email icon Email this citation

Science-Based Economic Development edited by Susan Raymond


Science and Technology Policy Making in Louisiana

J.Trent Williams
Director, Policy Programs
Regional Technology Strategies Inc.
Chapel Hill, North Carolina


The author would like to thank Dr. John Ahlen of the Arkansas Science and Technology Authority, Kris Kimel of the Kentucky Science and Technology Foundation, and Dr. Stuart Rosenfeld of Regional Technology Strategies, Inc. for reviewing and improving the first draft of this document.

Louisiana
Science and Engineering Profile


 Actual 50-State Rank
General
Population, 1994 4,315,000 21
Civilian Labor Force, 1994 1,939,000 24
Personal income per capita $17,651 46
Gross state product, 1992 (billions) $96.2 22
Science and Engineering
Doctoral scientists, 1993 4,914 26
Doctoral engineers, 1993 873 28
S&E doctorates awarded, 1993 243 29
S&E post-doctorates, 1993 273 27
S&E graduate students, 1993 8,791 17
Federal Spending
Total Expenditures, 1994 (millions) $21,672 21
R&D obligations, 1993 (millions) $153 37
Total R&D performance, 1993 (millions) $470 35
Industry R&D, 1993 (millions) $170 41
Academic R&D, 1993 (millions) $255 26
 of which, in life sciences 62%
 of which, in engineering 13%
 of which, in environmental sciences 8%
Higher education current-fund
expenditures, 1993 (millions) 		$2,473 23
Number of SBIR awards, 1990-93 45 31
Patents issued to state residents, 1994 403 29


A spacious corner office on the third floor of a renovated red brick building in downtown Baton Rouge, the capital of Louisiana. This is the domain of Louisiana's newly appointed Secretary for Economic Development. Parquet floors, oriental rugs, antique furniture, the two interior walls sport works of Louisiana artists punctuated by an occasional remainder of the occupant's very successful and highly visible business and political careers.

The secretary sits, framed by a glass wall, in a chair at the end of a coffee table. He's in shirt sleeves; his suit coat in slung over the arm of the overstuffed chair behind his desk at the other end of the office. Two men, both in suits, sit on the couch to his right. They are sipping strong Louisiana coffee from demitasse cups. One of the men is smoking. when they look directly at the secretary, they are also pasted with a view of blue sky, a distant but looming green levee, and spread before it, a mile of big brown river.

The secretary's name is Kevin Reilly. The man smoking is Harold Price. As the Assistant Secretary for Commerce and Industry, Mr. Price directs all of the state's industrial recruitment efforts. Though he is an appointee of the new governor, he also performed this task for the prior and recently defeated administration. Crossing administrations at the cabinet level is very rare in Louisiana politics.

The third man, Jim Clinton, is the President of the Louisiana Partnership for Technology and Innovation. The Partnership is a private, not-for-profit corporation formed by business and civic leaders throughout the Louisiana to act as a catalyst to diversify the state's economy by facilitating technological innovation. Mr. Clinton has requested this meeting.

The three have just completed the traditional exchange of pleasantries prior to discussing business.

Reilly: Well Jim I haven't seen you since the transition team circus, you would've thought I had enough sense to avoid sitting in the secretary's chair [Brief pause.] What's on your mind this morning?

Clinton: Nothing real specific. Now that you had a couple of weeks to settle in a bit, I thought it might be appropriate to offer you a general introduction to the operations of the Partnership.

[A casual discussion of the Partnership's Pre-Seed Investment Portfolio and support activities for various university-based technology/applied research centers ensues.]

REILLY: [Looking directly at Price.] Harold, what do we need to do on the technology front? What can we support?

PRICE:  I think its important that we do something here-but its a tough call We have no priorities- no policy

REILLY: Can your folks come up with a policy?

PRICE: We're not really equipped to do that.

REILLY: Well then, who can? Who do we need to talk to?

PRICE: [Nodding toward Clinton.] Those guys.

CLINTON: That's what we're here for.

REILLY: How long will it take?

CLINTON: Let me huddle with the folks back at the office and we'll get back to you tomorrow morning with a timetable and an approach.

Jim Clinton did in fact call back the next morning with a timetable and an approach. But, there was a catch. The Partnership was eager to play a leadership role in the development of a technology policy for the state of Louisiana if a single condition could be met.

Introduction

The scene that serves as the preface for this case study is a not-so-dramatic reenactment of a conversation that took place in February 1992. That quick and somewhat casual conversation unleashed a series of events that, although they continue to unfold, have so far produced and implemented a bottom-up approach to formulating a state technology policy, a first statement of the policy itself, and a plan for establishing an infrastructure within state government for the continuous management, assessment, and refinement of the policy.

Perhaps the most striking aspect of the conversation was that it was completely unanticipated. When Jim Clinton showed up that morning he had no idea that he would leave the secretary's office with the responsibility of organizing a technology policy-making initiative. Perhaps it works this way more often that not. The decision to launch this policy effort was not the result of some systematic, analytical process that produced a compelling argument that a policy was essential. Instead, it was a spontaneous reaction to the realization that there were too many choices, too few dollars, and not enough information.

To what extent was this unanticipated realization inevitable? Do the resulting policy development activities hold any meaning for others? Can the implementation plans serve as useful models for other states and countries? This case study seeks to distill from Louisiana's policy making efforts any lessons that might advance similar initiatives. It is just as concerned with the politics of policy making as it is with the substance of the policy itself It holds that policy-making insight comes from an understanding of both context and content.

This brief study will first introduce some historical perspective on Louisiana's economy, politics, culture, and demographics. It will then examine five of the forces at work within this historical profile that induced Louisiana's policy making initiative. Once this context has been established, this analysis will then focus on the objectives of the policy effort, the process that was employed to develop the policy and the content of the policy itself The next portion of this study will address the organizational structure of policy development process as well as the planned structure for implementation and ongoing management of the policy. Finally, it will consider impact, outcomes, pitfalls, and prospects for the future.

Background

Culture and Politics

Louisiana is a fascinating state- as poor in wealth as it is rich in culture. Its heritage, people and politics are complicated and diverse. It was originally occupied by at least six native American tribes; then colonized and governed by France and Spain with additional settlements established by the Scotch, Irish, and English in its northern reaches; and then sold by the French to the United States in 1803. Its civil law is based on the Napoleonic Code rather than English law; its local government units are called parishes rather than counties. Louisiana considers itself to be partitioned into three distinct geographical and cultural regions: the piney woods, red clay, and Protestantism of north Louisiana-in the geographic and spiritual heart of the Mid-South; the swamps, accents, music, humidity, food, oil rigs, and Catholicism of Cajun south Louisiana; and the fecundity and mysticism of the island city of New Orleans.

Louisiana's politics and culture are inseparable. Its political figures, especially its governors, tend to be larger than life, flamboyant, and occasionally notorious. For well over half a century, its politics can be characterized as a struggle between Governor Huey P Long and his genealogical and spiritual populist descendants on one side and the reform movement on the other. It is no accident that in the 1930s Louisiana was the first state in the country to introduce a statewide system of relief for the poor. To this day, Louisiana has one of the most advanced welfare systems in the country. The state had traditionally been governed by strong governors and weak legislatures. However, the balance of power has begun to change dramatically in recent years.

Economy

While Louisiana's people and culture are diverse; its economy is not. Since the 1930s, its manufacturing base has been dominated by oil and natural gas extraction and the production of petrochemicals. The state has consistently occupied one of the top spots nationally in these manufacturing sectors for the last fifty years. Also, chiefly because of New Orleans, the state is one of the top tourism destinations in the country. As a whole, the state's manufacturing economy is natural-resource based, with wood and paper products and agricultural production among the next most important contributors. Given its resource base and its location on the lower Mississippi River, Louisiana also boasts two of the top five largest ports in U.S. in terms of tonnage.

Although the basic structure of the state's economy has not changed over the last twenty-five years, its performance has been highly variable. From 1970 to 1981, Louisiana experienced tremendous growth as measured by labor force size, employment, and per capita income. During this period, population increased by over 18 percent, the labor force increased 44 percent, and the number of employed increased 47 percent. From 1970 to 1980, the rise in per capita income was almost 44 percent. This growth was primarily the result of greatly increased demand for oil and natural gas and a continued strong performance in petrochemicals.

In late 1981, Louisiana's economy essentially walked off a cliff The deleterious impacts of the national recession were swamped by the even more damaging effects of what would be the beginning of a long-term decline in the price of oil and gas. While the state's economy had a history of coping well with short-term disruptions associated with recessions, it could not accommodate decay in its very foundation. Within a year Louisiana's unemployment rate soared from 6.7 percent to 10.3 percent. From that point on, for the remainder of the decade, Louisiana led the nation in unemployment with rates in the 10.5 percent to 12 percent range. Any notion that the state's economic problems were caused by the national recession was dispelled by the end of 1987 when the nation's average annual unemployment rate was 6.2 percent while Louisiana's was 11.7 percent.

The state's fiscal circumstances were just as bad, if not worse. Its tax structure mirrored the structure of its economy in that it was heavily dependent on severance tax collections on oil and natural gas extraction. At the beginning of the 1970s, severance tax collections accounted for roughly 30 percent of total state tax revenues; by 1980 this figure had declined to under 20 percent; and by 1990 to well under 10 percent. As a consequence, substantial budget cuts and budget deficits have been away of life in state government for the last ten years. This state of affairs set the stage for the conversation scripted in the prefatory scene. To what extent was the conversation inevitable?

Five Reasons Why the Unpredictable Conversation Was Inevitable

In retrospect, at least five different sets of circumstances can be identified as converging to incite a decision to launch a technology policy making initiative. The perspectives of three men who participated in the enabling event were, to varying degrees, shaped by all five of these forces.

Reason 1: The Diversification Mandate

Bad times fostered a widespread recognition that Louisiana's economy and public finances were driven by a monolithic industrial base (oil, natural gas, petrochemicals) which was in turn extremely sensitive to worldwide fluctuations in resource prices. It became apparent that a more diversified state economy was the only way out of the economic morass. As a result, the state's economic development vocabulary expanded past traditional industrial recruitment terms and into concepts associated with technological innovation, global markets, industrial competitiveness, and the role of education and learning. Understanding new markets, new products, and new companies meant a more public discussion and understanding of the competitive advantages derived from the development and use of technology.

Reason 2: Prior Trail Blazing Efforts (A Brief History)

After several unsuccessful attempts to launch and sustain funding for science and technology-related initiatives in the 1960s and 1970s, in the early 1980s some Louisiana legislators began to recognize the long-term role technological innovation would have to play in the successful diversification of the Louisiana economy. It was also recognized that a major portion of Louisiana's industrial base, which bad been traditionally targeted by state economic development incentives, did not have a strong innovation content. Most of the manufacturing plants were oriented towards routinized production that was vulnerable to the introduction of new technology, market fluctuations, and the resultant changes in world trade patterns.

In 1984, the Louisiana legislature passed legislation creating the Louisiana Science and Technology Foundation. As an economic development organization aimed at diversification, the foundation was to direct its powers to the production of: (1) new technologies and technology-based firms; (2) technologists who would improve existing industry and created new products and process improvements; and (3) entrepreneurial technologists who would create rapid-growth, technology-based firms. The legislature originally intended to provide the foundation with a $500 million endowment over a ten-year period. Subsequent to the passage of this legislation, as a result of Louisiana's economic difficulties, state revenues began contracting. It was determined that no funds could then be made available for the foundations' endowment. In following years, attempts were made to fund the foundation at lower levels, but by then the state's economy and the state's revenue stream had deteriorated even further and no funding was available.

During the mid-1980s the legislature also created the Louisiana Small Business Development Corporation. This entity was to focus on facilitating and nurturing the growth of small businesses featuring advanced technologies. Once again, as a consequence of the state's financial problems. the organization was created but funding was not available.

The final related statewide action initiated during the mid-1980s was the Louisiana Quest for Technology program. Although short lived, the objectives and results of the program are worth noting. In 1984 Gulf South Research Institute (GSRI) received one year's funding from the state to develop and implement the Louisiana Quest program. The objective of the program was for GSRI to work with participating Louisiana colleges and universities to establish an internal program to begin systematically transferring technology to the private sector. At the heart of the Quest program was a process for identifying, evaluating, and inventorying previously unrecognized or undervalued technologies in colleges and universities.

Sixteen Louisiana higher-education institutions participated in GSRI's Quest program. This effort involved training university personnel in the multifaceted technology transfer process, as well as establishing on-site technology transfer offices. The first year of the Quest program was resoundingly successful. The first year's results far exceeded all goals in terms of participating universities, technology submissions, and viable commercial assessments.

However, when the Quest program was originally funded, it was the intent of the state to transfer this activity from the State Board of Regents (the program's initial sponsor) to the newly created Louisiana Science and Technology Foundation, once the foundation was operational. As previously mentioned, the foundation was never funded. In view of the program's success and widespread support, the Legislature chose to fund the Quest program through the board of regents for another year. However, as a consequence of the state's fiscal crisis, the second year funding was never made available.

In the early 1980s Louisiana was among a handful of states (and first among the southern states) to conceive of a state-wide program to encourage technological innovation in an integrated fashion (from inception to commercialization) as a crucial public economic development initiative. It is also important to note that the planning documents for this program begin with the call for a statewide technology policy. The legislation creating the Louisiana Science and Technology Foundation, the approach to technological innovation featured in the operating plan for the foundation (A Technology Program for Louisiana, GSRI, 1984), and the success of the Louisiana Quest for Technology program all received regional and national attention. Implementation funding was not a high enough priority, however, and the state was never to realize economic benefit from its foresight.

Finally, in 1988, the Louisiana legislature and the governor created and funded the Louisiana Economic Development Corporation (LEDC). LEDC pursues a broadly defined developmental finance mission on a statewide basis. Included among its more innovative activities are programs that match both federal Small Business Innovation Research (SBIR) grants awarded to Louisiana businesses and other programs which stimulate the availability of venture and seed capital in Louisiana.

In 1989 the Louisiana Partnership for Technology and Innovation became fully operational. The Louisiana Partnership is a private not-for-profit corporation which is chartered to act as a catalyst to diversify the state's economy by facilitating technological innovation. (See Reason 4 for more information on the Louisiana partnership).

Two significant developments occurred during the 1991 legislative session. First, the legislature created a new Office of Technology, Innovation and Modernization (OTIM) within the Department of Economic Development. OTIM has two fundamental goals: (1) facilitating the continuous modernization (and competitiveness) of Louisiana's base of small and medium-sized manufacturing and manufacturing services firms; and (2) enhancing and coordinating technological innovation efforts throughout the state. At present, staff funding for OTIM has not been made available. However, the new office has been assigned a high priority within the economic development department and senior department staff have been assigned responsibility for developing the office and its programs.

The second major development was the passage of legislation that permitted and facilitated the creation of Business Industrial Development Corporations (BIDCO's). BIDCO's are non depository financial institutions which are allowed to provide financing and management assistance to Louisiana businesses through a number of avenues including subordinated loans with equity factions, royalty financing for product development, straight equity investments, and guaranteed loans under the SBA 7(a) program.

While important in their own right, both of these developments are also noteworthy because they are the first two statewide initiatives which focus on providing substantive financial and technical support to the state's manufacturing base- especially to small and medium-sized manufacturers.

Reason 3:
The Development of a Substantive Science and Technology Infrastructure

Over the past decade, the combination of research accomplishments, scientific vision, political acumen at the state and federal level, and just plain good fortune have provided Louisiana with the foundation for a strong technological infrastructure, especially when compared to many of its southern neighbors. LEDC, the Louisiana Partnership for Technology and Innovation, OTIM, and the BIDCO program have already been mentioned. One of the most important statewide, state-supported programs is the State Board of Regents' Louisiana Education Quality Support Fund (LEQSF). This program features a constitutionally protected funding source for basic and applied research with economic development implications with in Louisiana's statewide university system.

Louisiana has many hundreds of millions of dollars of public resources invested in the specific missions of a host of technology-related research centers throughout the state. This is a high level of investment for a rural state with approximately four million inhabitants and a resource-based economy. One of the most recent additions to this list, the Pennington Biomedical Research Center, was launched through a single $120 million gift from an individual donor. A partial but representative listing of these assets includes the following centers.

Louisiana's more broadly based technology-related resources are not counted in the above mentioned tally. These assets include: the university medical centers in New Orleans and Shreveport; the Veterinary School and Agricultural Center at LSU in Baton Rouge; the Louisiana Sea Grant Program; a major elementary and secondary education math and science initiative within the state department of Education jointly sponsored by the Board of Elementary and Secondary Education and the State Board of Regents; the state's system of vocational/technical training institutions; and technology transfer offices operating on a number of university campuses throughout the state.

Louisiana has the beginnings of a very substantial technological infrastructure. These assets have the potential to support very high-quality, self-sustaining economic development activities for decades to come. As a matter of necessity, they have been developed on an opportunistic and piecemeal basis. However, their ultimate productivity will be determined by how well they are managed, especially in relation to each other.

Reason 4.. The Existence of a Qualified and Independent Vehicle to Lead and Inform the Policy Effort

The Louisiana Partnership for Technology and Innovation is funded by Gulf South Research Foundation, the Louisiana Economic Development Corporation, the Louisiana Public Facilities Authority, and Louisiana business and industry. The Partnership's membership and its board of directors is comprised of business, university, civic, and political leaders throughout the state.

As an independent, private, not-for-profit corporation, the Louisiana Partnership performs four basic functions in support of its charter:

  1. it invests time and money in commercializing early-stage technological innovations from the state's university system and the private sector;
  2. it supports the state in any efforts related to technology development, technology policy, and industrial modernization and competitiveness;
  3. it assists Louisiana universities in marketing and structuring more fundamental technology development relationships with industry; and
  4. it communicates pertinent information on issues concerning scientific and technological education, technological innovation and competitiveness through its weekly and quarterly publications series.

To a great extent the creation of the Louisiana Partnership was a reaction to the state government's history of passing visionary economic development legislation without funding its implementation.

Reason 5: The Ascendancy of the Louisiana Legislature

By the early 1990s the balance of power had shifted from the governor to the legislature. The house and senate no longer viewed themselves as facilitators of the governor's wishes but instead began to assert their right to develop and implement its own policies. As a practical matter, this meant that while the governor's backing was highly desirable, independent backing from the legislative leadership was now essential for passing and funding any significant legislation. This power shift is unprecedented in modern Louisiana political history and is continuing to work itself out. The implications are very significant. While an independent legislature with its own agenda complicated the political terrain, it also opened new possibilities for wider based and more enduring commitments to new policies.

The scene described in the preface of this document concludes with the following statement:

Jim Clinton did in fact call back the next morning with the timetable and an approach. But, there was a catch. The Partnership was eager to play a leadership role in the development of a technology policy for the State of Louisiana if a single condition could be met.

This single condition was that Secretary Reilly and Jim Clinton first secure the commitment of the governor, the speaker of the house, and the president of the senate to mount an aggressive effort to implement the policy and policy-making process before proceeding any further. They were successful.

Process2: The Overall Approach and Its Goals

The Louisiana Partnership recommended, and the Department of Economic Development accepted, a five-step approach for the development and establishment of a technology policy in Louisiana.

  1. The Partnership would devise a process for the process. That is, rather than attempt to flesh out a technology policy for the state, it would draft a "e;white paper" that would recommend an approach for establishing an on-going process for the development and implementation of technology policy. This approach would establish general goals and ground rules but it would allow the process itself to establish specific objectives and appropriate initiatives, programs and actions.
  2. After reviewing and refining this approach, the Department of Economic Development would champion and support this policy-making effort. Secretary Reilly immediately established this as a high priority by detailing the department's highest ranking civil servant and most senior planner, Nadia Goodman, to serve as the department's point person for the initiative.
  3. Upon agreement on the approach and process, Secretary Reilly and Jim Clinton would brief the governor the president of the senate and the speaker of the house and obtain their commitment and backing.
  4. For the next year the partnership and department would implement this process and then draft policy recommendations based on the information developed through this process.
  5. The draft policy and its attendant goals, objectives, programs and actions would be presented to the legislature and the governor for debate, refinement, and implementation.

Because this approach addressed both the process of policy making as well as the policy itself, there were two different missions.

Mission #1: The goal of the approach is to redefine the way in which state government views technology and innovation and the way in which it makes decisions affecting technology and innovation.

Louisiana state government currently spends hundreds of millions of dollars annually on technology-related programs. These expenditures include university research centers; traditional science, math, and business education, both K-12 and collegiate; technical programs in the co-tech system; university research programs (direct appropriation and trust fund grants); and executive branch appropriations in an array of state agencies including the Departments of Transportation and Development, Wildlife and Fisheries, Environmental Quality, Natural Resources, and Economic Development.

Still, with all this commitment of resources, there is no state policy by which to evaluate these public investment decisions. At present, there is no individual, organization, or committee prepared to frame questions such as the relative importance to the state of a funding request from a Center for Advanced Micro-Devices versus, for example a job training funding request for development of a CNC machining curriculum. Yet, for Louisiana to move into the twenty-first century with economic momentum, wise investments of public funds in these areas are essential.

