|
|
|
|
Science-Based Economic Development edited by Susan Raymond
Susan U. Raymond
Director, Policy Programs
New York Academy of Sciences
This volume of the Annals contains a rich mine of case material from around the world. Because the conference on which it is based was organized by cross-cutting topics, this article represents a "roadmap" relating those issues to the case material. Most of the cases touch upon most of the issues. All provide insights into both problems and solutions. Nevertheless, each case relates to cross-cutting issues in a unique way.
The illustrations referred to here are not intended to provide a comprehensive summary of the case material, but only to highlight key issues.
Motivation for Policy Initiatives
Over the last several decades, a range of efforts have been undertaken to use science and technology to boost economic growth. In many settings, especially in developing countries, such initiatives have long been part of the overall national plans for economic development. Persistent low rates of growth and widespread poverty have underpinned an increasing concern for creating a more vibrant and forward-looking technological base within national and regional economies.
In the United States, the motivation for significant policy initiatives at the state level, on the other hand, often came not from chronic economic malaise but from recognition of economic disaster on the horizon. The realization-at varying points in the public-private coalition- that a pre-existing, narrow economic foundation would not rebound from an existing economic downturn- led to action. But the map to action was not always clearly seen. To quote the Louisiana case, "hard times tend to turn discussion into heated and confused debate." The salient features of the problem are discussed here on a state-by-state basis.
Florida: The immediate crisis was the need to convert a defense-based economy to global market competitiveness. The task was made more difficult because much of the S&T capacity was not within Florida, but imported from out-of-state contractors. Hence, the Florida problem was both defense conversion, and conversion without a strong, local S&T base. Employment was high, but jobs were low-paying. Therefore, there was no tax base upon which to create infrastructure improvement investments. No infrastructure improvement meant no ability to attract high-paying industries. And the cycle continued.
Louisiana: The looming crisis in Louisiana was the need to diversify an economy narrowly confined to oil and gas resources facing a certain future of permanent price declines. By the mid-1980s, Louisiana had the highest, most sustained unemployment rates in the nation, and needed to achieve diversification in an economy that had not changed structurally in a quarter of a century.
Kansas: For the first time in its history, Kansas was unable to rebound from an economic recession. Premised on agriculture and faced with both falling commodity prices and unrelenting global competition, the Kansan economy of the early 1980s risked permanent impairment.
Georgia: Devastated by war and total capital flight, and with a narrowly focused agricultural base whose economic viability had been totally destroyed, Georgia made a conscious decision to base its economic future on technology. A century later, the lessons (and motivations) continue.
Oregon: Diversification of an economy primarily based on natural resources was mandatory as global competition and environmental regulation challenged Oregon. Yet, in embarking on diversification, the state lacked even Florida's defense industry base because of the decades-long pacifist stance of its federal congressional delegation and its electorate.
Montana: The state of Montana has historically been wholly dependent on natural resources, lacks virtually any north-south transport capacity within the state, has only one east-west rail link, accesses only limited air connections to the rest of the nation, and is sparsely populated, having only a handful of urban concentrations.
Pennsylvania: The virtual disappearance of the state's traditional manufacturing base, and the decline of demand for its coal owing to changes in environmental regulations, resulted in a state-wide economic crisis of historic proportions.
Cases in Europe also display this crisis-reaction characteristic. In the space of half a decade, Birmingham, England (see the paper "Lessons from Global Experience in Policy for Science-Based Development," which appears later in this volume) between the late 1970s and the early 1980s, lost more than 200,000 jobs, nearly one-third of its total employment base. Per capita income fell from England's third highest to its second lowest. The result was an immediate economic crisis that provided both the public and the private sector with a deep and compelling motivation to seek new competitive solutions in technology-based industries.
The Long-Term View
Science and technology investments are notable for the length of time required for initiatives to bear economic fruit, both for the initial investors and for the economy at large. Policy, on the other hand, is often made (and unmade) in the world of politics, whose cycles are shorter and often erratic. Blending the need for long-term commitments and the realities of short-term policy priorities, especially when economies are in crisis, is difficult.
Austin: The development of a package of incentives for attracting Sematech (the national semiconductor consortium) was a conscious decision to make a several decades-long investment in a technology-based economy. the bond issues breaks, and other private and public dollars were clearly seen, and explained to the electorate, as investment flows.
Georgia: The state's commitment to a technology-based economic development strategy dates from the end of the U.S. Civil War. Faced with a physically and economically devastated economy, Georgia in 1871 built a set of technology policy initiatives and institutions that have survived and thrived for over 120 years.
Europe: Assessments of the lag between breakthrough scientific research and market applications indicate that in the medical sciences, the time lag in 60 percent of the cases was 20 years and in 30 percent of the cases, 50 years. Developing mechanisms that reliably sustain research-economic applications process for such long periods of time is critical.
Partnership
In U.S. state experience, the development of government-academic-private sector partnerships has been an essential element of the strategy for linking technology policy to economic development. However, one size does not necessarily fit all. Partnerships emerged from different champions, and the results, both in terms of political process and in terms of program portfolio, are quite different.
The oldest partnership experience is in Georgia, whose effort to expressly link private industry, university development, and public technology policy dates from 1871 and is embodied in the creation of Georgia Tech University in 1885. Irrespective of political party affiliation, every governor of Georgia since 1956 has made science-based development a component of the state's economic development programs. More recently, the partnership efforts of both the state of Kansas and the city of Austin have forged aggressive coalitions between universities, government, and private business, both in terms of the initial definition of the needed link between technology and economic growth, and the subsequent development of program initiatives. This characteristic-the creation of tripartite relationships at the very earliest conceptual period of policy and program planning-has been a key element of success in case experience around the world.
In the U.S., however, the origin of the relationships varies widely between the private sector, the government, and academe:
Private Corporate Sector
Georgia: Private industry took the original initiative in 1885 to forge the partnership with government and to create Georgia Tech.
Austin: The private Chamber of Commerce was the glue that held the partnership together, although it was inclusive from the beginning.
Oregon: Academic infighting and government indifference led private industry to take the partnership initiative and, ultimately, to form its own academic center.
Kansas: Although the larger initiative in S&T policy was government-led, the actual assessment of Kansas' economy and its S&T dimensions was financed and led by private corporations and banks.
Montana: The state historically ranked last in the nation in terms of young entrepreneurial companies, and was often termed the "least entrepreneurial state in the nation." Partnership outreach largely began with government initiative.
Louisiana: The politically ascendent legislature took initiatives to create S&T partnerships
Florida: The office of the Governor and executive branch took the original initiative.
Ohio & Pennsylvania: Initiation of the partnership effort was clearly gubernatorial, although legislative outreach was consciously bipartisan.
University
Maine: The origin of Maine's science and technology initiatives was not even within the state, but with the federal government's EPSCOR which sought to use federal funds to seed science and technology initiatives in "science poor" states. Externally generated efforts failed. The successful local initiative that followed was academic in its origins, and ultimately successfully included all sectors.
Kansas: Initially, the technology initiative had its origins in academic and legislative leadership, although the effort was quickly taken up by both business and organized labor.
Entrepreneurial University
In many instances, the growing role of the university as a partner in science- or technology- based development has required a shift in culture within universities. In industrialized countries, this blending of industrial and academic cultures to successfully link research to the marketplace is often painful. In developing nation economies, the tensions and difficulties are even sharper. In Korea, for example, explosive growth in the number of institutions of higher learning has not been accompanied by an evolution of research and financial capacity. Academics thus face stiff odds in establishing a research career within an academic setting, with industrial linkages being of lesser concern. In Europe, the linkage between the university, in both its research and its training function, and the demands of the marketplace, is often weak. In the U.S. cases, a range of experience is also present.
Examples of the Importance of Entrepreneurial Universities
Austin: The University of Texas at Austin is not simply located in Austin; in many ways, it is Austin. The University was an extremely aggressive partner, and had a long history of corporate collaboration.
Georgia: Georgia Tech was conceived as an entrepreneurial university linked to industrial R&D and development.
Kansas: Kansas University was an active entrepreneur, not only in technology development, but also in the political process. KU professors became resources to and opinion-leaders for the state legislature.
Examples Notable for Absence of an Entrepreneurial University
Oregon: A history of deep distrust and cultural differences between the university sector and private industry created a barrier to active collaboration.
Maine: With only one Ph.D.-granting university in the state, there was little university R&D capacity or opportunity for entrepreneurial linkages. Maine's major S&T capacity was in the nonprofit laboratory sector.
Montana: Historically, Montana's S&T teaching and research facilities were generally worse at the college level than in the secondary schools.
Innovative Institutional Arrangements
While partnerships between industry, universities, and governments can be discussed, and even agreed to, in general terms, their true contributions can be realized only to the extent that they can be embodied in an organization or institution that can act reliably over time. There have been many experiments In creating innovative institutional arrangements and these are discussed later in this volume.
In Thailand, for example, Chulalongkorn University has created "Chula Unisearch" to promote linkages between the university and private enterprise. In Indonesia, the creation of "business incubators" to provide the physical work space, shared facilities, and access to technical services has become a widespread technology strategy. Indeed, at the national level, an Incubator Steering Committee has been created, comprising senior government officials and private business executives in an effort to create collaboration and a sense of mutual self-interest.
In the United States, a common approach has been the creation of independent, non profit umbrella organizations to institutionally integrate the policy effort with its university and corporate implementation. These institutions normally are legislatively chartered, and have boards of directors comprising representatives of all three sectors. These boards are often jointly chaired by the governor and the state's most senior corporate chief executive officers. The financing of the umbrella organizations draws from a variety of sources, but usually not from general state tax revenues or through central budgets.
Kansas: KTEC is a nonprofit corporation, legislatively charted with a joint corporate-university-government board of directors. It serves as a holding company for all of the other programmatic initiatives of the S&T policy initiative (for example, the venture capital fund, the agricultural technology initiative, and the manufacturing extension program). Financing is derived from its own revenues and from a portion of earnings from the state lottery.
Montana: The Montana Alliance was created at the initiative of the executive branch through formal law. It is a nonprofit foundation with a joint board. It is financed from a percentage of the state's coal tax fund.
Maine: When the state Science and Technology Commission was part of the central state budget, it was unstable and regularly embroiled in budget fights. The legislature converted it into the Maine S&T Foundation, a nonprofit organization with a joint public/private board, and with the ability to solicit private donations as well as generate revenues and make investments. State budget support declined 25% in the first year of the change.
Louisiana: The Louisiana Partnership for Technology and Innovation is a private, not-for-profit corporation chartered to act as a catalyst for implementation of state policy with a joint board of industrial executives, academics, and civic and political leaders. Developed after a series of experiences with state policy that never became fully funded, the Partnership draws its resources from a variety of sources, but not from general tax revenues. Sources include private industry, the Gulf South Research Foundation, the quasi-independent state infrastructure authorities, and the state economic development office.
Human Resources
Human resources issues have been critical considerations in all strategies to link science and technology to economic development.
In Europe, strategies are usually closely linked to human resources because education and training are seen as one of the continent s greatest assets. In the Netherlands for example, education legislation specifies that the first objective of the university system is to train students for scientific and scholarly research. Yet, Dutch data over 20 years show very little effect of the educational level of its labor force on national economic output. Human resources are considered important everywhere, but the specifics of the linkage are complex.
In many settings in Asia, emphasis on human resources capacity has taken pride of place in public S&T policy. Primary, technical, and vocational education and training has been seen as a critical element in providing the capacity to pursue sustainable S&T strategies within national economies. Problems remain in Asia, how ever. In Thailand severe shortages of personnel represent a major roadblock to science-based development strategies. Colleges and universities graduate some 4,000 engineers each year, but annual demand is closer to 7,000.
In U.S. cases, a variety of human resources factors have inhibited, and to some degree motivated, science-based development strategies. These factors have reflected both problems in skill levels within the labor force, and problems with the migration of highly educated elements of the labor force.
Skills
Oregon: Significant problems are found in re-tooling human resources to meet the labor needs of jobs in a diversified economy; Intel and Hewlett Packard still import 90 percent of their senior scientists and 50 percent of their technical labor force from out of state.
Maine: Maine has an exceedingly weak university and technical human resources base.
Montana:Fourth in the nation in terms of graduation rates from secondary schools but 23rd in terms of college graduation and 47th in terms of scientists/engineers per 1000 population, Montana faced an extremely weak human resources foundation for S&T development.
Austin: While university capacity was a central core of the high-tech effort, the largest, most central problem faced by the technology-based urban development plan in Austin was, and remains, the quality of the urban school system.
Migration
Montana:After announcement of its S&T-based economic plans, and the venture capital approach to those plans, the state received many inquiries from technically qualified former Montanans who wanted to return if capital would indeed be available.
Kansas: The state faced a significant out-migration problem with its technical human resources. Kansas ranked 8th in the nation in term of S&T graduate students, and 47th in terms of scientists and engineers in the workforce. A critical human resources motivation was to develop an economic approach that would create opportunities for the human resources being turned out by Kansas universities.
Equity
Concern is widespread about ensuring that the gains to be accrued from science-based development are available across both income and geographic divisions with in a state or nation. Certainly, these concerns receive emphasis where economies are fundamentally precarious. But such concerns also arise in industrialized nations. The effects of technology initiatives on job-creation across income strata, and the effects on remote areas, often give policy leaders serious pause. At a November 1995 conference co-organized by the New York Academy of Sciences and the Federal Reserve Bank of New York regarding technology and economic development in the tri-state region of New York, New Jersey and Connecticut, the President of the Federal Reserve, William McDonough, remarked:
It is important to bear in mind that economic development is not the same as economic growth; development involves more than just increases in total...income. In the long run, economic development can be sustained only if the growing economic pie is shared by all parts of society- rich and poor, skilled and less-skilled, and among all ethnic and racial groups. Unless all segments of society have a stake in economic growth, we cannot foster the social and political cohesion that sustains economic growth.
Among the states of the United States, experience with linking technology policy to economic growth is also raising concern over equity.
Austin: A key concern in the evolution of the Austin technology economy has been ensuring that the jobs that are created are accessible to Austin's citizens. How can a high-tech strategy be melded to an urban environment that includes significant pockets of poverty and low-skilled populations?
Maine: Geographic equity becomes a problem with a technology strategy. Maine's vast northern areas are natural resources-based, and a technology strategy naturally gravitates to the southern third of the state, which has a more urbanized, educated population.
Kansas: Failure of geographic program equity in the early days created political opposition to technology programs from rural areas.
Oregon: In this state there are problems of equity for citizens with respect to the importation of labor that a diversified economy requires. If policies that create jobs do not create jobs for Oregon's citizens, political support dissipates.
Email this citation