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The Economic Value ofAcademic Research andDevelopment in Wisconsin      September 2004      © Wisconsin Technology Council...
TABLE OF CONTENTS    Executive Summary                                                             1    Academic R&D The V...
EXECUTIVE SUMMARYWithout a vibrant foundation in academic research      UW-Madison is growing in terms of the numberand de...
n If the jobs created by academic research spend-        n Wisconsin fell just outside the top 20 states (22nd    ing in W...
ACADEMIC R&D                                  THE VALUE OF ACADEMIC                                              RESEARCH ...
Academic research accounted for more jobs than    existed in total in Columbia County (28,128), the    city of La Crosse (...
WHAT IS A RESEARCH UNIVERSITY            OR INSTITUTION?In essence, a research institution emphasizes as       the Associa...
“... innovation is king and “knowledge-    based” solutions are being pursued for    Wisconsinʼs economic growth ...”     ...
Today, about 250 U.S. universities consider them-      to inventions made during federally sponsoredselves research univer...
THE BAYH-DOLE ACT AND THE EXPANSION                                                                                       ...
Universities must license the rights to innovations      In the 1960s and 70s, the pace of innovationto industry for comme...
MEASURING THE ECONOMIC IMPACT                                                                               OF ACADEMIC R&...
In 2000, a study by the Association of American       However, AAU continued, it is possible to “achieveUniversities (AAU)...
Top Ten U.S. Universities Receiving Patents (2003)500                439250100                            139          127...
������������������������������������������������������������������������������������������      in 1000ʼs of jobs500      ...
“The more skilled the workforce the better that     workforce is able to absorb, implement and     adapt ideas that come f...
A word about methodologyThe economic multiplier of 36 jobs per $1 million spent on academic R&D was developed by the Assoc...
Dowrick noted that academic R&D is a part of the     “new growth theory” that came into prominence in      Duke generated ...
“The driving force of economic growthis investment in human capital – skillsand ideas – rather than investment inmachines ...
HOW DOES WISCONSINʼS ACADEMIC                                                                     R&D COMPARE TO OTHER STA...
The SSTI breakdown of the funding sources for           Wisconsinʼs intensity level was 1.55 percentWisconsinʼs academic R...
Sources of Academic R&D Spending in Wisconsin            in millions of dollars     $700     $650      662,100,000     $60...
Ten states account for two-thirds of all R&D spending in the United States            Remaining 39 States         TOP 10 S...
WHAT ARE OTHER STATES DOING TO SUPPORT                                                             TECHNOLOGY AND ACADEMIC...
States have become particularly adept at leverag-       between industry, non-profit organizations, localing funds and fost...
and alternative fuels development, environmental         by Promoting University-Industry Tech Transfer,”     protection, ...
PUBLIC SUPPORT FOR THE UW SYSTEM                                COMPARED TO OTHER STATESAt a time when states face budget ...
CONCLUSIONS AND RECOMMENDATIONS     The evidence is mounting that the UW System              n The number of lecture secti...
Specific recommendations:n The governor and Legislature should continue           n The UW-Madison, the Medical College of ...
“If the slide in higher education     funding effort continues, the     academic R&D infrastructure in     Wisconsin could...
STATE-BY-STATE OVERVIEWHere are examples of what selected states are doing to foster job growth and technology development...
Indiana     Academic research per capita ranking (fiscal              capabilities in medical informatics, supporting the  ...
IowaAcademic research per capita ranking (fiscal 2001):     more than the stateʼs average income. The plan7 out of 51      ...
Kentucky     Academic research per capita ranking (fiscal 2001):       University of Louisville and the comprehensive     4...
MichiganAcademic research per capita ranking (fiscal             the four institutions on a competitive basis; (2) 502001):...
Minnesota     Academic research per capita ranking (fiscal         Gov. Tim Pawlenty has made bioscience research     2001)...
Minnesota State Board of Investment would be            education: (1) Appointment of a Commission onencouraged to seek ou...
New York                                               North Dakota     Academic research per capita ranking (fiscal       ...
Gov. John Hoeven has asked for $50 million to         Research and Technology Transfer (BRTT), thesupport the creation of ...
Pennsylvania     Academic research per capita ranking (fiscal            Pennsylvania ranks 4th in the nation in terms of  ...
Texasand domestic animals; (2) South Dakota Signal           Academic research per capita ranking (fiscalTransduction Cente...
“Few states have the infrastructure, the     prestige and the talent to support stem     cell research over the long run. ...
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
The Economic Value of Academic Research and Development in Wisconsin
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Transcript of "The Economic Value of Academic Research and Development in Wisconsin"

  1. 1. The Economic Value ofAcademic Research andDevelopment in Wisconsin September 2004 © Wisconsin Technology Council 1
  2. 2. TABLE OF CONTENTS Executive Summary 1 Academic R&D The Value of Academic Research in Wisconsin 3 What Is a Research University or Institution? 5 The Bayh-Dole Act and Expansion of Economic R&D 8 Measuring the Economic Impact of Academic R&D 10 How Does Wisconsinʼs Academic R&D Compare to Other States? 18 What Are Other States Doing to Support Technology and Academic R&D? 22 Public Support for the UW System Compared to Other States 25 Conclusions and Recommendations 26 State-by-State Overview 29 Stem Cell Research: A Case Study 41 What are Stem Cells and Why Are They Important? 42 Pros and Cons of Human Embryonic Stem Cell Research 44 What is the Extent of Stem Cell Research in Wisconsin? 46 Whatʼs Happening in Other States and Nations? 48 Summary 502
  3. 3. EXECUTIVE SUMMARYWithout a vibrant foundation in academic research UW-Madison is growing in terms of the numberand development, Wisconsin will find it difficult, if of students, and when demand for access to thenot impossible, to grow a high-tech, “knowledge- university remains high.based” economy in the 21st century. Thanks todecades of investment in people and facilities, It is also happening at a time when WisconsinWisconsin has a strong base for academic R&D is striving to produce globally competitive goodstoday. However, there are forces at work that could and services, and to attract and retain knowledge-quickly erode Wisconsinʼs academic research based workers.advantage – and threaten the stateʼs ability to pro-duce high-wage, private-sector jobs. If the slide in higher education funding effort con- tinues, the academic R&D infrastructure in Wis-Prominent among those corrosive forces is the consin could deteriorate – and that would mean25-year trend toward weaker public support for less ability to compete for merit-based federalhigher education in Wisconsin. The stateʼs higher research grants. Such grants typically go to stateseducation “effort,” as measured by per capita with state-of-the-art laboratories, well-compen-public spending, has declined faster than the U.S. sated researchers and a healthy environment foraverage and more sharply than all but one of the scientific research.eight Big Ten Conference states. In this study, the Wisconsin Technology CouncilWisconsin has reduced its higher education effort has examined the extent of academic R&D inby 47.8 percent since 1978. That is 40th among Wisconsin, how much is being spent on such re-the 50 states – with 50th representing the weak- search, the sources of the funds, and the effect ofest effort. That state is Colorado, which passed academic R&D spending on the general economy.a Taxpayer Bill of Rights amendment to its state Some highlights:constitution. n Academic and other research institutions inThe decline in public support is chipping away at Wisconsin spent about $883 million on directthe infrastructure that supports academic research research activities in the latest fiscal year for whichin Wisconsin. For example, the UW-Madison is complete records are available. That spendingnow experiencing actual reductions in the number translated to 31,788 jobs, using generally accept-of faculty, academic staff, course sections, group ed multiplier estimates of the U.S. Department ofinstruction sections, lecture sections and labora- Commerce, Bureau of Economic Analysis (36 jobstory sessions. This is happening at a time when the for every $1 million in R&D spending). 1
  4. 4. n If the jobs created by academic research spend- n Wisconsin fell just outside the top 20 states (22nd ing in Wisconsin were reported as a separate overall) with total R&D expenditures of $2.7 billion. category within the labor market statistics of the This was primarily because Wisconsin lags the state Department of Workforce Development, it nation in state-based and industrial R&D (40th per would represent a significant sector in its own right. capita). If not for Wisconsinʼs relatively high ranking For example, paper manufacturing employs 39,100 in academic R&D, the state would slip out of the people in Wisconsin, printing 34,700, plastics and top half of all U.S. states in overall research and rubber products 34,600, and construction of build- development spending. It is important to note that ings 31,600. the nationʼs fastest-growing states also rank among the highest in overall R&D spending. n Wisconsin ranks 15th among the 50 states with total academic R&D spending of $805.8 The study recommends that the governor and Leg- million from federal, state and private sources, islature continue to invest in capital improvement according to the State Science and Technology programs such as BioStar and HealthStar, which Institute (SSTI). Those figures include $696.1 mil- leverage the assets of the UW-Madison and help to lion in R&D spending by all UW System campuses create spinout companies and jobs. The study also in the 2002 fiscal year. Most of the UW-related R&D calls for reversing the long slide in public support spending ($662.1 million) took place on the UW- for the UW System, beginning in the 2005-2007 Madison campus. The stateʼs per capita spending state budget bill. on academic R&D was $148.14, or well above the U.S. average of $126.17. The study also urges that the UW-Madison, the Medical College of Wisconsin and the Marshfield n The $805.8 million total also includes $109 million Clinic re-examine an already strong collaborative in research spending by private institutions, such as research relationship to look for more opportuni- the Medical College of Wisconsin, the Milwaukee ties to jointly attract research funding and conduct School of Engineering and Marquette University. science. Incentives to conduct inter-institution and interdisciplinary research should be established. n The SSTI figures do not include research spend- This is similar to an approach being followed in ing by the private Marshfield Clinic Research Foun- Minnesota, where the University of Minnesota and dation (about $75 million) or the research budgets the Mayo Clinic are working more closely together. of the two Veterans Administration hospitals in Wisconsin ($2.5 million). Those budgets deserve The study also urges the governor and the Leg- including in the state total of $883 million, however, islature to establish a commission, similar to the because research at those institutions is conducted Michigan Commission on Higher Education and in close association with other institutions and/or Economic Growth, to explore other options and to private industry. more deliberately track “best practices” in other states.2
  5. 5. ACADEMIC R&D THE VALUE OF ACADEMIC RESEARCH IN WISCONSINAcademic research institutions in Wisconsin spent percent of the stateʼs total workforce. Put another$883 million on direct research activities in the way, academic research accounted for more jobsfiscal year ending June 30, 2002, according to the than existed in total in Columbia County (28,128),latest reported figures. That spending translated to the city of La Crosse (28,718) or the city of She-31,788 jobs, using generally accepted estimates boygan (27,913) in July 2004. Moreover, jobs cre-of the U.S. Department of Commerce, Bureau of ated through academic research pay substantiallyEconomic Analysis (36 jobs for every $1 million in more, on average, than the Wisconsin per capitaR&D spending). wage of $30,898 per year.If the jobs created by academic research spending In an age when innovation is king and “knowledge-in Wisconsin were reported as a separate cat- based” solutions are being pursued for Wiscon-egory within the labor market statistics of the state sinʼs economic growth, it is essential that supportDepartment of Workforce Development, it would for research and development conducted throughrepresent a significant sector in its own right. By various Wisconsin research institutions remainway of comparison, paper manufacturing employs high.39,100 people in Wisconsin, printing 34,700, plas-tics and rubber products 34,600, construction of Universities and other research institutions with anbuildings 31,600; the federal government 29,400; academic bent are the engines of discovery andreal estate and rentals 28,700, and wood product innovation in science and engineering, thus fuelingmanufacturing 25,800. advances in agriculture, manufacturing, services and other sectors of the economy. The returnWithin a total non-farm workforce of 2,798,300 on investment in academic research is high; the(average monthly 2004), Wisconsinʼs academic return on disinvestment could undermineresearch sector represents a little more than 1 Wisconsinʼs competitiveness. 3
  6. 6. Academic research accounted for more jobs than existed in total in Columbia County (28,128), the city of La Crosse (28,718) or the city of Sheboygan (27,913) in July 2004. Academic R&D jobs compared to other employment sectors* in 1000ʼs of people 40 39,100 35 34,700 34,600 30 31,788 31,600 29,400 28,700 25 25,800 20 15 10 5 0 Paper Printing Plastic and R&D Jobs Construction Federal Real Estate Wood Product Manufacturing Rubber Products of Buildings Government and Rentals Manufacturing *Estimates based on U.S. Commerce Department multiplier of 36 jobs created for every $1 million in academic R&D spending.4
  7. 7. WHAT IS A RESEARCH UNIVERSITY OR INSTITUTION?In essence, a research institution emphasizes as the Association of American Universities in 1900.its primary mission the conduct of research, the Today, only 60 research universities qualify fortraining of graduate students in how to conduct membership in that organization.research, and, over the past 25 years, the trans-fer of knowledge acquired through research to The United States has long enjoyed the traditionthe marketplace. of great public universities offering professional and classical education. But the concept of alsoThe idea of a research university was born in offering agricultural and technical education isGermany in places such as the University of somewhat newer. In 1863, President LincolnGottingen (founded in 1737) and the University of signed the Morrill Act creating a land grant sys-Berlin (established in 1810). In the United States, tem of universities to provide practical educationuniversities began to fulfill that vital research and in agriculture and engineering. The Hatch Act ofdevelopment function in the late 1800s. The idea 1887 established a network of federally fundedspread from Johns Hopkins University (which be- agricultural experiment stations. Passage of thegan in 1876) and Clark University (in 1890), and Smith-Lever Act in 1914 created the Cooperativethen to Stanford University (in 1891) and the Uni- Extension Service to work in partnership with uni-versity of Chicago (in 1892). Research has been versities. The “Extension,” as it became known inconducted on the University of Wisconsin-Madi- Wisconsin and elsewhere, transferred knowledgeson campus since the late 1800s. The University from the laboratories of the university to the farmof Wisconsin was one of 14 founding members of fields of America. 5
  8. 8. “... innovation is king and “knowledge- based” solutions are being pursued for Wisconsinʼs economic growth ...” - Wisconsin Technology Council6
  9. 9. Today, about 250 U.S. universities consider them- to inventions made during federally sponsoredselves research universities, although the leading research. Before 1980, fewer than 250 patents100 research institutions account for about 70 were issued each year to universities. In 2002, thatpercent of the research space and 80 percent of number had swelled to 3,673 patents issued tototal research expenditures. The top 20 research 219 reporting institutions, according to the Asso-universities – a category that includes the UW- ciation of University Technology Managers. In theMadison – accounts for about one-third of total same year, those universities filed 7,741 patentsacademic research expenditures in the United and reported 15,573 invention disclosures.States. n The rise of biotechnology R&D and, more gen-About 660 U.S. academic institutions perform erally, of research in the life sciences, since thebasic and applied research and development, and early 1980s also boosted the number of researchthat number is increasing. There are good rea- universities with offices of technology licensing.sons for the phenomenon. Today, at least 70 percent of all license income earned by universities comes from the life sci-In our knowledge-based society, universities have ences, with the remainder mainly from the physi-a growing role to play in creating, nurturing and cal sciences, including engineering. In Wisconsin,deploying intellectual capital. The term “university research involving human embryonic stem cellstechnology transfer” applies to the commercializa- provides an interesting case study. (Please seetion of university discoveries and innovations. In page 41 in this report.)the past quarter-century, such transfer has takenon increasing importance to the U.S. and n State governments have joined the federal gov-Wisconsin economies. ernment and private industry in supporting R&D, increasingly providing financial support that can beThree factors have contributed to the recent rise used for capital investments, hiring “star” faculty,of university tech transfer activity: or engaging in partnerships with private institutionsn The enactment of the federal Bayh-Dole Act that might otherwise not be possible.in 1980 gave universities the right to claim title 7
  10. 10. THE BAYH-DOLE ACT AND THE EXPANSION OF ACADEMIC R&D Federal government agencies provided more However, as the AAU was quick to add in its June than $21.8 billion in FY 2001 to university and 2003 report, “new products and processes do not other academic researchers to conduct scientific spring fully formed from the basic research per- research, according to figures from the State Sci- formed at universities.” Patents, licenses, devel- ence and Technology Institute. The Association of opment, capital, marketing and manufacturing University Technology Managers put that figure at capacity are all required. Collectively, thatʼs called more than $22.2 billion in FY 2002. That continu- technology transfer. ing investment expands human knowledge and helps educate the next generation of science and Under federal law, as provided by the Bayh-Dole technology leaders, a process that is essential to Act of 1980, non-profit organizations – including the long-term economic and physical security of universities – may patent and retain title to inven- the United States. New discoveries from university tions created from research funding by the govern- research also form the basis for many new prod- ment. In general, the university must disclose each ucts and processes that benefit the nation and its new invention to the federal funding agency within citizens. In fact, studies surveyed by the Associa- two months of the inventor disclosing it to the uni- tion of American Universities (AAU) showed that versity, decide whether or not to retain title to the technological innovation and the scientific research invention, and then file a patent application within on which it is based are responsible for more than one year of electing to seek title. half of the nationʼs productivity growth in the past 50 years.8
  11. 11. Universities must license the rights to innovations In the 1960s and 70s, the pace of innovationto industry for commercial development; small was slow. Very little federally funded researchbusinesses receive preference. The federal gov- was leading to commercial applications, mainlyernment also receives a non-exclusive, irrevo- because there were no incentives for universitiescable license to the invention. Universities must or researchers to find partners to do so. Mainly,share with the inventor any income eventually de- there were penalties. Tight restrictions on licens-rived from the patent. Any remaining income, after ing, varying patenting policies among federaltechnology management expenses, must support agencies, and the lack of exclusive manufacturingscientific research or education. A principal value rights for government-owned patents made mostof having universities retain control of patent rights companies shy away. By 1980, only 5 percent ofis that it ensures that research findings remain government-owned patents resulted in new oravailable for further use in the classroom and improved products.laboratory. Bayh-Dole was passed to break the logjam. WithWhy does the government allow universities or the help of policies and procedures pioneeredtheir patent and license agencies to keep control by the Wisconsin Alumni Research Foundationof government-funded inventions? Doing so gives (WARF), the act created a uniform governmentpeople and companies incentives to commercial- patent policy and allowed universities and otherize technology, which sparks innovation and yields non-profit organizations (such as WARF) toother benefits for society. maintain title to federally-funded inventions and to work with companies on bringing them to market. A cycle of research, tech transfer and profit – which enabled additional investment in research – was created. 9
  12. 12. MEASURING THE ECONOMIC IMPACT OF ACADEMIC R&D Spurred on by Bayh-Dole and other trends, aca- universities in receiving patents (84 for the year) demic R&D has altered the landscape of the U.S. from the U.S. Patent and Trademarks Office. economy. But how can we measure the economic n 569 new commercial products were launched. effects of academic R&D? n 450 new companies were established, for a total of 4,320 since 1980 and 1,398 in the last three Since it was launched a decade ago, the annual years. Nearly 2,750 of those start-ups since 1980 Licensing Survey of the Association of University are still operating, and many of those that have Technology Managers (AUTM) has become a val- ceased to exist were acquired by other companies. ued source for data on the transfer of academic re- n Running royalties on product sales were $1.005 search for commercial application. The 2003 AUTM billion, an 18.9 percent increase over FY 2001. Licensing Survey included 222 U.S. and Canadian respondents, the largest number ever, and showed “The conclusions of the 2002 AUTM Licensing the following U.S.-only results for FY 2002: Survey show that the academic technology transfer field is an integral part of the innovation economy,” n Total sponsored research expenditures were noted Ashley Stevens, survey editor and chairman $34.967 billion. of the AUTM Survey, Statistics and Metrics Com- n Sponsored academic research expenditures from mittee. federal sources totaled $22.213 billion. n Sponsored academic research expenditures from “This persistent growth in a sluggish economy industry sources totaled $2.715 billion. shows the vital role of academic technology trans- n Sponsored academic research expenditures from fer in fostering the development of new products all other sources, including foundations and state that improve our quality of life, providing new governments, totaled $10.039 billion. streams of income to further academic research and education, and creating new jobs,” added The following reported figures included U.S. and AUTM President Patricia Harsche Weeks. Canadian universities and research institutions: An unanswered question from the 2002 AUTM n 15,573 invention disclosures were reported, up Licensing Survey is how many jobs are created 14.8 percent over FY 2001. by academic research. In 1998, AUTM estimated n 7,741 patent applications were filed, up 13.6 $33.5 billion in economic activity and 280,000 percent of FY 2001. directly supported jobs. In 1999, AUTM pegged n 3,673 patents were issued, down 1.3 percent economic activity at $40 billion and directly sup- from FY 2001. In calendar year 2003, the ported jobs at 270,000. The creation of indirect jobs University of Wisconsin ranked sixth among all U.S was not calculated by AUTM.10
  13. 13. In 2000, a study by the Association of American However, AAU continued, it is possible to “achieveUniversities (AAU) concluded that academic a rough, conservative approximation of the im-R&D expenditures by doctorate-granting institu- mediate employment impacts of academic R&D”tions created about 1.08 million jobs in the United by using multipliers developed by the U.S. Com-States, directly and indirectly. Using a rule of merce Departmentʼs Bureau of Economic Analysis.thumb for Wisconsinʼs share (2 percent) of the This multiplier is (36 jobs for every $1 million intotal national employment, that would indicate a academic R&D spending) is frequently used in theminimum of 21,600 jobs in Wisconsin. But the rule development of studies of the economic impacts ofof thumb doesnʼt work in this example because individual universities and colleges.of Wisconsinʼs above-average performance inacademic R&D spending. The AAUʼs estimate of 1.08 million jobs created in 2000 came from the following breakdown, whichHere is an excerpt from the AAU report: “The AAU examined various sources of funding for academicis often asked about the number of jobs supported R&D:by academic R&D funding in the United States. n National Institutes of Health extramural grantsThere is no definitive answer to this question (total $10.785 billion) 384,123 jobsbecause it has never been addressed in any pub- n National Science Foundation academic R&Dlished studies. Furthermore, academic R&D is not, grants (total $2.824 billion) 102,601 jobsand has never been, intended or presented as n Department of Defense academic researcha jobs-creating mechanism. In the last analysis, grants (total $2.007 billion) 72,047 jobsacademic R&D makes a much more vital contri- n NASA academic R&D grants (total $1.016 bil-bution to the nationʼs well-being-economic and lion) 37,904 jobsotherwise-by advancing the frontiers of knowl- n Department of Energy academic R&D grantsedge, by finding new cures and treatments for (total $696.2 million) 25,230 jobsdiseases, by helping to develop new technologies, n All federal R&D grants to universities and col-and by training future generations of researchers leges (total $19.879 billion) 717,243 jobsand teachers.” n All other R&D expenditures by doctorate-grant- ing institutions (these institutions account for virtually all academic R&D; total $29.597 billion includes R&D supported by nonfederal sources) 458,095 jobs 11
  14. 14. Top Ten U.S. Universities Receiving Patents (2003)500 439250100 139 127 9690 85 8480 817060 63 61 59 5950 0 *University California Massachusetts University Stanford University Johns University Columbia Cornell University of California Institute Institute of of Texas University of Wisconsin Hopkins of Michigan University University of Florida System of Technology Technology University ������������������������������������������������������������������������������������������������������ 12 12
  15. 15. ������������������������������������������������������������������������������������������ in 1000ʼs of jobs500 458,095400 384,123300200100 102,601 72,04750 37,904 25,230 0 Other Federal National Institutes National Science Dept of Defense NASA Academic Dept of Energy R&D Grants of Health Foundation Academic Academic Research R&D Grants Academic R&D to Universities Extramural Grants R&D Grants Grants Grants 13
  16. 16. “The more skilled the workforce the better that workforce is able to absorb, implement and adapt ideas that come from the R&D sector.” - Researcher Steve Dowrick14
  17. 17. A word about methodologyThe economic multiplier of 36 jobs per $1 million spent on academic R&D was developed by the Associationof American Universities using methods established 30 years ago by the U.S. Department of Commerce,Bureau of Economic Analysis (BEA). In the 1970s, BEA developed the Regional Input-Output Modeling Sys-tem, which was most recently updated in 1997. To learn more, go to www.bea.gov/regional/rims/brfdesc.cfm.These jobs figures include both full- and part-timejobs. They also include jobs supported directly on and Economics concluded that $105.2 million incampuses and jobs supported indirectly outside external funding for R&D at the University of Ken-campuses as institutional expenditures ripple tucky produced 4,509 jobs, contributed $274.6 mil-through local and state economies. To put these lion to the Kentucky economy, and raised personaljobs figures in some perspective, the Commerce income by $84.5 million. That is a ratio of 42.8 jobsDepartment at the time reported the following per $1 million in R&D.numbers of persons were directly employed in n A 2004 study by the Huron Consulting Groupthe following manufacturing sectors: tires, 73,300; and the Washington Advisory Group calculatedlogging, 78,220; communications equipment, that research funding at the University of North284,500; newspaper printing and publishing, Carolina and North Carolina State University sup-444,310; aircraft and related parts, 466,640; basic ported 22,000 jobs statewide. For every dollar thetextiles, 516,380; motor vehicles and equipment, faculty at those two schools attract in research1,012,990. funding, $1.70 in spending occurs in North Caro- lina.Other available metrics worth considering: n Economists have consistently agreed thatn An economic impact study by Cleveland State the rate of return on R&D spending is high. In aUniversity in 1992 used an employment multiplier 2003 report for the National Bureau of Economicof 40 external jobs created for every $1 million Research in Cambridge, Mass., researcher Stevespent in the local economy. Dowrick surveyed existing studies and determinedn The University of Montana estimated in 1992 that U.S. and multinational rates of return (privatethat 45 jobs are created for every $1 million spent and social) ranged from 10 to 63 percent, with 25in the local economy. to 30 percent being the norm for private ratesn A 2000 study by the Gatton College of Business of return. 15
  18. 18. Dowrick noted that academic R&D is a part of the “new growth theory” that came into prominence in Duke generated $2.6 billion in activity during the the late 1980s and early 1990s: “The neo-classical 2002-2003 fiscal year. Using the AAU formula, growth model, formalized three decades earlier, Dukeʼs sponsored research of $365 million had focused on the accumulation of machinery and generated 13,140 jobs. equipment and emphasized the feature of dimin- ishing returns – which implied that such investment “Like other major research universities, Duke is would not be able to drive long-run growth. The an economic engine whose activities and health new generation of studies switched attention to the have a dramatic effect on the local economy,” accumulation of human capital and the possibility wrote President Nannerl Keohane. “Nationally, it is that returns to investment in education, training clear that research universities such as Duke are and research may not suffer from diminishing re- increasingly important to the evolving economy. In- turns… The most extensively documented feature creasingly, industries and firms that are successful of embodied human capital is the relationship competitors here and abroad for business and jobs between education and wages. Studies of earnings are knowledge-based, high-tech, and engaged in in advanced capitalist economies typically find that cutting-edge research.” each extra year of schooling raises earnings by 5 to 10 percent.” In a paper prepared for the 2002 Wisconsin Eco- nomic Summit, William R. Rayburn, dean of the The more skilled the workforce, Dowrick continued, graduate school at UW-Milwaukee, summarized the better that workforce is able to absorb, imple- the value of academic R&D in this way: “University ment and adapt ideas that come from the R&D and industry relationships benefit both parties. sector. Universities receive support for research, improve- ments in facilities, and learning opportunities for “The driving force of economic growth is invest- students. Companies receive useful research ment in human capital – skills and ideas – rather results that advance their research and develop- than investment in machines and buildings,” he ment objectives. The commercialization of univer- wrote. sity technologies derived from federal and industry sponsorship of research serves the public interest. More often that not, the engines behind those To be most effective, Wisconsinʼs academic institu- driving forces are located on the campuses of tions need policies, practices and infrastructure academic R&D centers. In 2003, when Duke that promote an entrepreneurial environment…” University examined its economic impact on the Durham, N.C., region, the conclusion was that16
  19. 19. “The driving force of economic growthis investment in human capital – skillsand ideas – rather than investment inmachines and buildings.” - Researcher Steve Dowrick 17
  20. 20. HOW DOES WISCONSINʼS ACADEMIC R&D COMPARE TO OTHER STATES? If not for Wisconsinʼs relatively high ranking in from federal, state and private sources, accord- academic R&D, the state would slip out of the top ing to the State Science and Technology Institute half of all U.S. states in overall research and de- (SSTI). Those figures include $696.1 million in velopment spending. It is vital that academic R&D R&D spending by all UW System campuses in in Wisconsin continue to be supported, or the state the 2002 fiscal year. Most of the UW-related R&D risks becoming an “also-ran” in the 21st century, spending ($662.1 million) took place on the UW- knowledge-based economy. Madison campus. The stateʼs per capita spending on academic R&D was $148.14, or well above the Research and development expenditures by U.S average of $126.17. industry, government sources, foundations and academic institutions vary widely by state. The 10 Those figures include $696.1 in R&D spending highest ranking states accounted for 66 percent of by UW System campuses, with the bulk of that total U.S. R&D expenditures in 2000. Those states spending ($662.1 million) taking place at UW- were: California, Michigan, New York, New Jersey, Madison. UW-Milwaukee spent $24.9 million on Massachusetts, Illinois, Texas, Washington, Penn- research. sylvania and Maryland. The top 20 states account- ed for 87 percent of the U.S. total of $247 billion; The $805.8 million total also includes $109 million California alone accounted for more than one-fifth in research spending by private institutions, such of the total at $55 billion. The bottom 20 states ac- as Marquette University, the Medical College of counted for just 4 percent of all R&D spending. Wisconsin and the Milwaukee School of Engineer- ing. The private school figures are stripped of Wisconsin fell just outside the top 20 states (22nd dollars spent in research collaborations with other overall) with total R&D expenditures of $2.7 billion. institutions. This was primarily because Wisconsin lags the nation in state-based and industrial R&D (40th The SSTI figures do not include research spend- per capita). If not for Wisconsinʼs relatively high ing by the private Marshfield Clinic Research ranking in academic R&D, the state would slip out Foundation (about $75 million) or the research of the top half of all U.S. states in overall research budgets of the two Veterans Administration hos- and development spending. It is important to note pitals in Wisconsin ($2.5 million). Those budgets that the nationʼs fastest-growing states also rank deserve including in the state total, however, be- among the highest in overall R&D spending. cause research at those institutions is conducted Wisconsin ranks 15th among the 50 states with in close association with other institutions and/or total academic R&D spending of $805.8 million private industry.18
  21. 21. The SSTI breakdown of the funding sources for Wisconsinʼs intensity level was 1.55 percentWisconsinʼs academic R&D revealed the state – good for only 29th on the 50-state list, accordingranked 19th in federal funding, 20th in state and to the Alliance for Science and Technology Re-local funding, and 40th in industrial support. search in America. It was also well below the U.S.Wisconsin cannot compete with a California in average of 2.69 percent.size or economic might – or even a Pennsylvania,some might argue. Is there a way to measure Wisconsinʼs relatively weak R&D effort is importantWisconsinʼs total R&D effort that might reflect the because of the correlation between the intensityintensity of the stateʼs effort? of a stateʼs effort and its economic growth. Ac- cording to the U.S. Bureau of Economic Analysis,Yes. One way of controlling for the size of each real gross state product for the nation grew at anstateʼs economy is to measure each stateʼs R&D annual rate of 4.5 percent from 1999 to 2000. Sixlevel as a percentage of its gross state product. of the 10 states with the fastest growth in real GSPThat percentage is referred to as R&D intensity or from 1999 to 2000 also rank among the top 10concentration. in either total R&D performance (California, New York, Massachusetts, and New Jersey) or R&DOverall, the nationʼs ratio of total R&D to gross do- intensity (Massachusetts, Rhode Island, California,mestic product was 2.69 percent in 2000. The top and Idaho) for 2000.10 rankings for state R&D intensity in 2000 were,in descending order, Michigan (5.81 percent), New If not for academic R&D in Wisconsin and theMexico, Washington, Maryland, Massachusetts, ability of academic institutions to attract federalDelaware, Rhode Island, California, Idaho, and research dollars for that purpose, the state wouldthe District of Columbia (3.87 percent). Each of find itself in the bottom half of the states in anthe 10 states with the highest R&D intensity levels important “New Economy” indicator. And yet, statein 2000 was also among the top 10 states in R&D support for academic R&D has been threatenedintensity in 1998 and 1999. by budget cuts affecting the University of Wiscon- sin System. These budget cuts have taken place at a time when most states are investing more in academic R&D and their overall infrastructure for technology development. 19
  22. 22. Sources of Academic R&D Spending in Wisconsin in millions of dollars $700 $650 662,100,000 $600 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 109,000,000 75,000,000 $50 34,000,000 $0 2,500,000 UW-Madison Remaining Private Colleges Marshfield Clinic Veterans UW System and Institutions Administration Hospitals Total: $882.6 million. Note: Private colleges and institution estimates may be low due to efforts to eliminate double-counting2020
  23. 23. Ten states account for two-thirds of all R&D spending in the United States Remaining 39 States TOP 10 STATES California Michigan New York New Jersey Massachusetts Illinois Texas Washington Pennsylvania MarylandWisconsin 1.1% 21 21
  24. 24. WHAT ARE OTHER STATES DOING TO SUPPORT TECHNOLOGY AND ACADEMIC R&D? The pivotal role of state governments in expand- development initiatives available to assist biosci- ing regional economic growth through science and ence companies. State investments have grown technology development is a widely recognized, and the variety of approaches used to stimulate albeit relatively recent, phenomenon. Practically growth of the bioscience sectors have increased all states have established lead science and significantly. technology offices, most of whose existence can n More than 885,000 people in the U.S. are em- be traced back only to the mid- to late-1980s. The ployed in the biosciences. The largest segment independent, non-profit Wisconsin Technology of this group is working in the areas of medical Council is the lead agency for Wisconsin, and was devices and equipment, which accounts for 37 created by an act of the Legislature in 1999. percent of bioscience employment. n In 2003, bioscience workers on average were During the 1990s, states increasingly included paid at least $26,600 more than the overall na- a science and technology component in their tional average private sector annual wage. economic development plans. Between 1991 and 1995, no fewer than 13 states adopted statewide Overall, state efforts tend to focus on the creation S&T strategic plans of varying levels of sophis- of high technology firms and the use of advanced tication and complexity; that number climbed to technologies in the traditional manufacturing and 40 by 2003. A review of State of State speeches, service sectors. Common to these plans is the inaugural addresses and budget messages that acknowledged importance of: were delivered by most governors in the early part n Maintaining and strengthening the research and of 2004 indicates a continuing high level of inter- development (R&D) capacity of the statesʼ col- est in science- and technology-based economic leges and universities; development. n Encouraging “home grown” businesses by pro- viding support to entrepreneurs and small tech- At the 2004 international conference of the Bio- nology-based firms rather than seeking to recruit technology Industry Organization, a report by the technology firms to locate within the state; and Batelle Memorial Institute showed: n Facilitating the incorporation of new technology n Forty states specifically target the biosciences into processes and products. for development and all 50 states have economic22
  25. 25. States have become particularly adept at leverag- between industry, non-profit organizations, localing funds and fostering university-industry part- governments, and individual performers.nerships. In 1998, the Battelle Memorial Instituteand the State Science and Technology Institute Organizations such as the National Governors As-surveyed more than 1,000 state agencies and sociation have adopted strategies that encourageuniversities and learned that states spent $3.009 states to invest in science and technology, withbillion on R&D activities and supporting facilities academic R&D being a cornerstone. In the NGAʼsin 1995. These totals include (1) expenditures for annual meeting in 2003, the governors resolved:R&D performed by or in support of state govern- “Fundamental research and technological innova-ment agencies regardless of sources of funds, and tion provides the means for long-term economic(2) R&D funding provided by state governments to growth, for a better standard of living and quality ofexternal parties, including most notably direct R&D life for all citizens, and for all branches and levelsappropriations to academic institutions through of government to better serve their citizens bystate budget processes. reducing costs and enhancing service quality. As both investors in and users of science and technol-State government sources (including general ogy, states have a critical role in creating an envi-revenue funds, lottery proceeds, revenue bonds, ronment that promotes and supports research andand specially designated tax funds) accounted for technology. Such an environment fosters economic87.4 percent ($2.431 billion) of total state spending development, commercialization, and innovation.”on R&D activities in 1995. Federal dollars passingthrough state agencies accounted for 9.3 percent The governors specifically recognized the role of($0.258 billion) of the state-directed R&D total, federal research, the Bayh-Dole Act, and the lever-and leveraged funding from industry and other aging power of state investments:non-government sources for 3.3 percent ($0.092 “Federal funding for basic research has significantbillion). Academic institutions performed 73.2 implications for federal-state relations. The federalpercent ($2.036 billion) of all state government government has become the principal source ofR&D spending reported in this survey. State agen- funding for basic and applied research in fieldscies performed 14.7 percent ($0.408 billion) of the such as health and life sciences, defense tech-R&D total, and the rest ($0.336 billion) was split nologies, homeland security, energy conservation 23
  26. 26. and alternative fuels development, environmental by Promoting University-Industry Tech Transfer,” protection, space exploration, land management, Tornatzky emphasized the importance of state and education. The governors support continued support for academic research and development: federal investments in such research and develop- ment. “University-industry tech transfer – formal and informal – is important in building high-skills, “States also have played an important role in high-wage economies. Technology drives the new research and development initiatives, particularly economy, and universities provide critical feed- through their research universities. Governors stock in terms of talented people, new knowledge strongly support a stateʼs right under the U.S. and innovative technology. For states, universities Constitution to the protections of sovereign im- can be major assets in economic development…” munity and oppose any effort to threaten that right with a loss of the protections of federal intellectual Specifically, he urged governors to encourage uni- property laws to any entity of the state, including versity-industry technology partnerships; to invest their research universities. in entrepreneurial mechanisms, such as business incubators tied to university campuses; to remove “Governors also recognize the key role played by legal barriers to university-industry technology the passage of the Bayh-Dole Act in improving the transfer; to underwrite capital improvements to transfer of discoveries and technologies supported keep laboratories and other facilities competitive; with federal funding from university laboratories to and to champion the role of research universities commercial applications, and support its continu- in speeches and other public communications. ation.” Of late, however, governors across the United In a 2000 report to the NGA, Dr. Louis D. Tor- States have found it more difficult to support natzky of the Batelle Memorial Institute concluded research universities – and higher education in that states can directly influence the growth of new general – because of declining revenues and cor- economy research and development within their responding budget cuts. What follows is a review borders. In his report, “Building State Economies of how Wisconsin has fared in that environment.24
  27. 27. PUBLIC SUPPORT FOR THE UW SYSTEM COMPARED TO OTHER STATESAt a time when states face budget troubles, analysts Wisconsin has reduced its higher educationare closely monitoring the debates and decisions spending effort by 47.6 percent since 1978, ac-about spending for higher education occurring in cording to Grapevine. That is 40th among the 50state capitals across the country – including Madi- states (with 50th representing the weakest effortson. In early 2004, The Chronicle of Higher Edu- by Colorado) and seventh lowest of the eight Bigcation reported that aggregate appropriations for Ten Conference states. Those states are Iowa, Il-higher education in the United States fell for the first linois, Indiana, Ohio, Michigan, Minnesota, Penn-time in 11 years. sylvania and Wisconsin.For fiscal year 2004, states appropriated $60.3 bil- Wisconsin is 27th nationally in appropriations oflion for the operations of higher education in their state tax funds for operating expenses of higherstates, according to Grapevine, a respected statisti- education per $1,000 of personal income, or fifthcal tracking project at Illinois State University. This lowest among the eight Big Ten states.was down from $61.5 billion in fiscal 2004, and downfurther from $62.8 billion in fiscal 2002. In 44 years Wisconsin is 36th nationally in the change in stateof reported data, this was the first time year-to-year tax fund appropriations per $1,000 of state per-state tax fund appropriations for higher education sonal income between fiscal 2001 and fiscal 2004,declined two years in a row. and sixth among the eight Big Ten states.The Grapevine has also tracked state-by-state high- Based on the current trends, Wisconsin would stoper education spending as a function of per capita spending state dollars on higher education in theincome and $1,000 of personal income. Almost all year 2040, which is the 16th fastest rate amongstates show a diminished spending “effort” since the 50 states.1978. But a few states stand out – Wisconsin amongthem. In 1995, according to the Midwestern Higher Education Compact, Wisconsin ranked 3rd highestOne state, Colorado, has reduced its state invest- among 12 Midwestern states in total funding forment effort in higher education by more than two- higher education. By 2002, it had fallen to sixth.thirds since 1978 (67.5 percent) due to a spendinglimit called the Taxpayer Bill of Rights. Seven states Between 1994 and 2004, Wisconsin ranked 46thhave joined the “50-percent off” club by reducing out of 50 states in the percentage change in statetheir higher education effort by more than half: Ari- tax-funded spending on higher education. Thatzona, South Carolina, Washington, Oregon, Mas- was the lowest ranking among the eight Big Tensachusetts and New Hampshire. Four more states states.are poised to join the club: Minnesota, Rhode Island,Vermont and Wisconsin. 25
  28. 28. CONCLUSIONS AND RECOMMENDATIONS The evidence is mounting that the UW System n The number of lecture sections taught in under- and UW-Madison, in particular, are providing less graduate courses declined from 2,525 in fall 2002 access to higher education at a time when there to 2,448 in fall 2003. This was a decline of 3.1 is more demand. Reductions in state support in percent. As a consequence, the average size of 2003-2004 had the following effects in the aca- undergraduate lecture sections increased by 1.6 demic year that began in the fall of 2004. percent. n The number of faculty funded from the general n The number of laboratory sections taught in purpose revenues/fees instructional budget de- undergraduate courses declined from 1,389 in fall clined from 1,368 FTE in 2002-03 to 1,342 FTE in 2002 to 1,319 in fall 2003. This was a decline of 2003-04. This was a decline of 1.9 percent. 5.0 percent. As a consequence, the average size of undergraduate laboratory sections increased by n The number of non tenure-track academic staff 2.6 percent. funded from the GPR/Fees instructional budget declined from 892 FTE in fall 2002 to 843 FTE in As a point of context, this decline took place at a fall 2003, a decline of 5.4 percent. time when the number of full-time equivalent students at the UW-Madison increased by n The total number of course sections taught one-half of 1 percent. declined from 12,102 in fall 2002 to 11,922 in fall 2003. This was a decline of 1.5 percent. When overall state support for higher education declines, so does state support for academic n The total number of group instruction sections research and development as a segment of that (lecture, laboratory, discussion and field) declined budget. If the slide in higher education funding from 7,831 in fall 2002 to 7,683 in fall 2003. This effort continues, the academic R&D infrastructure was a decline of 1.9 percent. in Wisconsin could deteriorate – and that would mean less ability to compete for merit-based fed- eral research grants. Such grants typically go to states with state-of-the-art laboratories, well-com- pensated researchers and a healthy environment for scientific research.26
  29. 29. Specific recommendations:n The governor and Legislature should continue n The UW-Madison, the Medical College of Wis-to invest in capital improvement programs such as consin and the Marshfield Clinic should re-examineBioStar and HealthStar, which leverage the as- and already strong collaborative research relation-sets of the UW-Madison and help to create spinout ship to look for more opportunities to jointly attractcompanies and jobs. Of particular interest is the research funding and conduct science. IncentivesInterdisciplinary Research Center at the UW- to conduct inter-institution and interdisciplinary re-Madison Medical School, which will require public search should be established. This is similar to ansupport in order to attract private donations. As has approach being followed in Minnesota, where thebeen demonstrated nationwide, state support for University of Minnesota and the Mayo Clinic havecapital improvements makes it possible to attract recently announced joint initiatives.federal, industry and private foundation dollars forresearch. General obligation bonding should be n The governor and the Legislature should estab-considered as a funding source, given the long- lish a commission, similar to the Michigan Commis-term return on the investment. sion on Higher Education and Economic Growth, to explore other options and to more deliberatelyn The governor and Legislature should begin, in track “best practices” in other states.the 2005-2007 state budget, the process of re-storing state support for UW System operations. Wisconsin has invested heavily over nearly 100Although many states have experienced similar years in its academic research and developmentbudget difficulties, the erosion in the UW budget infrastructure. In the UW-Madison alone, the statehas been relatively steady for years and cannot has an asset that most states can only covet. Forcontinue if the state wants to protect its investment. far less money than some states are belatedly investing in academic research and development,n The governor and Legislature should create a Wisconsin state government can protect its historicWisconsin Innovation and Research Fund to help public investment and reap the benefits associatedsecure federal and corporate grants by providing with the transformation to a high-tech economy.small matching grants to UW system and privatecollege faculty who collaborate with business onR&D. 27
  30. 30. “If the slide in higher education funding effort continues, the academic R&D infrastructure in Wisconsin could deteriorate.” - Wisconsin Technology Council28
  31. 31. STATE-BY-STATE OVERVIEWHere are examples of what selected states are doing to foster job growth and technology developmentthrough academic research initiatives and related investments in higher education.IllinoisAcademic research per capita ranking (fiscal be expected to invest in Illinois firms, but will not2001): 27 out of 51 be required to. It is understood by venture firmsState spending on higher education per $1,000 of that theyʼll be expected to invest in the state, andpersonal income (2004): 33rd of 50 their prior investments to the state may help their chances of receiving the money. The $50 millionState efforts to bolster academic R&D in Illinois invested to the Technology Development Fund willhave included funding for a post-genomics institute probably be invested in four or five venture funds.at the University of Illinois, a new chemical sci- There is a rule that no more than 10 percent of aences building at UIʼs Chicago campus, a cancer fun can be constituted by this state money.research center at Southern Illinois University inSpringfield, and a new facility for the treatment An additional $17 million in state funds is pro-of juvenile diabetes at the University of Chicago. posed to leverage $126 million in federal moneyAlso, there is continued support for a new biomedi- over the next five years to complete the Center forcal research building and a nanotechnology center Nanoscale Materials at Argonne National Labora-for Northwestern University. Illinois has also tory. One of only five in the country, the facility isestablished a Technology Development Fund. The expected to initially attract about $200 million ininitial amount invested will be $50 million. The cap nanoscience and nanotechnology research. Inon any investing is 1 percent of the money under addition to the Argonne National Laboratory, 26the state treasurerʼs control and the total is $8 academic institutions in Illinois receive federalbillion. Participating venture funds must be either R&D dollars.based in Illinois or have a significant presence inthe state. All of the funds that receive money will 29
  32. 32. Indiana Academic research per capita ranking (fiscal capabilities in medical informatics, supporting the 2001): 33 out of 51 linkage of basic medical and clinical research in State spending on higher education per $1,000 of Indianaʼs growing life science sector; (2) Support personal income (2004): 20th of 50 for advances in materials science and engineer- ing, particularly new carbon-carbon composites Indiana is building on the stateʼs promising aca- of importance to the aerospace and automotive demic and commercial assets to give Indiana a industries; (3) Development of new materials for competitive edge in technology and job creation. joint implants; (4) Novel applications of engineer- Seventeen public-private partnerships in Indiana ing concepts involve the application of non-linear have been approved to receive a total of $22 acoustic theory to provide accurate information million in awards from the Indiana 21st Century concerning critical blast furnace wear and erosion Research and Technology Fund, as of August, characteristics. 2004. The fund, created by the Indiana General Assembly in 1999, has awarded more than $132 In 2003, Kernan launched Energize Indiana, a million in grants to 102 projects since its inception. $1.25 billion plan, to stimulate research, pro- Gov. Joe Kernan has said he believes that provid- vide venture capital for entrepreneurs, and build ing awards to public-private partnerships early university research facilities. The plan will not in the development phase helps the projects get be funded by taxes, and will create high-paying off the ground, and ultimately creates companies jobs in advanced manufacturing, life sciences, that contribute to Indianaʼs economy. The fund 21st century logistics, high-tech distribution and is aimed at supporting Indiana ventures focused information technology. Energize Indiana hopes on the commercialization of advanced technolo- to create 200,000 new high-wage, high-skill jobs gies. The fund makes awards in two categories: over the next 10 years, and enroll 200,000 addi- Science and Technology Commercialization and tional students in higher education and credential Centers of Excellence. Projects that have re- programs. This will help spur the stateʼs per capita ceived funding include: (1) The creation of new income faster than the national average.30
  33. 33. IowaAcademic research per capita ranking (fiscal 2001): more than the stateʼs average income. The plan7 out of 51 calls for encouragement and facilitation of biosci-State spending on higher education per $1,000 of ence research and development, while supportingpersonal income (2004): 15 of 50 the business climate and sustaining Iowaʼs firms. Action steps ranging from developing bioscienceIowa will continue to invest in the biosciences with educational programs to creating and funding ana 10-year, $302 million plan, Bioscience Pathway economic development director position on thefor Development, to grow the industry and cre- Iowa Board of Regents within the first 12 monthsate new job opportunities for the state. The plan of strategy implementation.is based on three solid aspects of Iowaʼs biosci-ence background: (1) Strong bioscience research Bioscience Pathway for Development will becapacity at several of the stateʼs universities; (2) funded over 10 years, with $170 million from theCore bio-industrial competencies in sectors such sale of bonds and about $132 million from directas biomass conversion, traditional biotechnology, state appropriations. Each state dollar invested ispharmaceuticals and medical devices; (3) A signifi- expected to be leveraged 5 to 1, with an estimatedcant workforce base already employed in biosci- $1.5 billion coming from federal, industry and otherence related jobs. Iowaʼs per capita employment private sources. The total projected economicin the bioscience industry is 24 percent higher than impact is 16,050 new bioscience jobs by thethe national average, with jobs paying $12,000 year 2015. 31 31
  34. 34. Kentucky Academic research per capita ranking (fiscal 2001): University of Louisville and the comprehensive 42 out of 51 institutions, as well as helps universities com- State spending on higher education per $1,000 of pete for federally funded research; (3) Kentucky personal income (2004): 8th of 50 Science and Engineering Foundation, which positions Kentucky researchers to secure more Kentucky has developed a strategic plan for the new federal grants by giving them an opportunity to economy based on the stateʼs core strengths. In investigate untested research hypotheses. efforts to advance its innovation-based infrastruc- ture, the New Economy strategic plan will develop Programs designed to foster product develop- globally competitive research at Kentuckyʼs universi- ment in fledgling Kentucky technology-based ties. Having limited R&D infrastructure, Kentucky firms are: (1) The Commercialization Fund, will focus on five research priority focus areas, which which enables university faculty to translate their provide the most promising opportunity for Kentucky research into marketable products. Maximum to build centers of research excellence. grant is $225,000 over three years with a $75,000 annual limit; (2) The Rural Innovation Fund, The following programs advance the development which enables small, rural-based Kentucky firms of the universitiesʼ basic research capacity: (1) The to undertake research and development work. Experimental Program to Stimulate Competitive Maximum grant is $50,000 over two years with a Research, which builds basic research capacity in $25,000 annual limit; (3) The R&D Voucher Fund, science and engineering with the goal of achieving which enables small and medium-sized Ken- nationally competitive levels; (2) Bucks for Brains, tucky-based firms to undertake research and de- which combines public monies and private donations velopment in partnership with Kentucky university to encourage research at the University of Kentucky, researchers. Maximum grant is $200,000 over two years with a $100,000 annual limit.32
  35. 35. MichiganAcademic research per capita ranking (fiscal the four institutions on a competitive basis; (2) 502001): 25 out of 51 percent will go to a Collaborative Research andState spending on higher education per $1,000 of Development Fund, with emphasis on testing orpersonal income (2004): 26th of 50 developing emerging discoveries in partnership with biotech firms; and, (3) 10 percent will go to aMichigan is among the nationʼs leading states in Commercialization Development Fund to invest inresearch and development intensity, meaning the start-up biotechnology-related companies in Michi-amount of dollars invested per capita. Academic gan. The Michigan Economic Development Corpo-R&D is only a part of that commitment, with private ration (MEDC) anticipates taking equity positionsindustry leading the way. Through a series of $50 in supported new businesses. Life Sciences wasmillion appropriations, Michigan intends to invest one of three industries targeted in “Smart State:$1 billion over 20 years in life sciences research, Michigan,” a report released in 1999. The otherdevelopment and commercialization. The fund- two were information technology and advanceding comes from Michiganʼs tobacco settlement. manufacturing.Other public and private sources are expected tomatch much of the stateʼs investment over the two Most recently in Michigan, Gov. Jennifer Granholmdecades. In 1999, then-Gov. John Engler signed announced the state cannot compete for jobs with-a bill creating a “life sciences corridor,” an effort out more people earning college degrees. Of 6.4to make four Michigan research institutions -- the million Michigan residents over age 25, 1.4 millionUniversity of Michigan, Michigan State Univer- -- or about 22 percent -- have earned at least asity, Wayne State University, and the Van Andel bachelorʼs degree, according to Census 2000 fig-Institute -- among the nationʼs most important for ures. That compares with 26.7 percent nationally.biotechnology applications. Granholm would like to double the stateʼs percent- age of people holding degrees to 45 percent overThe funding will be concentrated in three pro- the next 10 years. The Michigan Commission ongram areas: (1) 40 percent will support a Basic Higher Education and Economic Growth isResearch Fund, to be distributed to projects from expected to report its findings by Jan. 1, 2005. 33
  36. 36. Minnesota Academic research per capita ranking (fiscal Gov. Tim Pawlenty has made bioscience research 2001): 34 out of 51 and development a cornerstone of his economic State spending on higher education per $1,000 development efforts. Pawlenty said bioscience of personal income (2004): 21st of 50 advances represent “the next frontier” and that they will “revolutionize big parts of our economy According to the 1999 National Science Foun- within the next two decades.” He indicated re- dation statistics, Minnesota was the 15th best search and new industries are integrating knowl- state for R&D spending per capita at $808, and edge and ideas from molecular biology, genom- the 16th best state for overall R&D spending at ics, materials science, electrical engineering, $3.8 billion. Minnesota Technology Inc., (MTI) optics, bioinformatics, and agricultural processing commissioned a study, Future Technologies Life to create scientific advances and practical prod- Sciences 2003 Delphi Study, which identifies new ucts that can be used to save lives, make a better technologies emerging from research laboratories fabric, create clean energy sources, and almost to become products or services that can be sold limitless other applications. in the marketplace. MTI recognizes the conver- sion of technology into the marketplace through Pawlentyʼs proposals include: (1) Development R&D helps companies find a competitive niche in of a Bioscience Park. Similar to one of the Gover- todayʼs evolving economy. Annual reports from norʼs proposed JOB Zones, this Bioscience Park Minnesota-based Medtronic and 3M illustrate the would be a private-public partnership designed to importance of R&D, as they continually reap the attract cutting edge bioscience companies to Min- benefits of those investments. Medtronicʼs 2003 nesota. (2) Create Major Partnership in Genom- annual report states that “approximately two- ics and Biotechnology. Bringing together two of thirds of current revenues were generated from the nationʼs top biotech and genomics research products introduced within the past two years.” assets, the University of Minnesota and the Mayo 3M strongly advocates future R&D efforts as Clinic, the state will lead efforts to create a new they state their 2002 research and development partnership and joint ventures between those two related expenses were close to $1.1 billion. MTI institutions as well as Minnesotaʼs bioscience, and Bemidji State University conducted this study medical device, and value-added agriculture to point out that Minnesotaʼs R&D infrastructure companies. (3) Stimulate Investment in Min- can capitalize on life sciences technology, nesota Bioscience Projects. Citing the example converge the technology into the marketplace of the State of Wisconsin Investment Board, the and ultimately benefit the region.34
  37. 37. Minnesota State Board of Investment would be education: (1) Appointment of a Commission onencouraged to seek out and support Minnesota- the Future of Higher Education – to recommendbased bioscience businesses. (4) Tax Incen- ways to improve higher education, and identifytives for Bioscience Development. After the state new funding sources for colleges and universities;budget deficit is resolved and economic times (2) Creation of the Research Alliance of Missouri,improve, tax incentives would be provided to spur an alliance between businesses and universities,both research and development and investment which will coordinate research and provide morein bioscience projects and companies. (5) Fund access to technology for Missouri businesses.the Universityʼs Translational Research Facility. “By these two steps, we can better direct andThis important new facility will not only lead to connect higher education and the economy. Wefurther bioscience discoveries, but it will be geared must make our colleges, universities, and techni-towards transferring and applying those discover- cal schools the engines that fuel our economy andies in Minnesotaʼs economy. (6) Funding for Re- the future,” Holden declared.search. The Governor repeated his commitment tomaintain funding for the University of Minnesotaʼs Missouri has created a student loan forgivenessAcademic Health Centers and academic health re- program aimed at keeping the stateʼs best andsearch. His budget preserves and protects recent brightest math and science students in Missourinew funding streams for those purposes. following graduation. The Missouri Advantage Repayment Incentive Option (MARIO) providesMissouri up to $10,000 in student loan forgiveness forAcademic research per capita ranking (fiscal college students who graduate with a math or2001): 23 out of 51 science degree and go to work for a Missouri lifeState spending on higher education per $1,000 of science related company. This is the first step inpersonal income (2004): 43rd of 50 Holdenʼs Jobs Now plan, which calls for stronger ties between business and research institutionsPolicymakers in Missouri have reaffirmed that edu- to ensure that new technologies are brought tocation will serve as the foundation for that stateʼs market and lead to additional jobs.ʻknowledge-basedʼ economy of the future. In his2003 State of the State Address, Governor BobHolden called for two action plans to strengthenthe link between Missouri businesses and higher 35
  38. 38. New York North Dakota Academic research per capita ranking (fiscal Academic research per capita ranking (fiscal 2001): 17 out of 51 2001): 6 out of 51 State spending on higher education per $1,000 of State spending on higher education per $1,000 personal income (2004): 41st of 50 of personal income (2004): 4th of 50 New York Centers of Excellence – a network of The National Institutes of Health recently an- high-tech research and economic development nounced a five-year, $16.3 million grant to from Buffalo to Brookhaven -- creates an Empire promote biomedical research in North Dakota. State High Tech Corridor that connects the high- The NIH Funding is the second phase of a previ- tech industry with the universities. Additional Cen- ous grant designed to increase competitiveness ters of Excellence such as New York Presbyterian for federal research money by smaller states. Hospital, Cornell and Columbia universities, New Grants were given to North Dakota, along with York Medical College and companies focused 22 other states and Puerto Rico, which combined on biotech, along with Sloan-Kettering Cancer were receiving only 5 percent of NIH funding. Center, NYU and other medical institutions, are The grants will help spur research initiatives and expanding the Empire State High Tech Corridor. help build state research infrastructure networks. They are all building on the biotech industry and Sen. Byron Dorgan, D-N.D., said heʼs worked their academic strengths. In order to create a new to spread money in developing research zones, economy in New York, the state must also build such as that between UND in Grand Forks and on the other high-tech and biotech investments in North Dakota State in Fargo. This area is the their STAR Centers, Advanced Research Centers cornerstone of his Red River Valley Research and Centers for Advanced Technology. Corridor concept, with uses the stateʼs two larg- est universities to attract more research funding and enhance the stateʼs economic development. The University of North Dakota will administer the grant in collaboration with North Dakota State University; Mayville State, Belcourt, Valley City, Minot and Dickinson are also involved. The grant will provide $1.2 million for science education at four North Dakota tribal colleges as well.36
  39. 39. Gov. John Hoeven has asked for $50 million to Research and Technology Transfer (BRTT), thesupport the creation of new Centers of Excel- Wright Centers of Innovation, Wright Projects andlence on each of the state college campuses to the Third Frontier Action Fund. Since 2002, theaccelerate the growth of targeted industries in all BRTT has distributed nearly $80 million to sev-regions of North Dakota. The centers would use eral multi-million-dollar collaborative biomedicalthe funds to leverage federal dollars, private sec- and biotechnology research projects that couldtor support and philanthropy to generate another lead to commercialization. The Wright Centers$100 million. Potential projects for the campuses of Innovation, supporting large-scale researchinclude expansion of technology parks and exist- and tech-development platforms, are to be col-ing centers and the creation of new centers in laborations among Ohio higher education institu-numerous areas: biometrics and the life sciences; tions, nonprofit research organizations, and Ohiorural technology, distance learning and computer companies in the areas of advanced materials,networking; oil and gas training and technology; bioscience, power and propulsion, informationrenewable energy; bio-security; advanced manu- technology and instruments, controls and electron-facturing; audiology; rural law enforcement; ics. Wright Projects require major capital acquisi-and tourism. tions and improvements at Ohio higher education institutions and nonprofit research organizationsOhio and must be near-term commercialization proj-Academic research per capita ranking (fiscal ects. Funds for the Third Frontier Action Fund will2001): 36 out of 51 be distributed across various action programs: (1)State spending on higher education per $1,000 Validation/Seed Capital Funds to enhance early-of personal income (2004): 35th of 50 stage Ohio technology companies; (2) collabora- tive R&D grants through Ohioʼs Fuel Cell Initiative;Ohio supports biomedical research and tech- (3) Product Development Pilot Program, providingnology development, passing three bills com- development assistance to small and medium-mitting state legislature to an additional $103 sized Ohio manufactures; (4) company recruitmentmillion for its Third Frontier Project for the fis- and attraction.cal year, beginning July 1, 2004. The stateʼsThird Frontier portfolio includes the Biomedical 37
  40. 40. Pennsylvania Academic research per capita ranking (fiscal Pennsylvania ranks 4th in the nation in terms of 2001): 10 out of 51 the number of research and development facilities, State spending on higher education per $1,000 of and 4th in the nation in terms of doctoral scientists personal income (2004): 46th of 50 and engineers. There are nearly 40 Nobel Prize Winners at research institutions in the Philadelphia Pennsylvania supports technology development region alone. and utilization through: (1) The Ben Franklin Part- nership Program – allowing state government to support small technology start-ups and facilitate South Dakota the cooperation between industries and universi- Academic research per capita ranking (fiscal ties to help solve firmsʼ problems. The program 2001): 51 out of 51 will provide financial support for early-stage, State spending on higher education per $1,000 of high-tech venture companies and R&D activi- personal income (2004): 22nd of 50 ties, and will encourage the commercialization of research: (2) The Industrial Resource Center South Dakota has invested an additional $2.8 mil- Program – founded in 1988 to help companies to lion in its public universitiesʼ potential to grow the adopt proven technologies to increase their com- stateʼs economy through research investments. petitiveness; (3) R&D Tax Incentives – providing This funding comes from economic development tax benefits for the high-tech industry, to stimulate legislation, passed in 2004, that approved creation R&D activities and technological innovations. The of four new specialized research centers to be state offers employers a 10 percent tax credit for completed by 2010. The research centers were new R&D investments and provides a $1,000 tax selected by a research and commercialization credit per newly created jobs for companies that council, after reviewing 11 proposals submitted by focus on the development of technology; (3) The faculty at South Dakota public universities. The Technology 21 Initiative Report – initiative devel- four research centers are: (1) Center for Infec- oped to seek industry input regarding the role of tious Disease Research and Vaccinology, South state government in helping Pennsylvania high- Dakota State University, $780,000. This center tech businesses remain competitive. One of the will foster research leading to the development major report recommendations is to establish a of novel therapeutic and diagnostic technologies research and technology network among research and products for infectious diseases in humans institutions, universities and industries.38
  41. 41. Texasand domestic animals; (2) South Dakota Signal Academic research per capita ranking (fiscalTransduction Center, University of South Dakota, 2001): 26 out of 51$900,000. This center will examine the pathways State spending on higher education per $1,000 ofthat regulate cell growth and differentiation, cell personal income (2004): 19th of 50death, response to stress and the maintenanceof constant physiological conditions, with a goal The Texas Enterprise Fund was proposed inof reducing cardiovascular disease and cancer; 2003 to help grow the stateʼs economy by invest-(3) Center for Accelerated Applications at the ing in technology, biotechnology and universityNanoscale, South Dakota School of Mines and research. Thirty percent of the revenue projectedTechnology, $585,000. This center will focus on for the stateʼs Economic Stability Fund – roughlyresearch in the areas of nanoparticles and associ- $390 million – will make up the Enterprise Fund.ated nanosensors, with emphasis on South Dakota Along with investing in tech fields and research, amineral development; (4) Center for Research and portion of the money will be used to retain compa-Development of Light-Activated Materials, Univer- nies, such as Sematech, that can attract relatedsity of South Dakota, $503,741. This center will businesses to the area. There is also a Scienceperform both basic and developmental research Initiative dedicated to improving pay for scienceon materials with light-activated properties. The teachers and providing students with the neces-research is important to medical applications such sary tools for technology jobs.as human tissue bonding, drug delivery, and anti-tumor agents, and is important to developing phos-phors for sensors, new laser materials, and thin Washingtonfilms that impart special properties and characteris- Academic research per capita ranking (fiscaltics to the materials they coat. Within the first two 2001): 24 out of 51years of the initiative, seven new senior scientists, State spending on higher education per $1,000 ofeight postdoctoral students, seven Ph.D. students, personal income (2004): 29th of 50eight graduate associates, and 11 technicians willbe brought into the state university system. Also In 2003, Washington Governor Gary Lockeassociated with the project will be another 24 uni- proposed $20 million in higher education fundingversity scientists, whose salary is associated with to expand enrollments at their colleges and uni-their respective institutions. versities by more than 1,500 students. The funds will be dedicated exclusively to high-demand fields such as engineering, computer science and health care. This will help the state create high- paying jobs by supporting industries such as biotechnology and software. 39 39
  42. 42. “Few states have the infrastructure, the prestige and the talent to support stem cell research over the long run. Wisconsin is one such state.” - Wisconsin Technology Council40

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