures through the newly established Oregon Nanoscience and Microtechnology Institute (ONAMI). The fund would be available to businesses with fewer than 100 employees. Michelle Godfrey, communications manager for OECDD, said the goal is to increase collaboration among institutions of higher education and high-tech companies. By investing this modest amount into ONAMI, the state will be able to leverage more private and federal dollars, Godfrey said.

ONAMI, established through a partnership between Hewlett-Packard and Oregon's institutions of higher education, already has used half of its $1 million General Fund investment for operations. The institute has leveraged more than $22 million from federal research dollars and $3 million from the private sector since opening in May.

Gov. Kulongoski's 2005-07 budget is available at: http://www.governor.oregon.gov.

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U.S. Innovation Hurt by Restrictions on Foreign Grad Students, Study Shows
Tight restrictions on student visas for foreign graduate students will hasten the erosion of America's global dominance in innovation, according to a University of Colorado at Boulder study.

The study, conducted by Economics Professor Keith Maskus and Gnanaraj Chellaraj and Aaditya Mattoo of the World Bank, provides economic results about the contributions of foreign graduate students and skilled immigrants to U.S. innovation and technological change.

The study finds that strict enforcement of restrictions on student visas could deteriorate much of the innovative activity sparked by the Bayh-Dole Act of 1980, which allows U.S. universities to commercialize research results. Fewer foreign graduate students have entered U.S. universities since 9-11, based on recent survey data, the study observes.

A 10 percent increase in the number of foreign graduate students in the U.S., however, would raise patent applications by 3.3 percent, according to the researchers. With such an increase, they say, patents granted to universities also would go up by 6 percent, while non-university patent grants would go up by 4 percent.

Annual licensing revenue from U.S. patents amounts to tens of billions of dollars, with pharmaceutical, biotechnology and informational technology industries among the leaders.

The study also finds that U.S.-born graduate students have no detectable effect on patent applications or grants. Maskus explained that this is largely due to the fact American-born students tend to study other areas outside of the sciences and engineering, two leading areas in innovation.

"There is still a much higher return for American students to learn to run a company or become lawyers," Maskus said.

The U.S. presently enjoys an advantage in exporting the services of higher education, especially in training scientists and engineers, Maskus says. As countries such as China and India improve their graduate science programs, he concludes, visa restrictions could put U.S. institutions at a competitive disadvantage.

Maskus and his colleagues developed a model using U.S. Census Bureau and National Science Foundation data to test the productivity of graduate students and skilled workers, both domestic and foreign, in producing patent awards to university and private businesses. To obtain a copy of the study, contact Keith Maskus at keith.maskus@colorado.edu or 1-303-492-7588.

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Innovation Economy Strong, But State Lags in High Tech Job Creation, MTC Index Finds
Massachusetts' innovation indicators may be strong, but the conversion of innovation into new high tech jobs is lagging and the state’s median household income continues to dip, according to the latest Index of the Massachusetts Innovation Economy.

The 8th annual index, released last month by the Massachusetts Technology Collaborative (MTC), tracks nine industry clusters and 17 economic indicators that benchmark the state’s strengths and weaknesses against six other states: California, Colorado, Connecticut, Minnesota, New Jersey and New York. Positive signs for innovation in Massachusetts include:

Some of the less positive signs identified in the index include:

"Less than 25 percent of the state’s workforce is currently working in the Innovation Economy – the lowest level since we started publishing the Index in 1997,” said Adams. “As the Innovation Economy has contracted, a long-term decline in the state’s household incomes has accelerated. That’s not a recipe for sustainable economic growth in the Commonwealth.”

The Index suggests Massachusetts has the infrastructure to create high tech jobs and improve the economy, but jobs related to the Innovation Economy are not being created as quickly as they are in other states. The Commonwealth needs to raise the level of educational attainment by expanding access to its investments in public higher education, the Index states.

Recent developments point toward the creation of highly innovative growth industries for the future. In early 2004, new economic development legislation approved by the governor and state legislature created a series of programs for science- and tech-based economic development.

In 2005, the state is expected to undertake a re-evaluation of the size and scope of the state’s public university and college system. Enrollments in the state’s public universities have remained flat over the last several years, while enrollment in degree-granting programs at the state’s community colleges have declined, the index points out.

Index of the Massachusetts Innovation Economy is available at: http://www.mtpc.org/institute/the_index/index_11_23_04final.pdf

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Entrepreneurship Sustains Innovation and Boosts Growth
Public policies should seek ways to promote entrepreneurship in order to boost economic growth, according to a review of existing research by David Audretsch of Indiana University. Audretsch seeks to distinguish what is known (supported by existing data and theories) from areas of future exploration related to entrepreneurship and economic development in "Sustaining Innovation and Growth: Public Policy Support for Entrepreneurship," an article from the September 2004 issue of Industry and Innovation.

The article examines academic literature on small enterprises and entrepreneurship since the early 20th century across various disciplines. The review considers three issues in the literature: (1) the role of small and medium sized enterprises (SMEs) in economic growth; (2) theories about the links between entrepreneurs and economic performance; and (3) empirical evidence supporting these linkage theories using different units of analysis, including the firm, region and country.

Audretsch discusses how recent research indicates a shift away from traditional outputs such as labor and capital towards knowledge. SMEs and entrepreneurs appear to have a comparative advantage in this new knowledge-based economy by nurturing innovation and bringing innovative products to the marketplace. Audretsch points to the difficulty in predicting the influence of knowledge on economic growth due to its uncertain asymmetric nature. He also cautions that knowledge will not automatically spill over and create greater commercialization.

In concluding, Audretsch suggests future academic research to clearly identify the instruments that promote entrepreneurial SMEs and define the public policies that best support these instruments. Academic research needs to direct policymakers toward appropriate ways to enhance entrepreneurial innovation and promote the transformation of these innovations into commercially viable products, he says.

Industry and Innovation is available online by subscription at: http://www.tandf.co.uk/journals/titles/13662716.asp

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Foundations Brighten Holidays for Several TBED Efforts
Foundations and philanthropists are playing increasingly important financial roles for many academic and regional technology-based economic development (TBED) efforts. The latest issue of Philanthropy News Digest, the weekly electronic newsletter of the FoundationCenter, highlights three recent announcements that provide examples of the size, scope and opportunity presented by these types of awards. The announcements are summarized below.

The Danforth Foundation awarded the Donald Danforth Plant Science Center a $50 million challenge grant that can be earned by an equal amount of matching gifts. The award will contribute one dollar to the center for each dollar raised from other donors to the center's endowment. The nonprofit research institute focuses on plant science research that leads to increased agricultural production, more nutritious food, and a cleaner environment.

Cleveland-based philanthropist and Harvard alumnus Albert Weatherhead III and his wife, Celia, recently created the Weatherhead Endowment for Collaborative Science and Technology at Harvard University. The $30 million endowment will function similar to a venture capital fund, enabling the university to seed promising interdisciplinary science and technology (S&T) projects. A Harvard S&T task force is evaluating more than a dozen proposals submitted by faculty across the university. Nanotechnology and neuroscience are two areas that may be supported by the endowment, according to school officials.

Earlier this month, the University of California at Berkeley received a five-year, $5.6 million grant from the Gordon and Betty Moore Foundation for continued support of the Biology Scholars Program. Established in 1992 with funds from the Howard Hughes Medical Institute, the program helps undergraduate students from underserved communities to succeed in the biological sciences. The grant will enable these students - ethnic minorities, low-income students and those who are the first in their family to attend college - to become competitively qualified for admission into medical schools and graduate programs leading to science careers.

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People

Evan Barrett was named chief business officer of The Governor's Office of Economic Opportunity in Montana.

Betsy Biemann will be the new director of the Maine Technology Institute, pending legislative confirmation in January. Biemann currently serves as an associate director at The Rockefeller Foundation.

Brian Fitzgerald will be executive director of the Business-Higher Education Forum, a nonprofit organization that separated earlier this year from the American Council on Education, beginning in January. Fitzgerald stepped down from the independent Advisory Committee on Student Financial Assistance, a panel that advises legislators and the U.S. Department of Education on student-aid issues.

Kelly Lewis, a state legislator in Pennyslvania, will be the new president and CEO of the Technology Council of Central Pennsylvania, beginning Jan. 1.

C. Peter Magrath, president of the National Association of State Universities and Land-Grant Colleges, announced he will resign from his position in late 2005.

Indiana Gov.-elect Mitch Daniels recently named Michael "Mickey" Maurer as president of the Indiana Economic Development Corp.

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