SSTI Digest

A community essentially has two options for strategies to diversify its economic base: traditional economic development or technology-based economic development (TBED). The traditional approach of recruiting or inducing companies to relocate to their community from elsewhere creates an atmosphere of competition, rivalry and one-upmanship among cities and regions as they bid to buy firms' location decisions. Often, it is also difficult for small and mid-sized communities to compete on these terms. The result, particularly with large manufacturing facilities, can be publicly financed incentive packages that may prove economically more expensive to a community than the benefits promised by the new development. Increasingly, economic development professionals are learning those promised jobs may never fully materialize.

Since passage of the Bayh-Dole Act of 1980, universities across the country have established transfer technology offices to assist in commercializing academic inventions. Efforts to transfer university inventions to the market continue to be a difficult proposition, with less than a third of disclosed inventions resulting in license. Start-ups garner only one in eight licenses.

Many community and economic development professionals believe the report released last Tuesday should have predated the President's 2006 Budget to consolidate or eliminate 18 federal programs used by most parts of the country to support growth and well-being (see the Feb. 14 issue of the Digest). Among those targeted in the move are the Community Development Block Grants (CDBG) and the entire Economic Development Administration (EDA) slate of grant programs. What was proposed in the Administration's budget request was a smaller program called Strengthening America's Communities Initiative, or SACI for short.

Coming off the heels of the state legislature's approval of a new Emerging Technologies Fund (see the June 13 issue of the Digest), Gov. Rick Perry announced last Saturday that Texas would provide a $50 million grant to establish the Texas Institute for Genomic Medicine (TIGM). The Emerging Tech Fund remains untouched, however, as the $50 million will be taken out of the original $295 million appropriated for the governor's discretionary Texas Enterprise Fund.

The nonprofit TIGM is a collaborative effort between the Texas A&M University System and Lexicon Genetics, a private technology firm located in Woodland, Texas, north of Houston. Lexicon will receive $35 million of the grant to create two copies of its library of 350,000 mouse stem cell lines for use by TIGM to identify new drugs for combating human diseases.

Incubators provide an integral and flexible component of many communities' tech-based economic development efforts. When successful, business incubators can provide a focal point for encouraging entrepreneurship in even the smallest cities and metropolitan areas. Ample evidence is presented in the latest survey of incubators supported through the multifaceted $35 million Entrepreneurship Initiative of the Appalachian Regional Commission (ARC).

Since 1978, ARC has made 108 grants totalling more than $17 million for business incubation projects. Using 2004 data gathered from 76 of the 85 known incubators in the region, the report summary yields:

For the second year in a row, the Maryland Technology Development Corporation (TEDCO) was the most active source of early-stage or angel capital, according to the July issue of Entrepreneur magazine. The list of the top 100 funds, based on number of deals made during 2004, is based on the results of the quarterly MoneyTree survey published by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association (NVCA).

Forty-six of the venture capital sources on the list are from California; 17 are from Massachusetts. Some of the well-known angel organizations, such as Tech Coast Angels, Band of Angels and the Angels Forum and the Halow Fund (all from California), were in the top firms with 7-8 deals.

In signing the state budget last Thursday, Wisconsin Gov. Jim Doyle approved spending $5 million for two new programs supporting agricultural and forestry bio-based industrial development. Bio-based industries convert the carbohydrates in plants into fuels, polymers, fabrics, and other chemicals. Advocates for bio-based fuels industries argue every function now served by petro-chemicals also can be more simply, safely and sustainably served by bio-chemicals.

As part of the governor's new biobased initiative announced in June, the two newly funded programs include:

As a precursor to a report expected next month from the President's Commission on Tax Reform, the National League of Cities (NLC) recently issued its findings from a survey citing disapproval of how state and federal tax issues are being handled by the Administration, Congress, and state governors and legislatures. NLC outlined recommendations and called on the federal government to convene a national economic summit to address the issues.

According to a research brief summarizing the report, Local Budget and Tax Policy in the U.S.: Perceptions of City Officials, 84 percent of responding city officials said the federal deficit, in particular, poses a problem for cities. The report points to several governmental challenges that are negatively impacting fiscal policy. Among those challenges are federal and state unfunded mandates, cuts or limits in federal and state support, and federal or state preemption of local authority.

Can patent insurance protect innovations from predators? Yes, particularly if innovators insure their innovation before rivals enter the market, according to Financing and the Protection of Innovators, a discussion paper by Gerard Llobet and Javier Suarez from the Centre for Economic Policy Research.

According to Llobet and Suarez, patents offer limited protection if the innovators cannot demonstrate a willingness and ability to litigate patent predation. Competitors appear to avoid preying upon innovations from large companies that have litigated past patent infractions. However, rivals may view innovators without a history of legal action as easy prey unless they can demonstrate additional protection for their intellectual property.

Ronnie Bryant, president and chief operating officer for the Pittsburgh Regional Alliance, is leaving to become president and CEO of the 16-county Charlotte Regional Partnership in North Carolina.

Albert Clough is the new Commissioner of the Alaska Department of Commerce, Community and Economic Development, following the resignation of Edgar Blatchford last week.

Pat Dillon has taken a position with the Wisconsin Entrepreneurs’ Network, an initiative to support high tech, high growth companies in Wisconsin.

Ronnie Bryant, president and chief operating officer for the Pittsburgh Regional Alliance, is leaving to become president and CEO of the 16-county Charlotte Regional Partnership in North Carolina.

Albert Clough is the new Commissioner of the Alaska Department of Commerce, Community and Economic Development, following the resignation of Edgar Blatchford last week.