In the June 11, 2008 Issue:

Copyright State Science & Technology Institute 2008. 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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 Senators Collins and Clinton Introduce Bill to Create National Innovation Council
The creation of a single organization to consolidate federal innovation investments, called for by the Brookings Institution and the Information Technology and Innovation Foundation (ITIF) (see the April 23, 2008 issue of the Digest), moved a small step closer to reality with the introduction of authorizing legislation in the U.S. Senate.
 
S. 3078, the National Innovation and Job Creation Act of 2008, was introduced on June 3, 2008, by Sen. Susan Collins (R-ME) and cosponsored by Sen. Hillary Clinton (D-NY). The bill calls for the creation of a National Innovation Council within the Executive Office of the President and several new grant programs to support state-directed technology-based economic development initiatives.
 
One of the missions of the National Innovation Foundation proposed by ITIF and Brookings was to consolidate federal programs involved with innovation into a single organizing office. As drafted, S. 3078 would move the following programs to the proposed council:

The Council would be tasked with creating and collecting data for improved measures of innovation and productivity, working in concert with the Census Bureau, the Bureau of Economic Analysis, the Bureau of Labor Statistics and several other federal statistical agencies.
 
Five new grant programs would be administered by the Council if S. 3078 passed in its current form. While specific authorization levels are not mentioned for most of the programs, the size of the awards mandated for each state suggests a considerable pool of new federal investment would be required after nearly a decade of reduced or level funding for most federal tech-based economic development spending.
 
CLUSTERS Program
S. 3078 authorizes a $350 million CLUSTERS program, which stands for the Competitive Leadership for the United States Through its Economic Regions Program. The CLUSTERS program would make matching grants to states or entities designated by a state or group of states to support the planning and operation of cluster programs and cluster initiatives.
 
Feasibility grants for planning could be as large as $250,000. Each state would receive at least one $1 million in start-up funds to initiate a cluster program and at least one annual operating grant of $1 million per year for five years. In addition, CLUSTERS would include a competitive matching grant program to provide awards up to $15 million to support specific cluster initiatives.
 
State Innovation-Based Economic Development Grants
Structured somewhat similarly to CLUSTERS but without an authorization level, the new council would provide each state with at least one one-time $250,000 feasibility study grant and a one-year $2 million start-up grant. States also would be eligible to receive at least one annual operating grant that could be renewed indefinitely.
 
Federal grant funds, which could only represent one-third of a project’s cost, could be used to establish technology commercialization centers, industry-university research centers, regional cluster development programs, regional skills alliances, entrepreneurial support programs, science parks, and related activities to spur innovation or productivity.
 
States also would be required to prepare strategic plans to describe, among other things, how grant funds “would be used to support the creation of alliances for the dissemination of innovation among local governments, businesses, educational institutions and other institutions.”
 
Technology Diffusion Grants
The MEP centers in each state would receive feasibility, start up and annual grants – again on the same $250,000 and $2 million levels as the state innovation grants – to support manufacturing extension services.
 
National Sector Research Grants
The council would award competitive matching grants of unspecified amounts to support industry-led consortia involving at least five companies that commit to developing three- to 10-year technology roadmaps for the consortia. The Department of Energy had a similar program in concept during the Clinton Administration entitled Industries of the Future.
 
Productivity Enhancement Research Grants
The council would be authorized to provide grants to academic institutions and university-industry joint ventures to support early-stage research into methods to increase productivity and innovation. No specific grant amounts are identified in the bill.
 
S. 3078 has been referred to the Senate Committee on Commerce, Science, and Transportation for its consideration.

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Luxembourg Partners with U.S. Firms for $200M Molecular Med Investment
On June 5, 2008, the government of the Grand Duchy of Luxembourg announced plans for a $200 million five-year molecular medicine initiative that draws on a strategic partnership involving three Luxembourg Public Research Centers (CRPs), the University of Luxembourg and three U.S. research institutes prominent in the field.
 
The U.S. research institutions include:

Three interrelated projects are involved in the plans: a biobank, a center for systems biology and Project Lung Cancer.
 
The next-generation model for biobanks will increase opportunities for scientific and technological collaboration across disciplines such as biology, pathology, informatics and information technology infrastructure, laboratory operations, transportation, legal matters and ethics.
 
According to TGen, the Integrated BioBank of Luzembourg will implement uniform standards for collection, storage and redistribution of an anticipated full range of tissue samples (e.g., blood, serum and tumor tissue) like existing biobanks. The new effort will advance the industry by adding detailed, molecular-based characterization of biospecimens, which over time (and ultimately linked to detailed clinical information) will lead to amassing an extensive database of medically relevant information.
 
The biobank will be established by the University of Luxembourg and the Luxembourg Public CRPS, Santé, Henri Tudor and Gabriel Lippmann and will facilitate international research projects, advance translational research, and serve as a catalyst to transform research findings into tools for the prevention, diagnosis and treatment of disease, according to a university press release.
 
The second project calls for creation of the Center for Systems Biology Luxembourg by the university and ISB. Two research initiatives will be the initial primary focus of the center: genome sequencing, particularly the study of genetic systems, and molecular fingerprinting. The university reports the project also contains a major technological component focused on the development and integration of tools used in genomics (the study of genomes), proteomics (the study of proteins) and bioinformatics (the application of computer techniques to biology).
 
Project Lung Cancer, the third component of the nation’s $200 million investment, will focus specifically on lung cancer for which there are no reliable tools for early detection and for patients with advanced disease with virtually no known cures. The project, which partners with PPM and CRO-Santé, also will seek to demonstrate that earlier detection and intervention can reduce healthcare costs.
 
In addition, the Société Nationale de Crédit et d’Investissement has set up a limited "health technologies facility" to help co-finance for-profit ventures in this area.
 
More information is available at: http://www.uni.lu/actualites/a_la_une__1/a_luxembourg_biobank and http://www.tgen.org/news/index.cfm?pageid=57&newsid=1167

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Recent Research
Business Churning Enhances U.S. Productivity and Employment Growth
New establishments are responsible for one-third of annual employment creation in the U.S. and have higher measures of productivity when compared to mature surviving establishments, according to a report released last week by the Kaufmann Foundation. Turmoil and Growth: Young Business, Economic Churning, and Productivity Gains, written by Steven Davis of the University of Chicago, John Haltiwanger of the University of Maryland, and Ron Jarmin of the U.S. Census Bureau, sheds light on recent research examining the "churning" process - the continual entry and exit of companies in the national economy.

Looking at U.S. employment rates from 1977 to 2005, the average annual increase in new jobs was almost 18 percent, while the annual decrease in jobs was about 15 percent. In both job creation and destruction, business churning was responsible for roughly one-third of employment change, the rest coming from expansion or contraction within existing locations.

The authors also found among surviving establishments, younger companies grow faster than older companies in terms of employment. In their first year of existence, employment growth at surviving locations is 18 percent, steadily declining over the years such that average employment growth around year five is about 6 percent. For establishments that leave the market, employment losses peak at the second year of their existence, at an average decline of about 17 percent. In short, younger businesses experience high job growth when they survive and high job losses when they fail.

In terms of productivity, establishments less than five years old are, as a whole, 3 percent more productive than the baseline of surviving mature establishments. Compared to this same baseline of mature survivors, the mature companies exiting the market are 27 percent less productive, and establishments less than five years old are 32 percent less productive. The volatile nature of less productive establishments dropping out and newer more productive establishments surviving creates an overall more productive national economy.

The report calls for additional tracking of businesses with no employees, a group the authors argue is often neglected in business studies. They report 75 percent of all U.S. businesses are non-employer businesses, whose sole proprietors represent 7 percent of total employment, generating 4 percent of total U.S. revenues. Additionally, one-quarter of new employer businesses started out as these non-employer businesses in their genesis. As these non-employer companies develop into revenue-generating established companies, it is important to follow their progress before they begin to hire employees.

Turmoil and Growth: Young Business, Economic Churning, and Productivity Gains is available at: http://www.kauffman.org/items.cfm?itemID=1082

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Useful Stats
GDP by State, Per Capita 2003-2007
The Bureau of Economic Analysis (BEA) recently published its estimate on the real gross domestic product (GDP) growth of each state for 2007, revising previously released figures for 2003-2006.
 
