In the May 15, 2006 Issue:

Copyright State Science & Technology Institute 2006. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected.

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Innovation Index Reveals Steady Growth in Washington
Although technology sector employment is down slightly from previous years, Washington firms received twice the aggregate amount of venture capital (VC) funding compared to last year, and the state remains above the national average in educational attainment, according to the sixth annual Washington State Index of Innovation and Technology.

The index, produced by the Washington Technology Center (WTC), is divided into two parts - state measures and regional comparisons. State measures benchmark Washington against all 50 states, while regional comparisons look at how the technology economy is impacting 12 communities across the state. These sections are built around 40 indicators and organized into six key areas: innovation, competitiveness, growth, financial capacity, human potential and quality of life. The index is meant to be both informative and influential. The goal is to "produce a report that serves as both a historical account of our state's performance and a tool to guide our state's leaders in economic planning," according to WTC Executive Director Lee Cheatham.

The slight decline in Washington's technology sector employment, which represents 11 percent of the state's total employment, is due to a loss of jobs within the aerospace industry, the index finds. The state lost some ground in new company creation, dropping to second place. Washington did place first for company closures, which have both positive and negative effects, according to the study. Although company closings cause distress in the workforce, they free talented people to pursue new ventures, the study states. Other key findings include:

Job growth trends varied among the regions within Washington. According to the index, eight out of the 12 regions surveyed show some growth in technology employment, with some of the smaller communities showing the highest percentage of growth. In terms of total technology employment, Olympia leads the state, followed by Bremerton and Pullman. Bellingham leads the state in new company creation.

The 2006 Washington State Index of Innovation and Technology is available at: http://www.watechcenter.org/downloads/index_final.pdf

Links to this paper and nearly 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at: http://www.tbedresourcecenter.org/.

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House Committee on Science Introduces Three Bills Focusing on Competitiveness, Education
Republican members of the House Committee on Science introduced last week three bills designed to strengthen U.S. economic competitiveness by improving math and science education and research.

According to the Association of American Universities, the bills respond to several recent competitiveness reports, including the National Academies' Rising Above the Gathering Storm. The bills are: H.R. 5358, the Science and Mathematics Education for Competitiveness Act; H.R. 5356, the Early Career Research Act, and; H.R. 5357, the Research for Competitiveness Act.

The Science and Mathematics Education for Competitiveness Act emphasizes the importance of bolstering undergraduate math and science education programs, according to the House Committee on Science. Specifically, the bill would:

The Early Career Research Act would authorize NSF and DOE's Office of Science to provide grants to early career researchers and establish innovative research programs. The bill would set aside 3.5 percent of the agency's research funding to ensure that NSF's programs to fund young faculty increases as the budget grows. NSF would provide grants of at least $80,000 for up to five years to help researchers establish a lab and pursue "risky" research in emerging fields. Additionally, the legislation would authorize $25 million at DOE for fiscal years 2007-11 for a similar program to support research by new faculty.

The Research for Competitiveness Act would authorize NSF and DOE to provide grants to early career researchers to conduct high-risk, high-return research in areas relevant to industry. Under the bill, NSF and DOE would offer $50,000 grants for up to five years, and provide an additional $50,000 to researchers who raise one-to-one matching funds from private industry.

The Task Force on the Future of American Innovation praised the House Committee for introducing legislation to "strengthen the nation's competitiveness by improving science and math education and encouraging careers in science-related fields." According to the task force, the measures introduced complement the President's American Competitiveness Initiative (ACI), which is currently in the FY 07 appropriations process.

Last week, the Committee on Appropriations released the Chairman's markup of the FY 2007 Energy and Water Development Appropriations bill, which provides $24.4 billion for DOE - $299 million over the president's request. The bill fully funds the ACI for a total of $4.132 billion and supports the Advanced Energy Initiative by increasing funding for a variety of clean energy technologies, including biomass, hydrogen, solar, wind and clean coal.