Mission #2: The purpose of this policy is to improve Louisiana's long-run economic vitality by enhancing its economy's capacity to generate wealth and create jobs. The intent is not only to provide an adequate standard of living for all of Louisiana's citizens, but to increase their standard of living.

The policy establishes three major goals in pursuit of this purpose.

  1. By the year 2004, Louisiana will have a scientifically and technologically competent and innovative workforce.
  2. By the year 1999, Louisiana will demonstrate the ability to consistently develop, commercialize, and use new and/or improved products, services, and processes.
  3. By the year 1999, Louisiana's economy shall have the capacity to develop and sustain a modern, highly productive manufacturing base.

The Process

Concept

Louisiana state government currently spends hundre

This process is intended to lead to a permanent, rational mechanism to promote, coordinate, guide, and evaluate the state's efforts as it invests the hundreds of millions of dollars it budgets every year for technology-related endeavors. For this approach to be effective, it is essential that both the mechanism and the process which creates it be shaped by accurate, incisive technical and economic information supplied by those individuals and organizations who create, develop, fund, use, and evaluate technology.

This approach for Louisiana assumes that the eventual structure will be responsible for developing and shaping a comprehensive technology policy and for facilitating, monitoring, and managing its implementation. It holds that this structure's purview should cross traditional legislative and executive offices, agency, and private sector lines. It insists on a mind-set that invests public funds rather than one that spends or budgets public funds, and it measures its returns in terms of wealth generated and jobs created in the Louisiana private sector. It views its scope as including technological innovation, risk capital availability, market information, technological knowledge, competitiveness and modernization, and education and training at all levels.

Mechanics

The Department of Economic Development and the Louisiana Partnership began the process by organizing and conducting a series of ten statewide focus groups over a ten-month period at various locations throughout the state. At the request of the department and the Partnership, the legislature cosponsored this effort.

The first half of the focus group effort was concerned with soliciting information and counsel from the type of private sector firms upon which the success of this policy would rely. These groups included small, technology-intensive companies, small and medium-sized manufacturers and manufacturing service firms, large manufacturers and/or large, technology-intensive companies (including information processing firms and utilities). These meetings were conducted in both the northern and southern portions of the state.

The second half of the focus group effort first addressed the university research base and then concentrated on those segments which would most likely have major implementation roles or major education and training responsibilities. Information gleaned from the private firm groups- especially information related to the role of government, the efficacy (or inefficacy) of potential policies, programs and service delivery methods, present and future education and training requirements, and technological infrastructure needs-was presented to the public sector focus groups and to economic development professionals throughout the state.

The Secretary of Economic Development convened each focus group. Advice and reactions were solicited from each participant regarding the scope and expectations for a state technology policy, the manner in which technology policy should be developed and implemented, and strengths. weaknesses, and opportunities associated with the state's current technological profile.

The purpose of the focus group activity was twofold. First, it gathered essential knowledge, information, and advice from the sectors of the state that would be the most affected by any technology-related initiatives. It was felt that if the resulting policies made sense, then these very knowledgeable individuals and the organizations they represented might also be expected to serve as the foundation for a sizable technology constituency. Second, these focus groups assembled similarly situated interests for the first time to address technology-related issues. If all parties found these groups to be productive, it was thought that it might be worthwhile to incorporate this type of approach into the permanent technology-policy development process.

The information and counsel gleaned from the focus groups was then evaluated, synthesized, and cast in a policy framework by representatives of the Department of Economic Development and the Louisiana Partnership for Technology and Innovation. The policy framework was submitted to the governor for review and executive action in November of 1994. Current plans call for the document to be presented to the legislative leadership early in 1995.

Ground Rules and Critical Distinctions

A number of issues are likely to surface anytime economic development concepts, programs, and priorities are discussed. Arguments concerning the proper role of state government, urban versus rural concerns, industrial recruitment versus indigenous development, the roles of higher education institutions within the economic development arena, basic versus applied research, tax incentives, math and science education, community colleges and vocational training, public roles in risk capital markets, local versus regional versus state economic development organizations, among other issues, are typically brought to the table. Because a decade of hard times has forced all the major public and private stakeholders into a survival mode, this discussion in Louisiana has a tendency to turn into a heated and confused debate.

