SSTI Digest

In China, leaders of the rapidly growing nation dogged by soaring energy needs and unrelenting pollution problems made a commitment to double the nation’s use of renewable energy resources within the next 15 years.

China’s National Development and Reform Commission (NDRC) said in November, that the government will spend as much as $180 billion on renewable energy over the next 15 years in an effort to increase renewables' share of primary energy consumption from 7 percent to 15 percent by 2020. Already, China has installed solar power in 700 remote, off-grid towns at a cost of $600 million. As many as 30 million Chinese residents live without power.

To support innovation and technology with increased accessibility for small-and medium-sized firms, Canada's Minister of Industry, David Emerson, announced a new program that will replace Technology Partnerships Canada (TPC).

Minister Emerson said in a press release that the new program will be accessible to more industries, tightly focused on transformative technologies, and more transparent to taxpayers. The goal of TPC is to ensure leading-edge industrial research continues in Canada and that Canadian firms remain competitive in the global economy.

If the innovation powerhouse that represents the U.S. economy for the past century were a cinder block foundation of a house, then China and India would present two of the more significant cracks. These two great nations may grab the headlines, but the improved innovation and research capacities of any country provide new challenges for continued U.S. domination of the world's economy. As this week's article on the Czech Republic and Singapore reveals, these are just two more blocks in the U.S. wall to show stress fractures.

"Now, hold on SSTI," you may be saying to yourself. "You want me to lose sleep over the smaller economies, too?" Worry and lose sleep? No. But we do want more people to wake up to what's going on in the basement.

While the U.S. commitment to science is threatened by flattening federal R&D investments, two more countries demonstrate their shared belief that the way to economic prosperity is through science and innovation.

Czech Republic

The Czech Republic has outlined a five-year economic development plan that calls for doubling R&D's share of the gross domestic product by 2010. To achieve that goal requires increasing government spending for science and innovation by 20-25 percent annually, according to Martin Jahn, deputy prime minister for the economy.

Should policymakers focus on urban core centers as keys to economic growth or seek greater economic equity in the less developed periphery? A new study on regional policy and economic geography suggest policies should be directed toward core growth.

In New Economic Geography, Empirics, and Regional Policy, the authors examine historic development patterns in Europe and test a new geographic model with time series data. Authors Steven Brakman, Harry Garretsen, Joeri Gorter, Albert van der Horst, and Marc Schramm conclude that economic activity quickly balances in favor of existing central clusters regardless of policies. In fact, policies focused on building regional infrastructure, as a way to pull commerce into less developed regions, often results in drawing activity back to core areas over time.

The study highlights the following policy-related conclusions:

The U.S. can watch as another country significantly expands its investments in innovation. This time it's France, as newly appointed Prime Minister Dominique de Villepin last month announced that the national government will double its funding from €500 million to €1 billion for the Industrial Innovation Agency (IIA), and give €350 million to the National Research Agency (ANR).

A study suggests policies enacted in 1999 to encourage cooperative research, establish tech transfer structures and provide venture capital contributed to a dramatic shift in the biotech topography in France. In “Start-ups, firm growth and the consolidation of the French biotech industry,” authors Eric Avenel, Frederic Corolleur, Caroline Gauthier, and Carole Rieu compiled an original dataset on biotech firms to test several growth models on the French landscape.

The study from the Grenoble Applied Economics Laboratory examines the biotech landscape from three location types: administrative regions, science genopoles, and clusters with more than 10 biotech firms within 20 kilometers. Administrative regions are comparable to states, while genopoles would be comparable to Metropolitan Statistical Areas in the U.S. with government established science parks.

While many regions, states and countries are lamenting a drain of talent from their area, the Pakistan Higher Education Commission is taking an opposite strategy to strengthen the nation's science and research capacity: sending up to 15,000 of its brightest students to study selected disciplines abroad through its Foreign Ph.D. Scholarship Program.

Students may choose from selected programs in science, engineering and technology at universities in Austria, China, France, Germany, Netherlands or Sweden. In return, scholarship recipients must commit to serve in Pakistan for a minimum of five years after completion of study, preferably in an institution of higher education.

In the opening ceremony of the 2005 FORTUNE Global Forum, held in Beijing on May 16, Chinese President Hu Jintao broadly outlined the course his country is taking to reach a goal of quadrupling its 2000 Gross Domestic Product (GDP) by the year 2020. Science, technology and innovation figure prominently in the strategy.

President Hu discussed the recent historical rise in the nation's economic performance, saying, "In a short span of 26 years from 1978 to 2004, China's GDP increased from $147.3 billion to $1.6494 trillion with an average annual growth rate of 9.4 percent. Its foreign trade rose from $20.6 billion to $1.1548 trillion, averaging an annual growth rate of over 16 percent. China's foreign exchange reserve increased from 167m to 609.9bn." (Note: All amounts are in U.S. Dollars.)

Recognizing the economic benefits of engaging young people in science and technology, Ontario's McGuinty government recently launched the Youth Science and Technology Outreach Program. The new program links high school students with researchers to support in-depth mentorship experience and postsecondary career advice.

The Provincial government will provide $3 million over three years to fund projects that include speaking engagements, workshops and demonstration projects, short-term projects in a lab or field research site, student science competitions, expert-in-residence programs, and lab mentorships. According to the Ministry of Economic Development and Trade, the goals of the program are to:

Do tax credits pave the way for more investment in R&D and equity investments in new enterprises? Or, do they reward companies and venture capitalists for investments they would have made anyway?

Discussions on these questions can become quite heated and fueled by data supportive of both sides, as two new academic analyses demonstrate.

The recent studies examine two Canadian business tax credits, but come to opposite conclusions. One study reviews the impact of Canadian R&D tax credits, a permanent feature of the Canadian tax code. A second study focuses on a Quebecquoise investor credit established a decade ago to encourage local venture capital to the region.

There are several factors that go into location decisions for biomedical firms. Proximity to strong university research capacity, other biotech businesses, and technically competent workers are all important considerations. With the financial investments many states and localities are making toward the life sciences, however, the field of prospective locations for successfully launching a biotech firm has grown considerably larger than the "usual suspects."

That is a good thing, based on a recent study by the Boyd Company, a Princeton-based location consulting firm. As highly leveraged biotech start-ups increasingly are pressured by their venture capital backers to reduce operating costs, many smaller cities may present attractive alternatives for new biomedical industry investments, the study suggests.