SSTI Digest

Emphasis in the defense research agenda would continue to shift toward advanced technology development and defense-wide programs in Fiscal Year 2003, based on the House and Senate versions of the defense authorization bills that have cleared the respective armed services committees. [Note: authorization bills set the parameters for program spending levels; Congress must pass separate appropriation bills each year to allocate funds to specific programs or agencies.]

According to a synopsis provided in FYI #64, the American Institute of Physics (AIP) Bulletin of Science Policy News (May 30, 2002), spending for applied research will very likely decrease while basic research gets mixed signals between House and Senate versions of the bill. Advanced technology development could see an increase of 8-9.4 percent.

The Institute for Competitiveness and Prosperity — the research arm of Ontario's Task Force on Competitiveness, Productivity and Economic Progress — has released a comprehensive view of Ontario's industry clusters, showing for the first time how they compare with similar clusters in other provinces and U.S. states.

A View of Ontario: Ontario's Clusters of Innovation serves as the Institute's first Working Paper on Ontario's competitiveness, productivity and economic progress. It draws on the analytical approach of Harvard Business School's Michael Porter and is the result of collaboration with the Institute for Strategy and Competitiveness at Harvard.

NASA Administrator Sean O'Keefe and Biotechnology Industry Organization (BIO) President Carl B. Feldbaum signed a memorandum of understanding this week to expand cooperation between NASA and the biotechnology industry.

Biotechnology research already is being integrated into NASA's programs. For example, the upcoming launch of Space Shuttle Endeavour to the International Space Station (ISS) will transport a biotechnology company's experiment to the station that will compare human liver-cell function in space with that on Earth. This research could aid in the development of treatments for people in need of liver transplants.

A wake-up call. That's what the final report of the Lincoln Technology Council said the city received after learning one of its top employers was expanding its operations in a nearby city instead of Lincoln because of perceived weaknesses in Lincoln's telecommunications infrastructure. The result was Mayor Don Wesely creating the Mayor's Technology Council in February last year to "enhance the community's core technology strengths and infrastructure to achieve a competitive advantage for Lincoln as a leading city for technology-based businesses and to promote economic development."

The National Science Foundation (NSF) has published the Science & Engineering State Profiles: 1999-2000, an online database. One-page statistical summaries are given for each state, the District of Columbia, and Puerto Rico, permitting calculation of per capita statistics and rankings.

The report is geared to allow easy reference across 30 science and engineering statistics, the distribution of federal R&D obligations by department and performer, and industrial and academic R&D expenditures. Additionally, it includes figures for population, per capita income, labor force, patents, small business innovation research awards, and gross state product.

In the SBIR Phase I award/proposal table SSTI released with the May 10, 2002 issue of the SSTI Weekly Digest, the figures reported under "Health" inadvertently included both Phase I and Phase II proposals for the National Institutes of Health. As a result of the adjustment, the award-to-proposal ratio also has been corrected. The revised table has been republished at: http://www.ssti.org/Digest/Tables/050302t.htm

New York's initiatives to support technology-based economic development (TBED) will share more than $520 million in state appropriations during Fiscal Year 2003. The highlight: two originally competing budget proposals to support university-based centers of excellence survived with a combined $470 million in state funds (see the Jan. 5, 2001 issue of the SSTI Weekly Digest for background). Most of New York's other TBED initiatives also fared well in the new budget, running counter to the fiscal environment facing TBED in several other states.

Governor Pataki's Centers of Excellence proposal will receive $250 million to support major upgrades of research facilities and other high-technology and biotechnology capital projects, allowing colleges, universities and research institutions to secure research funding that will lead to new job creation.

Senate Bill 1844, signed by Governor Jeb Bush this week, provides $30 million to create Centers of Excellence and includes several other key elements of the Florida Technology Development Initiative, proposed by Governor Bush in his State of the State speech this year.

The Centers of Excellence program is intended to foster innovative, cutting-edge technology research at Florida's colleges and universities, develop commercially viable applications for that research, and recruit high-tech industries and thinkers to the state.

Technology sectors highlighted in the announcement include simulation, optics and space technology, biotechnology, nanotechnology, and artificial intelligence. The legislation permits the centers to support new facilities, laboratories and endowed academic chairs.

Other provisions of the bill include:

Interest by would-be entrepreneurs to start new businesses declined in 2001 as the economic recession and lingering effects of the dot.com crash dampened enthusiasm for launching new ventures, according to the Global Entrepreneurship Monitor (GEM) 2001 National Entrepreneurship Assessment for the United States of America. The trend is expected to continue for the near term with a strong rebound later in the year.

Conducted by Babson College and the Kauffman Center for Entrepreneurial Leadership, the U.S. GEM study shows entrepreneurial activity in the U.S. last year plunged 30 percent to 11.7 percent of adults from 16.7 percent in 2000. The measurement reflects the percentage of the U.S. adult population involved in the start-up process or in a business less than four years old.

Program expected to yield $15B in new capital for underserved communities

Six national, community-based financial services organizations recently announced the formation of New Markets Advisors to help investors identify opportunities using the New Markets Tax Credit.

The largest federal tax credit of its kind in nearly 20 years, the New Markets Tax Credit gives investors such as banks, insurers, investment funds, corporations and individuals a credit against federal income tax for new investments in eligible businesses and commercial projects in low- and moderate- income areas. The tax credit program is expected to stimulate the investment of $15 billion in new capital to accelerate the pace of business development in these areas.

Earlier this month, Kansas passed legislation to encourage $40 million in private equity investment. Alabama passed a $100 million bill for CAPCOs. Similar legislation aimed to increase the amount of venture capital available locally has passed at least one chamber in the South Carolina and Ohio state legislatures. Pennsylvania pension funds, after taking a bath in the dot.com crash and current recession are increasing the percentage of their portfolios placed in venture capital.

States and localities across the country, seeing the quarterly surveys report the continuing decline in venture capital deals (such as the Moneytree survey reported in last week's Digest), are moving to encourage more VC investment. The theory is by increasing the supply of venture capital available, more deals will be made and economic growth will follow.

But is it good public policy?

Generating $48.7 million in tax revenues to local and state governments and 5,949 direct jobs, the 31 tenants of the University of Arizona Science & Technology Park had an estimated direct impact in excess of $1 billion in FY 2000-01, according to a new report from the university's Office of Economic Development.

Impact of the University of Arizona Science and Technology Park on The Economy of Tucson and Pima County: An Economic and Revenue Impact Analysis for FY 2000-2001 lays out the local and regional direct and indirect impact of the sixth largest university research park in the U.S. In addition to tenant businesses, the park includes a high-tech incubator and high school.

In comparison with the 1999 study of the park's impact, the researchers found: