Fed Looks at Biotech Policies, Payoffs for States

Specialization may be the key to successful economic development strategies based on the life sciences, suggests the September issue of the fedgazette, published by the Federal Reserve Bank of Minneapolis. This month's entire e-zine focuses on two issues of importance to many state and local tech-based economic development professionals — biotechnology and clusters.

Because the intellectual capital of the anticipated biotech revolution is highly mobile and the spillovers of bioscience research tend to be localized and concentrated geographically, the broad-brush approaches adopted by many states to build a biotech sector are not likely to have the desired payoff, fedgazette editor Ronald Wirtz writes in the cover article.

“One possible strategy is to eschew efforts to catch up to already hot biotech sectors, like biopharma. Rather, economies that benefit from the bio-revolution likely will be those that identify new biotech opportunities and applications coming up the road that also mesh with regional strengths.”

It follows then, not surprisingly, that Wirtz suggests the five Upper Midwest states represented by the Federal Reserve Bank of Minneapolis should look more closely at niches in ag-biotech, such as commodity-specific applications, biofuels, functional foods, bio-modified manufacturing and the continually controversial genetically modified organisms (GMOs).

The nature of the ag-biotech side of life science research, in which 70 to 90 percent of the patents come from industry rather than universities according to one of the article sources, may play well into the hands of regions lacking an academic biotech research powerhouse. Lower land rents and the availability of people to fill biotech’s many low-skill jobs also can provide an economic development edge for communities in the region, Wirtz adds.

Other articles discuss the difficulty in defining and measuring the biotech sector, given its broad applicability. The September issue of the fedgazette is available at: http://minneapolisfed.org/pubs/fedgaz/index.cfm