In This Week's Issue
SSTI News and Analysis
Fiscal Commission Proposes Extensive Cuts to
Federal Economic Development
After months of closed-door negotiations, the chairs of
National Commission on Fiscal Responsibility and Reform has
released a draft list of proposals to reduce the growing federal
deficit. The proposals include drastic cuts to the federal
government's economic development agencies,
including the elimination of the Economic Development
Administration (EDA) and the Hollings Manufacturing Extension
Program (MEP), as well as the merging of the Department of Commerce
and the Small Business Administration (SBA). The commission also has proposed funding cuts for research into fossil fuels, defense
and private sector space flight. While the proposals would have
far-reaching consequences for the TBED community, commissioners
have emphasized that the current draft does not represent the final
report and many changes are expected before it is released later
this year. President Barack Obama has said that he will comment on
the commission's proposals once the full report
is released in December.
President Obama established the bipartisan
panel, co-chaired by Erskine Bowles and Alan Simpson, in February
to recommend steps that could be taken to bring spending in line
with tax revenue. If adopted in its entirety, the
commission's draft would reduce the FY2015
deficit by $200 billion, bringing the figure down to 2.2 percent of
GDP. An estimated $4 trillion would be eliminated from projected
deficits through 2020. Bowles and Simpson, however, have
characterized the draft as a starting point, and none of the nine
Democrats and seven Republicans on the commission have embraced the
current version, according to the New York Times.
One of the guiding principles used by the
commission was to focus on cuts that reduce "red
tape and inefficient spending that puts a drag on the economy and
job creation" in order to promote economic growth and
keep the country competitive. Under the heading
"Cut Outdated, Low Priority and Under-Performing
Programs," the commission recommends entirely
eliminating the EDA. Citing Congressional Research
Service and Government Accountability Office reports that the
agency has drifted from its core mission of aiding depressed areas
and has made erroneous claims of job creation and investment
returns, the report characterizes the agency as wasteful and
redundant in light of other federal initiatives. Eliminating the
agency would save the federal government $300 million in FY15.
Other major economic development eliminations in
the draft include the the National Institute of Standards and
Technology (NIST) Hollings Manufacturing Extension Partnership
(MEP) and Baldrige National Quality Program, as well as three
regional development agencies. The NIST programs provide services
already available from the privates sector and some funding from
MEP supports "inefficient companies that would
otherwise go out of business," according to the commissioners.
Ending the programs or supporting them through fees would save $120
million annually. The report calls the Appalachian Regional
Commission, the Denali Commission, and the Delta Regional Authority
duplicative of other existing federal programs and finds their
outcomes difficult to evaluate. Eliminating the three
agencies would save $100 million in FY15.
The commission also proposes merging the
Department of Commerce and SBA into a new Department of Commerce
and Innovation. By combining the programs of the two agencies, the
federal government could "strengthen the
potential impact" of Commerce initiatives, according to
the draft report. The new department would have a budget 10 percent
lower than the two separate agencies, for a savings of $1 billion
in FY15.
The proposals include a number of cuts to
federal research programs and R&D investment. In light of
growing private investment, the commissioners propose cutting new
funding for the Department of Energy's applied
research on fossil fuels, which would save $900 million in FY15.
Another $6 billion could be saved over the next five years by
ending NASA's investment in private sector
development in space flight technologies. Among the many Defense
cost-saving measures, the report proposes reducing spending on
Defense Research, Development, Test & Evaluation (RTD&E) by
10 percent. If this recommendation were adopted,
Defense's RTD&E budget would fall by $7
billion in FY15.
Read the Fiscal Commission report at:
http://www.fiscalcommission.gov/news/cochairs-proposal.
return to the top of the page
ITIF Releases 2010 State New Economy
Index
Massachusetts remains the state best prepared to
navigate the changing economy, according to the Information
Technology and Innovation Foundation's (ITIF)
2010 State New Economy Index.
ITIF uses 26 indicators in five categories to evaluate the economic
structure of states and assess their capacity to drive
innovation-based growth. Massachusetts ranked number one in
economic preparedness by a wide margin, as it has since the first
index was released in 1999. Other top states include Washington,
Maryland, New Jersey and Connecticut. Overall, most states and the
U.S. as a whole improved in most indicators between 2008 and 2010.
Only three U.S. indicators showed a marked decline during that
period: patents, non-industry R&D, and venture capital.
ITIF cautions that due to differences in
methodology and indicators, changes in ranks between years cannot
necessarily be used to evaluate state progress. Also, the
indicators do not reflect absolute figures, but instead reflect the
concentration of employment, investment and other metrics relative
to the state's economy. Massachusetts, however,
has kept its first place ranking throughout the last 11 years, and,
in fact, increased its lead over other states. ITIF credits the
state's remarkable performance to a high
concentration of software, hardware and biotech firms, and an
economy that was less affected by the recession than the rest of
the country. Meanwhile, Washington rose to second place, up from
fourth in 2007, on the strength of its aviation and software
sectors, and strong entrepreneurial activity.
Other states excelled in individual performance
metrics. Utah led the country in index scores for inventor patenting,
the percentage of its population that was online and in state and
local government use of information technology to deliver services.
Virginia took the top spot for IT professionals outside of the IT
industry. Delaware led in both employment in high-wage traded
services and foreign direct investment.
The Index concludes by offering several
recommendations to help boost the country's
preparedness and help compete in the changing global economy.
Federal and state policies should be revamped to limit zero-sum
competition between and within states. In a competitive global
environment, in which the U.S. no longer dominates worldwide
innovation, states can no longer afford to engage in zero-sum
competition. Cooperation could be improved through multi-state
compacts, an end to financial incentives to firms to move away from
other states, and a $2 billion federal fund to provide matching
grants to states to support non-zero-sum economic development
initiatives. States should be encouraged to develop win-win
economic development policies, such as cluster-based strategies
that support local innovation efforts.
Read The 2010 State New Economy Index at:
http://www.itif.org/publications/2010-state-new-economy-index.
return to the top of the page
Facing a Budget Crisis, UK Will
Not Cut S&T Spending
Facing the largest budget deficit in the European Union, British
Prime Minister David Cameron will not to cut spending on S&T.
The
European Commission predicts the UK will face a 12 percent budget
deficit in 2011. To combat this deficit, the Cameron led
Tory-Liberal Democrat
coalition took drastic measures to reduce the deficit by 2014.
In October, Chancellor George Osborne unveiled the budget
plan, which will cut almost all government departments by an
average of 19 percent over four years. This austerity plan should reduce
spending by almost £80 billion pounds (roughly $126
billion) according to
Fox News. However, core science spending will remain frozen at
£4.6 billion (approximately $7.3 billion) over the next
four years according to a recent
article in C&I magazine. According to the Chronicles
of Higher Learning, the top 20 research-intensive
universities will see a 2.5 percent increase in research funding. The
country also will invest £220
million ($350.7) in the UK Centre for Medical Research and
Innovation.
In July, ahead of the pending budget cuts, Cameron unveiled
a
"Big Society" plan focused on
public-private partnerships and civic involvement.
Cameron's plan will be financed through the new
Big Society Bank — a fund to help set up
partnerships, fund social enterprises and volunteer projects
focused on regional and community development. Public-private
partnerships will undertake a competitive process to receive
funding for their projects, which will cover a broad array
of services including education, economic and community
development.
The country's new infrastructure
plan also will incorporate public-private partnerships
"to specify infrastructure needs, identify the
key barriers to achieving that investment and to mobilize the
resources." The government hopes that government
spending in infrastructure will encourage private investment. The
government will attempt to leverage £40 billion ($64.8
billion) into almost £200 billion ($318.8 billion) in
infrastructure investments. The plan takes a broad definition of
infrastructure to include the country's green
economy and innovation strategies. The plan includes:
- Investing in a new low carbon economy - including a Green Investment
Bank, up to £1 billion ($1.6 billion) for one of the
world's first commercial scale carbon capture
and storage demonstration projects, and the provision of grants to
increase the uptake of electric vehicles;
- Providing the best superfast broadband in Europe by
2015 - a total of £530
million ($884.8 million) of investment over the Spending Review
period; and,
- Investing £30 billion ($47.8 billion) in
transport - including a high-speed rail
network, a Crossrail, over £10 billion ($15.9 billion)
for maintenance and investment in key road and local transport
schemes across the country and £14 billion ($22.3
billion) of funding to Network Rail to support maintenance and
investment.
