In the July 11, 2005 Issue:

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France Doubles Funding for R&D and Industrial Innovation
The U.S. can watch as another country significantly expands its investments in innovation. This time it's France, as newly appointed Prime Minister Dominique de Villepin last month announced that the national government will double its funding from €500 million to €1 billion for the Industrial Innovation Agency (IIA), and give €350 million to the National Research Agency (ANR).

The recently created Industrial Innovation Agency, announced earlier this year by President Jacques Chirac, was set up to fund large national champions in industrial R&D and technology development programs. Prime Minister de Villepin on June 18 stated that the funding to the IIA would back commercial projects in the fields of solar energy, nanotechnology, biotechnology and bio-fuels, according to the European Business New. Companies from other European countries are expected to be eligible for funding along with French firms.

The ANR, announced by Prime Minister Raffarin in 2004, was created to support the development of basic and applied research, innovation and partnership between the public and private sectors, and contribute to the transfer of technology produced by publicly funded research to the commercial world. The ANR will fund research projects selected by competitive peer review on the basis of scientific and technical excellence criteria, thus introducing a new approach in how research is funded in France.

However, the exact statutes and mission of the ANR will be defined in the Research Guidance and Planning Bill expected to be presented by the Government by the end of the year. The ANR Public Interest Group, a temporary structure, has been established in the interim to distribute the ANR’s budget.

More information on ANR is available at http://www.gip-anr.fr/en/index.htm

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New Jersey Senate Approves $150M for Stem Cell Facility
Just over two months ago, Acting Gov. Richard Codey announced budget shortfalls were delaying the state's $380 million stem cell research initiative (see the April 25 issue of the Digest). Good news for at least part of the initiative, however, came last month in the form of legislation passed by the Senate, which allocated $150 million for construction of the planned world-class stem cell research facility.

Under the legislation, funding will come from existing unused bond capacity resulting from cigarette tax revenues. Also included in the legislation is $60 million in unused bonds to finance additional capital investments in biomedical and life science research across the state. The building, which is set to break ground next month, will include clinical facilities and enable researchers to move easily between laboratory research and patient care in hospitals. The bill now moves to the Assembly, where passage is uncertain.

Acting Gov. Codey also recently introduced legislation to authorize the state to seek voter approval to fund $230 million in grants supporting stem cell research, according to press materials (see the March 7 issue of the Digest).  More information on the Stem Cell Institute of New Jersey is available at: http://www.state.nj.us/scitech/stem_home.html

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Third Try's the Charm for $28M Momentum Mississippi
In its third special session of the year, Mississippi legislators passed House Bill 3, an economic development package of grants and loans for high-tech and existing industry, including Gov. Barbour’s Momentum Mississippi Initiative.

Momentum Mississippi is a long-term, job creation strategy for the state. The $28 million initiative includes $7 million fund for companies to support business incubation centers and create new and expanding R&D and technology-based companies; $7 million for an equipment and public facilities fund to aid in infrastructure-related improvements and the purchase of equipment; $7 million for the Existing Industry Productivity Loan Fund, which provides loans to industries to deploy long-term fixed assets that will improve productivity and competitiveness through new technology; and $7 million in state general obligation bonds for an inducement account for "extraordinary" economic development opportunities. All of the programs will be administered by the Mississippi Development Authority.

In addition, H.B. 3 includes $12 million to create the Mississippi Job Protection Act Fund, which provides grants or loans to be used by industries to retain jobs in the state and improve productivity and competitiveness.

Immediately after the passage of H.B. 3, Gov. Barbour kept his promise to expand the special session to include other bond projects proposed by the House. However, the special session ended in a stalemate.

More information on H.B. 3 can be found on the Mississippi Legislature’s website: http://www.ls.state.ms.us/

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Utah Governor Unveils Industry Cluster Initiative to Fuel Economic Development
Within days of taking office in January, Utah Gov. Jon Huntsman Jr. dismantled the Department of Community and Economic Development and promised to make significant changes to how Utah approaches wealth generation and economic growth.

Six months into his first term, the governor kept that promise by unveiling a new cluster-based strategy targeting state efforts in seven industry sectors: life sciences; software development and information technology; aerospace; defense and homeland security; financial services; energy and natural resources; and competitive accelerators, such as nanotechnology and advanced manufacturing.

Gov. Huntsman also officially launched the Governor's Office of Economic Development (GOED) last month to oversee the initiative. The new GOED was created with the passage of H.B. 318 during the General session and splits the previous Department of Community and Economic Development, according to the governor's office. The former Division of Business and Economic Development and the Utah Division of Travel Development will form the new GOED.

Gov. Huntsman will meet with economic development leaders later this month to further discuss the cluster strategy. More information is available at: http://rss.dced.utah.gov/ee/index.php/ed_clusters/C147/

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NGA/NASBO: More States in the Green, but Facing Fiscal Challenges
The latest Fiscal Survey of States reveals that many states still face tough budget challenges, despite the fact that extreme revenue shortfalls of the past have subsided. The survey, which measures the fiscal health of states, is conducted semi-annually by the National Association of State Budget Officers (NASBO) and the National Governors Association (NGA).

Forty-two states saw revenues exceed original budget obligations in fiscal year 2005. Five - Indiana, Michigan, Missouri, Ohio and Rhode Island - fell below budget projections and made mid- or end-year corrections.

Ten are projecting negative growth in FY 2006: Alaska, Maine, Massachusetts, Mississippi, Missouri, New Hampshire, New Jersey, Nevada, West Virginia and Wyoming.

In FY 2005, resurgent revenue growth was tempered by a backlog of expenditure demands, the after-effects of the federal fiscal relief package, and general spending increases in nearly all major program areas, the report observes. Medicaid expenditures caused the most strain to budgets, and that is expected to continue in FY06. Medicaid costs exceeded expectations in 30 states by an average of 3.7 percent.

Aggregate state spending in FY05 was more in line with historical spending, growing at 6.6 percent above prior-year levels, according to the report. Five states reduced FY05 enacted budgets by $6.3 million, significantly fewer than in previous years. Also, within the state-spending category, five states reported negative expenditure growth in FY05. The report indicates that this is a dramatic improvement over 2003, during which time 21 states enacted negative-growth budgets.

The survey, which assembles data reported by states on their general budgets, reports specifically on state spending, state revenue actions, and year-end balances. According to NGA, states used a combination of layoffs, furloughs, early retirement, reductions to local aid, and reorganization of programs to balance their budgets in FY 2004.

Fiscal Survey of States is available from NASBO at http://www.nasbo.org .

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Recent Research
Building Bridges Between Industry, Academia and Across Disciplines
Research continues to point to universities and public research organizations as the engines of innovation. But how does one build bridges between academics and industry that result in formal research agreements and specific problem-solving approaches? Two French studies suggest academic research with links to industry and across disciplines enhance the transfer of knowledge, focusing on directly applicable outcomes.

Factors Affecting University-Industry R&D Collaboration
In Factors Affecting University-Industry R&D Collaboration: The importance of screening and signalling, authors Roberto Fontana, Aldo Geuna, and Mirelle Matt identify common characteristics of industrial firms with formal R&D agreements and successful collaborations with universities and other public research organizations. Their findings include:

The study, prepared by the Research Centre in Economics and Management in Strasbourg, considers survey responses of nearly 460 innovative small and medium-sized enterprises from seven EU countries. Using econometric analysis, the authors narrow down the significant company characteristics related to cooperation and formal collaborations with public research organizations.

Why Do Academic Scientists Engage in Interdisciplinary Research?
In Why Do Academic Scientists Engage in Interdisciplinary Research?, Nicolas Carayol and Thuc Nguyen Thi use empirical analysis to examine the characteristics related to cross-disciplinary collaborations. The data indicate:

The study from the Research Centre in Economics and Management relies on data from more than 900 researchers and nearly 80 laboratories at the Louis Pasteur University in Strasbourg. The authors note their study offers policymakers clues to what encourages interdisciplinary research but warn that their conclusions should be used cautiously, pending further analysis.

Both studies point to the importance of private industry to building the bridge for successful knowledge transfer from academia. From the firm perspective, only those companies focused on capacity building become actively involved in public research partnerships. From the academic perspective, links with industry promote interdisciplinary research focused on near-term applications.

Factors Affecting University-Industry R&D Collaboration: The importance of screening and signalling is available at: http://cournot2.u-strasbg.fr/users/beta/publications/2005/2005-07.pdf

Why do Academic Scientists Engage in Interdisciplinary Research? is available at: http://cournot2.u-strasbg.fr/users/beta/publications/2004/2004-17.pdf

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Useful Stats
Real Gross State Product, 2000-2004
Recently released U.S. Bureau of Economic Analysis (BEA) data show Nevada outpaced all other states in the percent growth of its real gross state product (GSP) over the period 2000-2004. The western state's real GSP grew from nearly $74.8 billion in 2000 to more than $90 billion in 2004, a 20.8 percent change, based on 2004 estimates.

BEA, which indicates it will provide further detail in its next Survey of Current Business issue, derives 2004 estimates from a "prototype methodology" used to speed up the release of reference year data from past release schedules. The 2004 estimates arrived six months after the reference year, or 12 months ahead of prior schedules. Estimates for 2003 and earlier are based on BEA's regular GSP methodology.

Along with Nevada, only two other states experienced greater than 18 percent growth in real GSP from 2000 to 2004 -- Arizona and Wyoming. Real gross domestic product for the U.S. grew by less than 10 percent over the four-year period, as did real GSP for 19 states. Louisiana was the only state to experience a decline over the period (1.09 percent); however, it had experienced increases the two previous years.

Using BEA data, SSTI has prepared a table that depicts the above information for all 50 states and the District of Columbia, ranking states by their percent change. The table is available at: http://www.ssti.org/Digest/Tables/071105t.htm

More information concerning BEA's methodology and tables characterizing GSP data in current dollars and by industrial contribution to percent change is available through the agency's press release, http://www.bea.gov/bea/newsrel/gspnewsrelease.htm. Regional totals are provided with the state and national totals.

