State Tech-based State Tech-based Economic Development: Economic Development:

A National Perspective A National Perspective

Presentation by:

Dan Berglund

March 19, 2009

State Science and State Science and Technology InstituteTechnology Institute

Mission

• Leads, supports, and strengthens efforts to improve state and regional economies through science, technology, and innovation

Funders

• Carnegie Corporation

• Kauffman Foundation

• MEP

• More than 180 state, local, and university TBED organizations

What is TBED?What is TBED?Approach used to help create a climate where firms that

constantly innovate and maximize the use of technology can thrive

Emphasis: “grow your own”

Can be powerful partner with conventional economic development’s recruitment of companies

Why do This?Why do This? Global competition

Lesser-skilled, lower wage jobs outsourced, or done more competitively, overseas

Quality jobs Technology industries’ wages average 84 percent more than U.S.

average

$69,000 vs. $37,500 (2003)

Changing demands of industry

Because of the growing technology-intensity of all industry, citizens’ success is increasingly dependent on their ability to learn, adapt, and contribute to innovation

Kentucky vs. North CarolinaKentucky vs. North Carolina

State Average Personal Per Capita Income as a

Percentage of US Average Personal Per Capita Income

0.6

0.65

0.7

0.75

0.8

0.85

0.9

0.95

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Sta

te A

vg

Inc

om

e/ U

S A

ve

rag

e In

co

me

NC

KY

Major New InitiativesMajor New Initiatives Legislatures approved

• AZ-- $25M/year for four years for 21st Century Fund

• AR– up to $140M for various TBED initiatives

• CA-- $70M for two energy research centers

• FL-- $29.5M for Opportunity Fund; $180M for research

• IN-- $20M Life Sciences Fund

• IA-- $25M for Iowa Power Fund; $25M for next 3 years

• MO-- $15M for several new TBED initiatives

• WA-- $70M over biennium for Life Sciences Discovery Fund; 10 year commitment of $35M/year

Energy in 2007Energy in 2007 Heavy emphasis on research

• Specific centers or demonstration plants

• CA ($70M), FL ($20M), NC ($5M), OK ($40M), OR ($6.7M), TN ($51.6M)

• Pool of funds to compete for

• IA-- $25M w’ $75M to come

• MN-- $5.65M

• NM-- $2M

• ND-- $14.9M

• TN– $13M

Focus on Energy Continues Legislature appropriated funding in 2008

• AK-- $50M for Renewable Energy Grant Fund; up to $250M

• CO-- $7.65M for Clean Energy Fund; $2M for Colorado Renewable Energy Authority

• FL-- $50M for the Florida Energy Consortium for R&D

• HI-- $8.7M for Hawaii Renewable Hydrogen Program

• KY-- $7M for Energy R&D Fund

• MI-- $45M for Centers of Energy Excellence

• NM-- $1M for solar energy research park

• OH-- $150M for advanced and renewable energy distribution

• PA-- $40M for alternative energy development program

Elements for Elements for Tech-based EconomyTech-based Economy

Intellectual infrastructure Spillovers of knowledge

• from universities

• from informal networks Physical infrastructure Technically skilled workforce Capital Entrepreneurial culture Quality of life

Intellectual Intellectual infrastructure activitiesinfrastructure activities

Strengthen state’s higher education system R&D capacity

• Example: Kentucky’s Bucks for Brains

Invest in basic research in hopes of seeding economic development and new industries

• Example: California’s Embryonic Stem Cell Institute

Invest in higher ed in areas of industrial relevance

• Example: Georgia Research Alliance

Invest in areas to diversify economy

• Example: Michigan’s Life Sciences Corridor, Prop 301

Encourage greater university-industry interaction

• Example: Maryland Industrial Partnerships Program

Improving Higher Ed Infrastructure Improving Higher Ed Infrastructure EmbracedEmbraced

Legislature appropriated funding

• AZ-- $25M for 21st Century Fund

• CA-- $70M for two energy research centers

• FL-- $80M for genomic res inst; $100M for Ctrs of Excellence

• ID-- $1.5M for Higher Education Research Council

• IN-- $20M Life Sciences Fund

• MO-- $13.4M for animal health & nutrition, renewable energy & plant sci

• NC– $25M to UNC-Chapel Hill for cancer research

• ND-- $20M for Centers of Excellence

• OH-- $100M for Ohio Research Scholars

• OK-- $75M for endowed chairs

• OR-- $11.5M for signature research centers

• WA-- $70M for Life Sciences Discovery Fund

Higher Ed 2008-- Scholars Legislature appropriated funding in 2008

• KY-- $60M for Bucks for Brains

• LA-- $8M one-time funding for endowed chairs and professorships

• SC-- $30M for Endowed Chairs Program

• UT-- $32.2M for USTAR

• WV-- $50M for Bucks for Brains

Spillovers of KnowledgeSpillovers of Knowledge Identify and remove barriers to commercialization of university-

developed technology

• Example: Oklahoma and Oregon

Encourage commercialization of university-developed technology

• Example: Utah’s Centers of Excellence

Encourage commercialization of federal lab technology

• Example: Technology Ventures Corporation

Provide seed funding to industry associations and technology councils

• Examples: MD, VA, and WA; more than 200 groups

Spillovers of KnowledgeSpillovers of Knowledge Improve competitiveness of existing manufacturers

• Example: Manufacturing Extension Partnership

Physical InfrastructurePhysical Infrastructure Research parks

• Example: Centennial Campus

Examine quality of infrastructure

• Example: e-Com Ohio, ConnectKentucky

Improve it through public or private action

• Example: Berkshire Connect, e-NC

Technically Skilled WorkforceTechnically Skilled Workforce Increase exposure to math & science in K-12

• Example: Maine’s Laptops for 7th graders

Encourage more students to enter S&E fields

• Examples: SciTech Scholars and GI Bill for the New Economy in Pennsylvania

Create internships to link students with jobs in-state

• Example: North Dakota “Operation Intern”

Subsidize tuition for undergraduate education

• Example: Hope Scholarships

Training for workers in technology-based companies

• Example: Maryland’s Partnership for Workforce Quality

CapitalCapital Use state funds to invest in technology companies

• Example: Massachusetts Technology Development Corporation

Use state funds to leverage private funds to invest in technology companies

• Example: Maryland Venture Capital Trust

Encourage angel investing

• Example: Arizona angel investor tax credit

Provide assistance to companies to access financing sources

• Examples: Oklahoma Tech Comm Center, Venture capital conferences, SBIR assistance

Entrepreneurial CultureEntrepreneurial Culture Improve survival rate of start-up companies

• Example: Ohio’s Edison Incubators

Work intensively with entrepreneurs to develop their businesses

• Example: Oklahoma Technology Commercialization Corp.

Recruiting management talent

• Examples: Kentucky, BFTP/Central

One-stop resource directory

• Example: CREC Program Finder

Kansas Kansas Technology Enterprise Corp.

• Investment Program

• Angel Investor Tax Credit Program

• Tech-based incubators

• Five small Centers of Excellence

• KTEC Pipeline

• MEP Center

• Annual budget $12.5M Kansas BioScience Authority

• Funded by TIF-like mechanism; sunset at $581.8M

• Lead agency pursuing National Bio and Agro Defense Facility

• Recruit eminent scholars and support rising stars

• Matching federal funds

• Pre-venture financing to early-stage bioscience firms

• R&D voucher program to support university-industry partnerships

• Awarded $86.7M as of Sept 2008

Kentucky Council on Post-Secondary Education

• Research Challenge Trust Fund; $410M since 1998 Department of Commercialization and Innovation

• Coordinating and strategy organization

• Match SBIR Phase I and II awards

• High-Tech Investment Pool

• $16.9M in FY2008 (some of which flows to KSTC) Kentucky Science and Technology Corp.

• Kentucky Enterprise Fund• Kentucky R&D Voucher Program

• Kentucky Rural Innovation Program

• Kentucky New Energy Ventures

• Innovation and Commercialization Centers

• Kentucky Science and Engineering Foundation• Kentucky Commercialization Fund

• R&D Excellence Program

• SBIR/STTR Phase 0 and Phase 00 Program

Maine Maine Office of Innovation

• Coordinating body and strategy

• $10M annual budget (most directed to MTI)

Maine Technology Institute

• Business Innovation Programs

• Seed Grant Program

• Development Awards

• Accelerated Commercialization Fund

• SBIR/STTR Phase 0

• Cluster Initiative Program

• Maine Technology Asset Fund

Maine StrategyThree phases

1. Invest in R&D capacity, building up universities and non-profits such as Jackson Laboratory, Bigelow Labs using EPSCoR and R&D bond funds. Also Maine Technology Institute funds for private sector R&D. (1999- present)

2. Invest in research infrastructure competitively with focus on collaboration (FY08-09 $50 million bond).

3. Going forward – focus on commercialization – next steps increased support for technology transfer, proof of concept, entrepreneurship, venture capital

State of Maine R&D Funding – FY1999/00-2008/09

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-2008 2008-2009

Fiscal Year

To

tal R

&D

Fu

nd

ing

TOTAL GENERAL OBLIGATION BONDS

TOTAL GENERAL FUNDAPPROPRIATIONS

Maine State Funding for R&D by Program FY1996/97-FY2008/09

University of Maine System 49.9%

Maine Biomedical Research Fund 17.7%

Maine Technology Institute 14.2%

Maine Science and Technology Foundation 6.3%

Applied Technology Development Centers 3.2%

Small Enterprise Growth Fund 2.7%

Maine Marine Research Fund 2.0%

Gulf of Maine Research Laboratory 1.7%

All Other 2.4%

Total State Funding for R&D = $397,126,970

$397,126,970

Lessons LearnedLessons Learned Committed high-level leadership is required that

understands:

• Economic impact further down the road than other approaches

• Research does not always succeed

• Significant cultural differences between actors

Action should be based on:

• Understanding of needs, capabilities, and gaps

• Filling gaps to encourage change in private sector behavior

Lessons LearnedLessons Learned Characteristics of successful TBED programs

• Three hallmarks for long-term sustainability

• Do good work

• Measure whether they’re doing good work

• Telling people they’re doing good work

• Champions from more than one sector (ideally all three)

• Private sector, university, government (gov or legislature)

• Effective management and staff

• Entrepreneurial in approach/responding to change

Contact Contact InformationInformation

For more information, contact:

Dan Berglund

614.901.1690

berglund@ssti.org

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