return to the top of the page
Report Suggests Complete Data Collection to Overcome
Challenges in Commercializing Space-Related SBIR
Technologies
The Department of Defense (DoD) lacks complete data on the
number of technologies commercialized and therefore cannot
determine the return on its space-related SBIR investment, finds a
report by the Government Accountability Office (GAO). To meet
space-related technology needs, DoD invested $5 billion, or
approximately 11 percent of its total SBIR budget, on space-related
Phase I and Phase II contracts over fiscal years 2005-09. However,
the GAO report finds that DoD does not have a complete picture of
contract awards and does not know how effectively it is
commercializing SBIR technologies. Specifically, DoD is lacking
complete data on Phase III and is inconsistent in recording and
defining commercialization. Further, the report finds DoD does not
require the services and components to track and report the data.
The report offers three short- and long-term recommendations to
overcome the challenges, including collecting data on all SBIR
technologies that transition into DoD acquisitions or
commercial-sector products or services. Read the
report ...
return to the top of the page
Global Entrepreneurship Week Aims to Inspire Youth
This week, millions of people in more than 100 countries across
the globe will participate in activities, forums and competitions
geared toward helping young people develop the skills and knowledge
needed to grow innovative companies as part of Global Entrepreneurship Week
2010. The third annual celebration co-founded by the Kauffman
Foundation and Enterprise UK boasts participation from students,
educators, entrepreneurs, business leaders, and government
officials. In tandem with the global celebration, President Obama
proclaimed Nov. 14 through Nov. 20, 2010, as National
Entrepreneurship Week, celebrating American entrepreneurs and
highlighting the administration's national
innovation strategy, which emphasizes entrepreneurship as a
catalyst for new industries, new businesses and new jobs, according
to a press release. The president's National
Advisory Council on Innovation and Entrepreneurship currently is
collecting input from across the U.S. to recommend policies to
bolster job growth.
Read more ...
return to the top of the page
American Society of Artificial Internal Organs and the New
Ventures Forum
ASAIO, the oldest society in the world
focusing on medical devices, is seeking device developers who are early in development
(pre-seed/seed stage funding) to submit abstracts to the
New Ventures Forum (NVF). The NVF is based on a partnership between ASAIO and students from MIT
Sloan School of Business that seeks to provide a forum for the
presentation of next generation medical devices and a robust
discussion of the commercialization challenges these technologies
may encounter. Approximately
three developers will be selected for 15-min presentations at ASAIO's national
meeting to be held June 2011 in Washington DC at a separate session
for the NVF.Submission does not require any fees. In January 2011 or so, student teams from MIT
Sloan will work with selected applicants to develop and refine business
plans and their presentations for the meeting. The selected applicants will present to a panel
that is made up of experts from the FDA, reimbursement consultants
and venture capitalists who will provide immediate feedback
regarding the technologies and presentations.
return to the top of the page
Recent Research
Federal Innovation Programs Essential Component to the 21st
National Economy
"Despite the clear limitations of existing
federal innovation programs, they remain important to our national
economic competitiveness," according to a new report
from the Center for American Progress. In Silos of Small
Beer, authors Maryann Feldman and Lauren Lanahan examine the
efficacy of federal innovation programs on the regional economic
development of the eastern Midwest region that includes Pittsburgh
in western Pennsylvania; and Cleveland, Akron and Youngstown in
northeast Ohio. Utilizing surveys and one-on-one interviews, the
case study not only provides insight into the efficacy of the those
federal programs, but also the interaction between actors within
the region (e.g., small and medium-sized business, venture capital
firms, nonprofit economic development agencies, state and local
governments). Researchers found several shortcomings stemming from
federal innovation programs and the region in general. However, the
report also highlighted some promising news related the emergence
of industry clusters in the region.
This region of the former "Rust
Belt" is in the midst of a successful transition from
the industrial heartland to a 21st century economy driven by
innovation, but the authors contend that flaws in the public
support structures could lead to "valleys of
death." Due to the work of private and public sector
TBED initiatives (e.g., NorTech, Innovation Works, the Pittsburgh
Life Sciences Greenhouse, JumpStart, BioEnterprise), regional
innovation and entrepreneurship is not only emerging, but also
becoming a vibrant aspect of the economy. However, small and
medium-sized businesses face a crisis in securing expansion and
working capital. Many ventures lack funding due to critical flaws
in the public support structure including:
- "Accessing federal innovation funds is
exceedingly time consuming, often defeating, and in the end usually
too small to be of enduring use"; and,
- "State and local innovation funds are pursued
to a greater degree than federal programs but are too small for the
needs of the region's firms."