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Southern Growth Outlines Steps to Rural Prosperity
Building high-quality communities is the underpinning of long-term economic development, suggests new Southern Growth Policies Board research. A report published by Southern Growth, The New Architecture of Rural Prosperity, states that although measurable progress has been made in the past several decades, the rural South continues to lag the nation in educational achievement, health care and economic performance.

The inclusiveness in the development of the report's recommendations is a credit to Southern Growth. More than 2,200 southerners participated in focus groups, forums and surveys to provide input. Participants indicated that lack of job opportunities for educated young people and quality of education are the biggest barriers to economic prosperity in their communities.

Some of the potential action items for states to undertake include encouraging institutions of higher education to be fully engaged in economic development, providing seed funding for regional initiatives, and encouraging philanthropic organizations and the private sector to provide incentives that encourage regional collaboration.

The report also includes analysis and recommendations from previous reports on economic development, examples of innovative programs in the region that are promoting rural prosperity, and detailed feedback from participants. It is available for purchase from Southern Growth at: http://www.southern.org/pubs/pubs.shtml#annual

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People

Gov. Tom Vilsack announced that Mary Lawyer will serve as acting director of the Iowa Department of Economic Development. Mike Blouin resigned from the position last week to launch his campaign to become the state's next governor.

After nine years as deputy director of the National Science Foundation, Dr. Joseph Bordogna is resigning. He will return to the University of Pennsylvania as Alfred Fitler Moore Professor of Engineering.

Pauli Jacobi, director of the Louisiana State University System Research and Technology Foundation, is resigning her position but will remain an LSU employee.

Darrell Kelley, CEO of Enterprise Florida for the past three years, will retire on Aug. 1.

Technology specialist David Levine, hired by Gov. Joe Manchin in March, is leaving the governor's office to become executive director of the Robert C. Byrd National Technology Transfer Center.

Ed Morrison, formerly with the Weatherhead School of Management in Cleveland, opened the Institute for Open Source Economic Development. He will continue to maintain the EDPro weblog.

Richard Overmoyer, deputy secretary for technology investment at the Pennsylvania Department of Community and Economic Development, is leaving to join the lobbying group, GSP Consulting.

The Puerto Rico Senate recently confirmed Jorge Silva-Puras as the new executive director of the Puerto Rico Industrial Development Company. He previously served as secretary of the Department of Economic Development and Commerce.

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EAST Initiative Seeks President/CEO
The Board of Directors of the EAST (Environmental And Spatial Technology) Initiative invites applications for the position of President/Chief Executive Officer. The EAST model, a result of a collaboration between business and education, is intended to provide K-16 students with access to resources not available in the traditional educational setting. The board seeks a proven leader whose vision and passion for education and technology is demonstrated by a successful track record of innovation, strong management and fiscal integrity. Someone with 10 years of executive management experience is desired. A full description is available through the SSTI Job Corner, http://www.ssti.org/posting.htm.

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SSTI's 9th Annual Conference: Avoiding the End-of-Summer Blues
Your kids may not be bored of summer yet, but if you're an avid bird watcher, you know the season has already changed to fall as Yellow Warblers and several species of shorebirds begin their migrations south by July 4.

If you find that a little depressing, then SSTI has a perfect suggestion to make certain your summer lasts well into October: Make plans now to join us for our ninth annual conference Oct. 19-21 in Atlanta! The average Mid-October temperatures for the area are ideal for discovering why the Buckhead area of Atlanta is called the "Jewel of the South" or "Shopping Mecca of the Southeast." October weather in Atlanta also is usually perfect for playing a few of the more than 1,100 holes of golf available in the metro area.

Shopping? Golf? At SSTI's annual conference? If you are one of our past conference participants or long-time Digest subscribers, you'll know that isn't the purpose of the premier professional development opportunity for the tech-based economic development community. SSTI's annual conference got its reputation as the best event of the year by the outstanding content with timely topics, excellent presenters and top-notch attendees.  Breakout session topics will draw on this year's theme, Investing in a Brighter Future: Building Tech-based Economies, but part of that investment is in you.

SSTI recognizes that true inspiration for improving your efforts to promote growth through science and technology, however, may require an additional mental push from outside the conference agenda. A critical ingredient for encouraging creativity and innovation -- within your client companies, university labs and your own tech-based economic development activities -- is fun. And folks in Buckhead, Atlanta and Georgia do it right!

We encourage our conference participants this year to make plans to stay for the whole weekend following the conference to: schedule 18, 36 or 54 holes of golf; or more fully explore the incredible restaurant and nightlight in Buckhead; or shop-til-you-drop in the region's finest stores, shops and boutiques; or explore Atlanta's wonderful musuems, gardens and art galleries; or simply relax and unwind in the pampered luxury of our conference hotel and spa, the InterContinental Buckhead-Atlanta; or create your own weekend getaway. A few suggestions are provided with links on the SSTI conference website: http://www.ssti.org/Conf05/amenities.htm

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