SSTI Digest

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.)

Washington Gov. Christine Gregoire last week signed a bill creating the Life Sciences Discovery Fund (see the Feb. 7 issue of the Digest). The fund will support life sciences research using $350 million in strategic "bonus" payments Washington will receive beginning in 2008 for its leadership role in the tobacco settlement. The state will receive the funds over a 10-year period. By leveraging funds from private and federal sources, the fund's total impact is expected to exceed $1 billion and is anticipated to drive important health care innovations, new company formation and job creation across the state.

One starts up. Another bites the dust. The Certified Capital Company (CAPCO) Program, a complicated and controversial tool used by some states to encourage venture capital investments, finds its beginnings in one region while seeing its demise in yet another.

The D.C. CAPCO program, officially launched today after being enacted in 2004 by the D.C. Council, will afford insurance companies with a tax credit against their premium taxes in exchange for making $50 million in equity investments over 10 years. The program's three fund managers - Wilshire D.C. Partners, Advantage Capital Partners and Enhanced Capital Partners - will look to invest in small and emerging businesses, including manufacturing centers and technology companies, through three initial funds.

Arizona's investment and technology communities are the anticipated winners from the state legislature's recent passage of a tax credit encouraging angel capital investments in start-up Arizona tech firms.

Senate Bill 1335 provides individual investors, limited partnerships or "S" corporations a 10 percent state tax credit per year for three years for investments in qualified technology companies. For investments in qualified biotech firms or for technology businesses located in rural areas, the credit climbs to 12 percent per year for two years and 11 percent the third year. Investments must be a minimum of $25,000 and only the first $250,000 of any investment is eligible for the tax credit.

As expected, Massachusetts Gov. Mitt Romney rejected last week Senate Bill 2039, the bill supporting stem cell research. Exercising a power not enjoyed by all governors, Gov. Romney sent the measure back to the legislature with four amendments for consideration, rather than vetoing the measure.

According to a May 12, 2005 article in the Boston Globe, one amendment would prohibit somatic cell nuclear transfer, or therapeutic cloning, while the other three ask the legislature to reconsider the bill's position on when life begins, to clarify monetary compensation for women who donate eggs for research, and to define the circumstances appropriate for researchers to create human life. Gov. Romney also sent a letter to lawmakers stating the bill would change the definition of an unborn child that dates back to 1974, the article states.

Moving forward with the governor's statewide broadband initiative, the ConnectKentucky Steering Committee and Gov. Ernie Fletcher recently unveiled Phase I Maps to illustrate service gaps and to serve as an economic development resource for communities.

The phase is intended to produce maps using Geographic Information System (GIS) technology to provide a comprehensive statewide inventory of existing broadband service and infrastructure. The committee will use the GIS maps and other demand and supply-side incentives toward full broadband deployment by 2007 under the governor's Prescription for Innovation initiative (see the Oct. 25 issue of the Digest). A second phase of the mapping project will identify expansion plans for 2005.

While many states are striving to increase broadband availability (see the Kentucky story above, for example), a Providence-based nonprofit released a study this month promoting the feasibility of making Rhode Island the first entirely networked state for broadband wireless.

The Business Innovation Factory initiated the Rhode Island Wireless Innovation Networks (RI-WINs) to assess the demand for a statewide broadband wireless network and to determine the technological and economic feasibility of the network. The study also proposed an operating model for RI-WINs drawing on a broad public-private partnership.

The South represents 20 percent of the nation's economic activity but attracts only 9 percent of the total U.S. venture capital invested. In an effort to bring those numbers closer together, the Southern Growth Policies Board recently announced the creation of a multi-state task force dubbed VentureSouth. Virginia Gov. Mark Warner, a former venture capitalist himself, will chair the group as it develops strategies to increase the flow of venture capital in the 14-state region.

Membership in the task force will be capped at 100 firms, with participants primarily coming from the private sector - entrepreneurs and professionals in the venture capital industry. The remaining members will be comprised of policymakers - governors, legislators and state government science and technology directors.  The membership fee to join VentureSouth is $500.

Sometimes when people are surrounded by others who share backgrounds, beliefs or opinions, they assume everyone thinks that way -- or should. It is one of the negative side effects or symptoms of the phenomenon known as "group think."

It could be easy, for example, for Digest readers deeply immersed in building tech-based economies - surrounded by college-educated researchers, scientists, MBAs, lawyers and engineers - to believe that obtaining a degree after high school is a fundamental key to future economic prosperity. Studies support the idea that the higher level of education attained, the higher one's income will be. We assume the only hurdles are affordability or access and set goals then to double the number of college graduates.

Encouraging economic growth in rural America is the topic of a recent report, a new $500 million economic development investment program, and an upcoming conference worth further investigation.

A child born in the U.S. today who obtains a master's degree directly after college and high school will have been in the job market for only 1-2 years in 2030. Many people in the tech-based economic development community want that girl or boy to study math, science or engineering. A more basic question, though, is where will that child live as a young adult? If you guessed in the West or South, you have a good chance of being right, based on the latest population projections from the U.S. Census Bureau.

The first conference mailer went to the post office yesterday, but we're too excited to delay announcing that the website for SSTI's 9th Annual Conference is now available to accept registrations and provide preliminary information for the tech-based economic development (TBED) community's premier professional development event of the year. The conference will be held on Oct. 19-21, 2005, at the beautiful Intercontinental Buckhead-Atlanta.