SSTI Digest

Universities and the investment they pour into R&D are "major factors" that contribute to a region's economic growth, concludes a recent report funded by the Ewing Marion Kaufman Foundation, NCOE and the U.S. Small Business Administration (SBA). The report's results show the growth occurs in less time than traditionally has been noted and that small firms innovate at a rate almost twice that of large firms. Building on Joseph Schumpeter's "creative destruction" concept and previous research, The Influence of R&D Expenditures on New Firm Formation and Economic Growth seeks to answer two questions: 1) do R&D activities at research universities have a significant effect on local new firm formations? and 2) do R&D activities as research universities have a significant effect on local economic growth? Creative destruction, the authors say, takes place when "newly formed independently owned firms commercialize inventions that increase overall demand thereby causing economic growth... ." Existing market structures consequently are destroyed, and the market's remaining firms experience a…

The continuing layoffs of thousands of workers, particularly in the information and communication tech sectors, creates significant hardships for the affected local and regional economies. For instance, a recent Federal Reserve Bank report noted office vacancy rates in Silicon Valley hovering around 40 percent. Fortunately, highly skilled labor does not tend to stay unemployed too long. If these people cannot find work, they make it by launching their own innovative businesses. The tech-based economic development community can do a lot to encourage tech firm start-ups in a down economy.  Understanding the entrepreneurial mindset, explored from two different perspectives in the following papers, is critical for ensuring support programs address the entrepreneurs' needs. Survey Finds Entrepreneurial Energy Among Minnesota’s Dislocated Workers An intriguing potential source of new entrepreneurial energy seems to exist among recently laid off workers, according to a recent report by the Minnesota Department of Trade and Economic Development (DTED). The report,…

Leslie McGranahan, in Unprepared for Boom or Bust: Understanding the Current State Fiscal Crisis, highlights the problems that are inherent in state policy when dealing with the cyclical behavior of the economy. The article released in the 2002 3rd quarter edition of Economic Perspectives, a publication of the Federal Reserve Bank of Chicago, identifies the common problem of states cutting taxes and increasing expenditures during boom times only to be faced with revenue shortfalls during recessions. When revenues are reduced, states are forced to cut government services when they are needed most and increase taxes when taxpayers are the poorest. McGranahan identifies various reasons for the increased revenues during the boom period of the 1990s, including increased sales tax revenue from increased consumer spending, increase in revenue from taxes on capital gains and dividends, the influx of tobacco settlement money and decreases in spending on welfare programs as they have been restructured among various other reasons for enhanced revenues. While revenues were increasing, state spending was…

NASA has announced the Langley Research Center in Hampton, VA, will team with the National Institute of Aerospace Associates (NIAA), Reston, VA, to create the National Institute of Aerospace (NIA) to perform aerospace and atmospheric research, develop new technologies for the nation and help inspire the next generation of scientists and engineers. Locating the NIA at the Langley Research Center will facilitate the institute's involvement in agency sponsored research programs and foster collaboration with NASA, including access to its research facilities. This government-academic partnership is comprised of a cost reimbursable, indefinite delivery/indefinite quantity contract and a cooperative agreement. The maximum value of the contract for a five-year base period is $49 million. The value of the basic five-year cooperative agreement is $69 million. If the three five-year options are exercised under the cooperative agreement, the combined potential total value would be $379 million. NIAA is made up of seven non-profit organizations or universities including: American…

The Association of American Universities has posted the text of a September 17 letter written by Rita Colwell, Director of the National Science Foundation (NSF), that outlines the Bush Administration's opposition to S. 2817, a bill to double the size of the NSF budget over a five-year period. A similar effort has been introduced in the House by Science Committee Chairman Sherwood Boehlert (R-NY) and co-sponsored by members of both parties (see May 10, 2002 SSTI Weekly Digest). The Colwell letter was sent to Senator Ron Wyden (D-OR), chair of the Subcommittee on Science, Technology, and Space, Senate Committee on Commerce, Science, and Transportation. In it, Director Colwell states: "[T]he amounts authorized in S. 2817 do not conform to the Administration's FY 2003 Budget request for NSF. NSF supports the Administration's budget request and therefore the bill should be amended to reflect the amounts contained in the authorizing legislation the Foundation transmitted to the Congress on May 14, 2002. Moreover, Dr. John Marburger, Director of the White House Office of Science and Technology Policy (OSTP)…

The future of Virginia's Center for Innovative Technology (CIT) became clearer on Wednesday with Governor Mark Warner's release of Commonwealth of Virginia Strategic Plan for Technology for 2002-2006. CIT has a lead position for half of the eight initiatives outlined in the 129-page document. Highlights of "One Virginia," CIT's portion of the plan, call for: Increasing federal research and development funding to industry and Virginia’s colleges and universities. The plan recommends 75 Small Business Innovation Research (SBIR) proposals be submitted in March 2003 to increase Virginia's level of SBIR funding by 1 percent of the national total. Milestones also are set for more Advanced Technology Program funding in 2004. Increasing commercialization of intellectual property (IP) from Virginia’s labs, entrepreneurs, and institutions of higher education. The plan suggests publishing a guidebook of best practices and making university and laboratory IP easily accessible to interested companies by augmenting the marketing process through training and electronic channels.…

Following President Bush's call for the nation to "be aggressive about the deployment of broadband," the Technology Administration within the U.S. Department of Commerce recently issued Understanding Broadband Demand — a 25-page paper examining the state of broadband demand and usage in the U.S. and identifying successes, challenges and actions to promote more aggressive uptake. After several expert roundtables, TA concluded that, while significant supply side issues such as regulatory considerations remain, "(T)he factor most likely to accelerate broadband demand is the creation and deployment of easily understood, value-adding business and consumer applications at prices that meet the needs of the market." TA points to December 2001 research that reveals the U.S. ranked sixth internationally in the percentage of total households with broadband usage at 10.4 percent. South Korea led the world with 51.7 percent, followed by Hong Kong (26.0 percent), Canada (19.7 percent), Taiwan (18.2 percent) and Sweden (13.4 percent). Broadband usage and demand is heavily skewed toward higher…

Joined by actor Christopher Reeve and several of California's leading biotech researchers, Governor Gray Davis Sunday signed legislation designed to promote stem cell research in California. "Stem cell research is responsible research that could potentially save millions of lives," said Gov. Davis. "With world-class universities, top-flight researchers and a thriving biomedical industry, California is perfectly positioned to be a world leader in this area. I am determined to keep California at the forefront of medical research and scientific innovation." Stem cells are cells that have the ability to divide for indefinite periods in culture and to give rise to specialized cells (such as brain tissue, blood, skin, or any organ). These cells can be found in a variety of sources including human embryos, adults, umbilical cords, and placentas. Stem cells can be used to generate cells and tissue that can be used for cell therapies. Researchers say this may lead to the cure or effective treatment of diseases, conditions, and disabilities affecting more than 128 million Americans (including…

On Thursday, Illinois Governor George Ryan announced nearly $3 million in state grants for eight Illinois Technology Enterprise Corporation (ITEC) centers, quadrupling the number of ITECs. Funded by the Illinois Department of Commerce and Community Affairs (DCCA), the centers assist technology-based start-up businesses and serve as incubators for the new ventures. The grants announced for the centers will continue to fund operations at Northwestern University in Evanston and the University of Illinois in Champaign and support six new centers in Chicago, Naperville, Lemont, Peoria, Carbondale and Springfield. Based at or partnering with universities, each ITEC is expected to stimulate development of advanced technology enterprises by transforming innovation into enterprises. To meet their missions and goals, each center will measure results in terms of stimulating the formation of technology-based businesses, nurturing and incubating these new ventures, and creating new jobs in the advanced technology segments of the economy technology occupations. Open since May 2000, the state's…

A $500,000 state grant approved Thursday by South Dakota Governor Bill Janklow will help create a center in Sioux Falls for fledgling technology businesses. The center — termed the technology business accelerator project — is being developed by Forward Sioux Falls, a joint-venture economic development partnership between the Sioux Falls Area Chamber of Commerce and the Sioux Falls Development Foundation. The center will offer leased space and provide business development services such as accounting, legal assistance and business planning. To date, Forward Sioux Falls has raised approximately $2.5 million for the project. The funding includes the new state grant, a federal grant of $800,000 and $1.2 million of Forward Sioux Falls IV funds. The state grant comes from the South Dakota Future Fund. The goal of the accelerator is to diversify the regional economy by helping entrepreneurs establish the next generation of technology-related businesses. The project’s task force is in the final stages of completing architectural, construction and organizational planning. In October,…

Cluster-based economic development policy has gained wide acclaim in recent years as interest has grown in utilizing “cluster theory” in economic development. Some have found this idea to be appealing while others have been a bit less receptive of its ideas. Three recently released papers address cluster-based economic development from different angles. The first article explores options for utilizing cluster-based economic development in less advantaged regions. The second examines into evaluation techniques of cluster policy, while the third addresses concerns about “cluster theory” in general. Each is summarized below. Creating Smart Systems: A Guide to Cluster Strategies in Less Favoured Regions In Creating Smart Systems: A Guide to Cluster Strategies in Less Favoured Regions, released in April 2002 and written by Stuart Rosenfeld, strategies are presented to apply cluster-based economic development policies in lesser advantaged regions. One of the basic questions that is often asked in regional economic development is, “Why do some regions have the ability to develop and…

A regional partnership of economic development organizations, led by the Department of Energy's Pacific Northwest National Laboratory (PNNL), announced the launch of the Northwest Technology Investor Network last week. The network is an online forum that links investors and entrepreneurs in the high-tech sector. "Technology-based businesses and manufacturers from throughout the Northwest can post their business plans on the Web site, connecting them to a nationwide network of accredited investors. Investors have one-stop access to quality business plans in the high-tech sector," said Gary Spanner, manager of PNNL's Economic Development Office. The network is hosted by LocalFund, a nationally recognized company that hosts investor networks throughout the U.S. In addition to the efforts of PNNL, partners in making the network available to entrepreneurs and investors include the Tri-Cities Enterprise Center, the Tri-City Industrial Development Council, the CH2M HILL Technology Education Center, the Applied Process Engineering Laboratory, Washington State University Tri-Cities…