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Recent Research
Seven-step Program for Community Information Strategies
High speed Internet access, global positioning systems and other information and communication technologies have revolutionized urban and regional economic development, both planning and practice. Communities willing and able to make the appropriate investment decisions regarding information improve their abilities to compete. Certain communities and sections of cities, or even smaller neighborhoods, however, miss the first cut for economic development leading to higher wage jobs for area residents because of a lack of easy, regular and current access to basic information.

More complete community information systems also improve the effectiveness and efficiency of many community development and quality of life issues, important factors for maintaining or sustaining a knowledge-based local economy driven by innovation and creativity. With a successful information strategy, communities can adjust the distribution of key public service delivery to reflect real-time information of undesired trends. For example, often it is geographic areas of blight or more mature downtown neighborhoods that are targeted for technology-based redevelopment and tax incentives to attract tech firms. These areas, once "cleaned up," may provide shining examples of successful local TBED investment, but also may have simply transplanted the original concerns of declining property values, vacant buildings, vandalism and crime to other areas of the community. Use of a well conceived community information system can help track the movement of these issues as trends first appear, rather than before major reinvestment is necessary.

A new paper from the Brookings Institution Metropolitan Policy Program lays out seven steps to help these areas to develop successful community-based information strategies. Written by Pari Sabety, director of Brookings' Urban Markets Initiative, Fulfilling the Promise: Seven Steps to Successful Community-based Information Systems points out some of the challenges of replicating one good community information system to another, but outlines a process which Sabety believes is scalable from the neighborhood to the national level.

While individual communities are developing useful models of the power of community information systems, Fulfilling the Promise is focused more toward the larger funders and national policy makers to ensure applicability to the smallest neighborhoods across the U.S. There are important roles to be played by states, regions, universities and localities as well.

The seven steps required are:

Fulfilling the Promise is available at: http://www.brookings.edu/metro/umi/pubs/20060508_cdinfopolicy.htm

Links to this paper and nearly 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at: http://www.tbedresourcecenter.org/.

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Recent Research
Foreign Bias for Location in Partnering with U.S. Biotech Start-ups
Perhaps in no field more than biotechnology are the roles of alliances, mergers and acquisitions, and licensing so influential in determining the future success of a start-up firm. Pharmaceuticals are perhaps the best example of this. There aren't hundreds of big pharma companies around the world; there are perhaps a dozen, and, thanks to television advertising for meds, most are practically household names. To make it as a young biopharma business, most plan to be licensed up or bought out.

The implications of this for state and regional technology-based economic development (TBED) were evident in a 2004 presentation by Cardiff University professor Philip Cooke in a presentation titled Path Dependence, given before the 2004 national meeting of Canada's Innovation Systems Research Network. With the increasing concentration of pharmaceutical distribution and the globalization of research capabilities, Cooke studied the evolution of pharma originating in the Basel-Friedburg-Strasburg region of Switzerland. After following the 250-year history of Swiss-related pharma, he concluded globalization is allowing or resulting in a cluster-based division of capabilities such that the tens and hundreds of biotech firms in certain "biotech hotspots," such as San Diego, San Francisco and Cambridge, are serving as very specialized open research labs for Swiss pharma giants like Novartis.

So if the U.S. biotech powerhouse areas are being reduced to mere concentrations of boutique research labs, what can other areas of the country do to be active players in biotechnology? Is being/becoming a high-wage research center for a particular niche of the biotech/life science industry a sufficient goal for TBED strategists?

Even that may be difficullt, if not impossible, the field was told nearly four years ago. There was quite a bit of uproar in the TBED community back in 2002 (see June 14, 2002 issue of the Digest) when Joe Cortright and Heike Mayer suggested in the Brookings Institution paper, Signs of Life: The Growth of Biotechnology Centers in the U.S, that the sheer amount of research money required to become one of the top biotech metros "may be beyond the reach of most metro areas." Since most of that funding comes from the National Institutes of Health (NIH) and, as the authors pointed out, "none of the 51 metro areas increased its share of NIH medical school research funding by even one percentage point during the past 15 years," the point may be valid - if being in the top 10 biotech regions is the goal. 

However, development of a cluster of niche capabilities seems to point the way with an ever watchful eye for opportunities to help nascent biotech firms form strategic alliances with larger partners as well as secure other sources of capital.

New research, published in the July 2006 issue of the Journal of Business Venturing, suggests communities also will have to overcome a locational bias in helping local biotech firms cultivate alliances with foreign partners. "An Examination of the Investments in U.S. Biotechnology Firms by Foreign and Domestic Corporate Partners," by Joseph Coombs, Ram Mubambi and David Deeds, finds, while domestic corporations are strongly influenced when selecting strategic alliance partners by firms' recent patent activities, foreign corporations appear to be more influenced by the location of the firm. The implications are that foreign firms recognize value in research conducted in clusters of technological capabilities. That supports Cooke's conclusions as well and suggests regions outside the readily recognized biotech hubs will have work much harder or differently to encourage international consideration.

If geographic clusters of research activities will serve as the de facto research labs of large biotech companies, then the quality and perceived value of research will be the drivers to ensure the relationship remains solid between the geographic region and its alliance partners - domestic and foreign.

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Useful Stats
Federal R&D Per Capita by State, 1999-2003
[Publisher's note: In last week's Digest, we prepared a table showing what I thought was per capita federal R&D spending by state for 2003. Some readers who are more astute than I questioned the data, and in reviewing how I used the NSF data, I discovered that I had done so incorrectly. My apologies to all for this error. We have removed the incorrect table from our website. The below article uses correct data to look at per capita federal R&D for the last five years and replaces the information from last week's Digest.]

Using statistics from the National Science Foundation’s Survey of Federal Funds for Research and Development, SSTI has prepared a table ranking all 50 states and the District of Columbia in per capita federal R&D obligations from 1999-2003.
 
According to the data, California, Maryland, Virginia, Texas and Massachusetts ranked the highest in total federal R&D obligations in 2003. However, when ranking the data per capita, the District of Columbia led the nation in federal R&D obligations at $5,261, followed by New Mexico ($1,616), Maryland ($1,435), Virginia ($861) and Massachusetts ($839).
 
Conversely, Arkansas ranked lowest in the nation in 2003 per capita federal R&D obligations at $53, with Wyoming ($82), South Dakota ($73), Kansas ($70), and Kentucky ($57) rounding off the final five.
 
Over the five-year period, Vermont experienced the largest increase in per capita federal R&D obligations, moving up 20 ranking positions from 36th in 1999 to 16th in 2003. Mississippi followed, advancing 19 ranking positions to 11th in 2003.
 
SSTI’s table is available at: http://www.ssti.org/Digest/Tables/051506t.htm

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People & Organizations

John Cronin was named state director of the new Rhode Island Small Business Development Center at Johnson and Wales University in Providence. Cronin is CEO of the Rhode Island Manufacturing Extension Partnership.

The Semiconductor Research Corporation (SRC) named Dr. Steven Hillenius to replace Dr. Ralph Cavin as vice president. Cavin is retiring from the SRC leadership team at the end of the year.

Yolanda Hunter is the new manager of the New River Valley Competitiveness Center in Radford, Va. Wayne Carpenter, former manager of the incubator, left to pursue private consulting work.

The Virginia Piedmont Technology Council (VPTC) selected Jerry MacLean as its new executive director. MacLean replaces Gail Milligan, who will remain with VPTC through June to assist with the transition.

The Purdue Center for Regional Development has appointed Ed Morrison to the position of economic policy advisor.

Yuka Nagashima was named executive director of Hawaii's High Technology Development Corporation.

Automation Alley, which promotes economic growth in Southeast Michigan, has hired Noel Nevshehir to direct its international business center.

The Northern Virginia Technology Council Foundation has changed its name to the Equal Footing Foundation to better communicate its mission to the community.

The Deshpande Center for Technological Innovation at Massachusetts Institute of Technology named Leon Sandler as its new executive director.

Massachusetts Gov. Mitt Romney named Deborah Shufrin as director of the state's Department of Business and Technology. Shufrin replaces Renee Fry, who stepped down to serve as the governor's duputy chief of staff.

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