SSTI Digest

If states are to emerge from the recession stronger than when they went in, state policymakers must make long-term investments in economic fundamentals such as a skilled workforce, technological capacities and quality amenities, reports the Corporation for Enterprise Development (CFED). They also need help from the federal government, according to the 16th annual Development Report Card for the States by CFED, a nonpartisan Washington-based think tank.

Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP/SEP), an independent nonprofit economic development organization, has announced the Commonwealth of Pennsylvania's $2 million commitment to establish the Ben Franklin Investment Partners venture guarantee revolving fund. The fund is the first such development financing vehicle of its kind in the U.S.

The multifaceted fund provides a guarantee of up to 25 percent of any loss experienced by a group of qualified private investors – angels – in seed investments made in technology companies located in southeastern Pennsylvania. The goal is to respond to the capital needs of these early-stage companies, most of which have experienced difficulties raising early stage risk financing and other challenges as a result of the economy's downturn.

U.S. companies had $199.5 billion in R&D investment in 2000, a 9 percent increase over the 1999 total, according to the annual Survey of Industrial Research and Development published by the National Science Foundation (NSF). The survey data is presented in a recent NSF InfoBrief, which shows the total industrial R&D increase to be 7 percent after adjusting for inflation.

Company funding of R&D rose from $160.2 billion in 1999 to $180.4 billion in 2000 – a 13 percent increase – and continued its steady climb since 1953, the report notes. Meanwhile, federal funding of industrial R&D contributed to the overall increase despite falling from $22.5 billion in 1999 to $19.1 billion in 2000, a 15 percent decrease. After adjusting for inflation, company-funded R&D experienced a 10 percent increase, and federal investment dropped 17 percent.

The challenges of creating a cluster of companies in related technologies, both the processes and factors for influencing cluster development, are different than the requirements for maintaining the cluster, concludes "Old Economy" Inputs for "New Economy" Outcomes: Cluster Formation in the New Silicon Valleys. The paper contests cluster development is a combination of elements of both new economic theory focusing on increasing returns and old economic theory, which concentrated on comparative advantage.

In preparing their study, the authors analyzed geographic clusters of information and communication technology (ICT) firms from different parts of the world and stressed the importance of studying clusters in-the-making, not only clusters that were already established. ICT clusters were located in Ireland, Cambridge UK, Israel, Scandinavia, India and Taiwan, present-day Northern Virginia and Silicon Valley in the 1960s.

Several of the key economic development and science & technology positions have been filled by some of the nation's 24 new governors. Many of these individuals will be involved in setting the state's tech-based economic development agenda and determining budget cuts, reorganization plans or program eliminations to handle the money squeeze. In addition, a few other lead S&T agencies have announced top-level changes.

Arizona

Chris Cummiskey has been named director of the Government Information Technology Agency by Governor Janet Napolitano. Cummiskey served in the state senate since 1994 before running unsuccessfully for secretary of state last fall.

Placing a high priority on the biosciences as a measure for long-term economic development, the Baltimore Workforce Investment Board (BWIB) has released a strategic plan that aims to ensure growth, in part, by securing a highly motivated and well trained workforce for the city's bioscience sector.

Conducted by two consulting firms, the Baltimore Bioscience Initiative finds that the city and surrounding region already have a sizable employment base of approximately 11,000 people. The majority of this workforce is housed at university medical schools and hospitals and National Institutes of Health (NIH) laboratories, the report states. Of the 78 companies (4,800 employees) that make up the bioscience sector, however, 12-15 percent of their workforce is comprised of low-skill workers, such as lab assistants, technicians, production technicians and clinical technicians.

Sixty-nine percent of Kentucky businesses use computer technology to handle some of their business functions, but only 36 percent use the Internet and little more than 20 percent have a website, according to a report released by Governor Paul Patton's Office for the New Economy. Kentucky Prepares for the Networked World, which details computer, Internet and website use among the state's businesses, shows more than 50 percent see "no need" to use the Internet.

The report is part of the governor's connectkentucky strategic plan that is designed to give Kentucky a sophisticated information network. It was commissioned by a steering committee to respond to the governor's request to assess the condition of the Kentucky's Internet highways, high-speed on-ramps to the highways and current use of the Internet by business, government and consumers.

The patterns of research and development (R&D) activities vary considerably among those states with the most R&D expenditures, the National Science Foundation's (NSF) latest InfoBrief reports. In 2000, 87 percent of the nation's total R&D investment of $265 billion occurred in 20 states. Only 4 percent of the U.S. R&D total was accounted for by the 20 lowest ranking states. California led all states with more than $55 billion in expenditures, a 14.9 percent increase over its 1999 total; the 2000 total equals more than one-fifth of the U.S. total.

Ontario is performing from a base of strength in its transition to a knowledge-based economy, according to the Ontario Innovation Index recently released by the Ontario Science and Innovation Council (OSIC). Using 30 indicators, the report measures all aspects of the province's innovation system, from community awareness and support for science and technology (S&T) to levels of investment to support its infrastructure. It also looks at Ontario's incentives for commercialization and growth, innovative performance and innovation outcomes.

"The purpose of the index is to provide us with an ongoing portrait of Ontario's innovation environment," Dr. Suzanne Fortier, chair of OSIC, said in a press statement. "This allows the province to compare itself to other jurisdictions that are also leaders in science and innovation. We hope this will be a useful tool for government, academia and the private sector to gauge Ontario's strengths and key areas for improvement."

The U.S. General Accounting Office (GAO) has released a report describing its efforts to evaluate the New Markets Tax Credit (NMTC) Program created by Congress in 2000. The NMTC program, which has total equity of $15 billion, permits taxpayers to receive a credit against federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the taxpayer's investment must in turn be used by the CDE to provide investments in low-income communities. Credit to the taxpayer totals 39 percent of the investment and is claimed over a seven-year credit period.

Security analysts and policy makers have been concerned with information published in the open scientific literature since WWII and the Cold War. Recently the focus has shifted towards information and research in the biosciences because of the dramatic advances and potential application of this information to bioterrorism. The likelihood of government-imposed restraints on the dissemination of scientific information is of great concern to the academic research community and has become a delicate subject between national security officials and the academic community.

Some arguments for and against restricting publication of "sensitive" research were outlined at a recent conference hosted by the Monterey Institute’s Center for Nonproliferation Studies.

A new report, Just Clusters: Economic Development Strategies that Reach More People and Places, from Regional Technology Strategies, Inc. (RTS) finds that while cluster-based economic development strategies have the potential to expand opportunities for disadvantaged populations and rural regions, most current cluster strategies do not pay attention to equity issues. The project was made possible through a grant from the Ford Foundation.

Just Clusters stems from a question put to almost two dozen leading cluster experts: “Are clusters equitable and just tools for economic development or do they skew resources to those who are already better off?” Clusters refer to the competitive advantages that firms acquire when there are significant concentrations of other similar or related and interdependent businesses in a geographic region.