Without adequate public funding, "valleys of
death" — entrepreneurs and companies
lack the financing to turn good ideas into hiring well-paid
workers, the creation of new firms and the expansions of existing
firms — may threaten the sustained growth of the
region. The report also points out that the existence federal,
state and local program financing is essential to attract private
financing in the region.
The report found some troubling news regarding knowledge about
and involvement with federal innovation programs by the
region's companies. Approximately 63 percent of firms
did not seek federal funding or work with federal programs. Many
respondents indicated, "They did not know about
the programs or did not believe they qualified."
Almost one-third of those respondents indicated they would like the
opportunity to work with the federal agencies in the future.
SBIR/STTR programs were the most active among the federal programs.
In 2007, almost 46 percent of all companies that applied for federal
funding was through SBIR/STTR programs. Of the respondents that
worked with federal agencies, 40 percent reported,
"federal funding allowed them to improve
services."
The authors also provide promising news for
the region's development:
- Firms in the region do not face a difficult task finding
management, engineering talent and well-trained workers;
- Startup companies and established small and medium-sized
business have built upon the region's historical past to build new
clusters centered around advanced manufacturing (29 percent of total firms
in Ohio) and software (24 percent in Pennsylvania); and,
- These companies recognize they operate in clusters and would
welcome coordinated efforts for their regional innovation cluster
(87.4 percent would work with a regional coordinator).
From their findings, the authors proposes several policy
prescriptions that will lead to a more effective national economy
fueled by bottom-up, locally organized innovation programs. These
regional programs should bring together federal, state and local
programs to provide region-specific support. These public-private partnerships should organize regional actors in a coordinated effort to grow their innovation clusters. The authors propose that the federal government plays a significant role in facilitating this process through the streamlining of the funding process and increased financing without monopolizing decision-making.
Read Silos of Small
Beer: A Case Study of the Efficacy of Federal Innovation Programs in a Key Midwest Regional Economy at: http://www.americanprogress.org/issues/2010/09/small_beer.html.
return to the top of the page
Staff Picks
Universities Starting to Change Their Behavior
While the short-term impact of the Great Recession has eased
slightly, survey results presented at the Association of Public and
Land-Grant Universities annual meeting show campus leaders fully
expect that the financial landscape has changed irrevocably — and
are starting to change their behavior (if slowly) in response.
Read more ...
How They Sell You What You Don't
Understand
This intriguing Washington Post article
looks at the creation and marketing of the iPad and Kotex to
demonstrate how new markets are created from products nobody
thought they needed.
Read more ...
VC4Africa Launches Entrepreneur/Investor
Matchmaking
VC4Africa announced the launch of an
online community dedicated to connecting innovative, Africa-based
entrepreneurs (and their ideas) with access to knowledge, markets
and capital — i.e. mentors, business partners and
investors.
Read more ...
$10M to 11 Florida Universities for Economic Growth
Universities competed for a share of $10 million in the final phase
of the New Florida Initiative, a program designed to use the higher
education system to "transform the
state's economic portfolio" —
broaden its economic base in ways that will yield a high return on
investment.
Read more ...
MD Launches Pilot Program with CA on Stem Cell
Research
The Maryland Stem Cell Research Fund said it will launch a pilot
program with the California Institute for Regenerative Medicine to
jump-start stem cell research across geographic boundaries.
Read more ...
NC Census Finds more than 12,000 Green Energy Jobs
The North Carolina Sustainable Energy Association (NCSEA) has
released the 2010 North Carolina Renewable Energy and Energy
Efficiency Industries Census, which estimates12,500 green energy
jobs exist across the state. NCSEA says it is the only organization
in the nation that conducts an annual statewide survey of
sustainable energy firms.
Read more ...
Translational Neuroscience Projected to become $145 Billion
Industry
In an op-ed piece, Mark Robinson describes the possible impact
of translational neuroscience on the field of neuroscience and on
economic development. Neurotechnology (brain-based devices, drugs
and diagnostics) is projected to become a $145 billion industry.
Read more ...
return to the top of the page