SSTI has prepared a table showing real GDP per capita for every state and the District of Columbia from 2003 to 2007. The table includes:

The real GDP per capita for the U.S. as a whole was $38,020 in 2007. The District of Columbia is a perennial outlier for the table, given its GDP per capita is more than three times the national average. Delaware led all states with a 2007 value of $56,496 – 49 percent higher than the U.S. average. Connecticut, New York, Massachusetts and New Jersey rounded out the top five states, the same top states in the 2005 and 2006 data. Overall, 18 of the 51 states experienced a real GDP per capita higher than the U.S. average in 2007. By contrast, only 17 states topped the national average in 2003.
 
Over the period from 2003 to 2007, Louisiana witnessed the largest real GDP growth per capita from $29,475 to $35,191, improving its ranking from 40th to 27th place as the value rose 19.4 percent. New York, ranked second in real GDP growth per capita, experienced a 16.5 percent increase over the five years. Oregon, Hawaii and Connecticut complete the list of top five states. Thirteen states posted double-digit gains from 2003 to 2007, and the only two states to experience a decline in real GDP per capita over this period were Michigan and Indiana. The change for the U.S. as a whole was 8 percent; 23 states exceeded that increase.
 
SSTI’s table is available at: http://www.ssti.org/Digest/Tables/061108t.htm
 
The BEA update, which includes links to all data and explains how the GDP by state is calculated, is available at: http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm

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SSTI Welcomes Newest Members; Alaska Brings State Tally to 47
It's no wonder SSTI's Annual Conference presents such a broad range of perspectives and approaches to TBED each year, when our organization draws in active membership from organizations from all across the continent! For example, with the involvement of the Alaska Manufacturing Extension Partnership, SSTI now has active members in 47 states, the District of Columbia, and Canada.

Membership allows access to the most comprehensive information about tech-based economic development activities across the nation. Our members tell us that one of the greatest benefits of membership is the ability to turn to SSTI when seeking answers to questions or advice on programs. Having answers to our member’s questions and finding the information they need is our top priority. Additional information regarding membership benefits is available at http://www.ssti.org/benefits.htm.

SSTI Welcomes Newest Members
State Sponsors
Tennessee Technology Development Corporation
Utah Science Technology and Research (USTAR)
Vermont Department of Economic Development

Affiliates
Alaska Manufacturing Extension Partnership
Detroit Renaissance
Embry-Riddle Aeronautical University, Office of the Provost
First State Innovation
Flinn Foundation
Forward Sioux Falls
High Performance Materials Institute, Florida State University
JumpStart
Leonard Wood Institute
Northeastern Pennsylvania Technology Institute
Portland State University, Graduate Studies and Research

Supporters
Porter, Wright, Morris & Arthur LLP

It is only through the involvement of every one of our more than 185 members that SSTI is able to continue its mission -- to lead, support and strengthen efforts to improve state and regional economies through science, technology and innovation. Together, we are growing a strong and vibrant tech-based economic development community.

Join today or please contact Noelle Sheets, director of membership services, to learn more about SSTI.

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People & TBED Organizations

The Aerospace, Manufacturing and Information Technology (AMIT) Cluster of Southern Arizona has consolidated its operations with the Arizona Technology Council.

Automation Alley was one of 19 organizations chosen to receive 'E' and 'E-Star' Awards, given by the president to recognize American export excellence. The nonprofit Automation Alley, an SSTI affiliate, supports Southeast Michigan's economy through a collaborative culture that focuses on workforce and business development.

Raymar Dizon has resigned from the Maryland Venture Fund to become director of technology transfer at Mitre Corp.

Jim Hayes, the president of the Economic Development Partnership of Alabama, passed away on June 6 after a long illness. Hayes was considered one of the state's top experts on economic development.

James Ryan was named the first dean of the newly formed Joint School of Nanoscience and Nanoengineering being run by North Carolina Agricultural and Technical State University and the University of North Carolina at Greensboro.

The National Science Foundation has selected Edward Seidel as the director of its Office of Cyberinfrastructure.

Tom Walker was appointed the CEO and president of i2E.

Robert Wilmers is the new chairman of Empire State Development Corp.

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