The frustration inherent in such far-ranging and tense debates is exacerbated by the fact that there is no common agreement upon the meaning of key concepts. definitions, and objectives. In an attempt to reduce this frustration and focus the debate, the Louisiana approach employs several important tools.

First, it explicitly defines the concepts of economic development, technology, and technological innovation.

On economic development:

This effort is exclusively and explicitly an economic development initiative. For the purposes of this framework paper, economic development is understood to mean changes in economic life that are not forced upon it from outside but arise by its own initiative, from within. The latter concept is not a new wave economic development notion; it is rather a paraphrase of Joseph Schumpeter's classic definition offered during the first half of this century. In its simplest form, it suggests that initiating change from within is the essence of economic development.

On technology:

This initiative does not distinguish among low, medium, and high technology. It holds, from the economic development standpoint, that such distinctions are basically irrelevant and often misleading. It defines a technology as simply a useful thing. In this case, "things" include the tangible and the intangible; such as, a new and effective management technique is a useful thing. It considers the essence of technology to be function or use. In free economies, markets most often determine the value of that use.

On technological innovation:

For the purposes of this paper, technological innovation is understood to mean the development and commercialization of new technologies and the products, processes, and services in which they are embodied. This process embraces not only the technology itself but all information and activities relevant to its commercialization. This includes such items as market information, technological knowledge, innovative approaches in existing markets, and innovative entrances into new markets. It is by nature an iterative process. The results can be as big and fundamental as the steel plow, the internal combustion engine, the microprocessor, or a manufacturing process that produces microscopic machine parts. The results can be as incremental, as humble, as an easy squeeze toothpaste container, a friendlier screwdriver grip, a non-reusable, disposable syringe, or even a better mousetrap.

Second, the Louisiana approach makes a critical economic development distinction between scientific and technological endeavors.

On the distinction between science and technology:

Finally, it is important that technological innovation be distinguished from scientific inquiry. Science and technology are different realms which are often interdependent. While the lines occasionally blur in areas such as biotechnology, for the most part they can be understood separately. Science is knowledge; technology is know-how. Science is fundamental inquiry; technology is application or use. As so articulately stated in the Southern Technology Council publication, Turning to Technology "science is intended to better understand the world; technology is intended to change the world-presumably for the better." Basic science is certainly important for a host of reasons, but it does not automatically translate into new technologies, products, and companies. When the goal is explicitly one of economic development, it is a mistake to ignore the technological imperative. Many argue that not making this distinction has resulted over the last few decades in Nobel laureates for the United States and technology for Japan. The point is one of balance. It is important to invest in and nurture both capacities but not to confuse them.

Third, and last, the Louisiana approach establishes ten guiding concepts and ground rules to orient the policy discussion.

The ten ground rules:

Before suggesting an approach for designing an ongoing technology policy development and implementation mechanism, ten ground rules are recommended to help frame what is normally a complicated and always a dynamic process. Prior experience in this arena indicates that the establishment of some firm guidelines at the outset helps avoid confusion and maintains a sharp focus further down the line.
  1. The purpose of the process and the policy is explicitly and exclusively one of direct economic development.
    This effort should not be used or construed as an attempt to develop overall education or science policy. Those are separate but related domains and are of critical importance in their own right.
  2. This policy approach adopts a broad technological perspective.
    It considers its purview to include an expansive concept of the technological innovation process, industrial competitiveness and manufacturing modernization, and education and training as they relate to skills of new labor force entrants and to upgrading skills in the existing workforce.
  3. This approach focuses on technology as opposed to science or even applied science.
    It holds that science is knowledge for knowledge's sake and that technology is making for the sake of use. Though the lines between science and technology can begin to blur, especially in areas such as biotechnology, failure to make this distinction can result in a serious confusion of objectives and strategies.
  4. There is no such thing as "high tech."
    There are only useful technologies and the products, processes, and services in which they are embodied. The issue is one of market competitiveness, not how much technology you can pack into a product.
  5. Nothing happens without money.
    Risk capital at all levels is essential to technological innovation; debt and equity capital are essential to manufacturing competitiveness; and taxpayer dollars (public investment capital) are essential for education and technological infrastructure.
  6. Economic development is ultimately a private sector affair
  7. Even though the transactions occur in global markets, jobs are created and wealth is generated by people who live and work in communities.Long-run economic vitality occurs when the two processes of job creation and wealth generation become self-perpetuating. Economic development is the result of indigenous private sector competitiveness and all the knowledge, skill, determination, savvy; aggressiveness, resiliency, and luck that consistent competitiveness (and long-run profitability) implies. Even in the case of university-based technological opportunities, the large body of statistical evidence indicates that the private sector will end up funding at least 90% of the commercialization costs. Government can facilitate economic development, but it cannot create it out of whole cloth. If technology policy initiative does not make sense within the private sector, then it does not make sense at all.
  8. Don't forget the university's role as an educator.
    Universities transfer technology sometimes; universities transfer knowledge and skill all the time. Universities have an important role to play as a source of technological opportunities, but the economic impact of these endeavors will almost always be dwarfed by the impact that will result from the skills, knowledge, and values they impart to their graduates.
  9. Universities do not commercialize technology; nor should they be expected to commercialize technology
    While universities are a crucial creator of technological opportunities and technological knowledge, they do not engage in the large scale manufacturing, marketing, selling, distributing, and servicing of products, processes, and services within national and international markets. At some point the technology must be transferred to the private sector if it is to be commercialized.
  10. Public finding means public obligations.
    When the opportunity presents itself, public institutions, including universities, are obligated to transfer technology not for their benefit but for the benefit of the people who fund them- the taxpayers. The most "profitable" deal for a public university is not necessarily the best deal for its taxpayers if the wealth and jobs generated by the endeavor are all out-of-state.
  11. If you build it they may not come.
    The innovation process is demand driven. Successful technological innovations are almost always induced by the market. Avoid supporting supply-side technology research and development efforts, no matter how good the idea seems. The result is all too often a catalog of technologies which is distributed to many, read by few, and commercialized by none. Gravitate towards supporting technology projects. including very risky projects, for which a compelling market need can actually be demonstrated. "I need, don't you have?" is stronger than "I have, don't you need?"

The Content

The initial technology policy piece created through this process began with a general statement of the three previously stated goals. Each goal was then followed by a series of policy statements that, if diligently adhered to, would go a long way toward realizing the goal. In some cases specific action steps were also recommended. The individual policy statements and action steps were all distilled from comments and recommendations from the series of focus groups with the various sets of technology policy stakeholders.

Policy statements associated with workforce competencies focused on the quality and availability of education and training programs and services for minorities, women, and new entrants into the labor force and for upgrading skills in the cur rent workforce. Specific actions steps ranged from making math and science education less abstract to implementing school-to-work programs to increased use of distance learning technologies to exploring effective ways to encourage employer-based training.

The technological innovation policy statement included the following objectives:

Policy statements addressing industrial competitiveness concentrated on the following activities:

The policy statement also contained a series of cross-cutting recommendations such as the development and implementation of a state telecommunications plan and an intermodal transportation plan; an increased level of participation in federal-state economic development partnerships; and establishing a formal process for updating and revising the policy.

Perhaps most importantly, the statement suggests a series of provisions for the actual implementation and ongoing review and management of the state's policies and programs. These implementation and accountability recommendations engage both the governor's office and its various executive agencies and the legislature. Three of these recommendations are especially significant. Two of them are important while the third is critical.

First, it is suggested that the initiate the establishment of the policy making mechanics by issuing an executive order that promulgates the policy statement and in doing so directs all state agencies with relevant responsibilities to, as a group, actively work toward the development and implementation of a comprehensive intermodal transportation plan, of a comprehensive telecommunications plan, and of programs that will support the competitiveness of Louisiana manufacturers.

Second, it is recommended that the governor appoint a Competitiveness Advisory Committee to provide guidance to his office and the Department of Economic Development matters related to development, commercialization, and deployment of technology and on-manufacturing competitiveness issues.

Third, it is recommended that the Louisiana legislature establish a Joint Subcommittee on Technology and Innovation with full-time staff under the commerce committees of the house and senate.

These pending items by the Governor represent necessary and important first actions for the establishment of technology policy and policy-making mechanism. However, their probable impact moves from the marginal to major if the legislature regards such a policy-making mechanism as desirable and practical. At this point in Louisiana's political history, the legislature is holding the high cards. It is in a position to supply the continuity across administrations, the funding, and the independent oversight required to make this policy-making effort work.

The Organizational Underpinning: Plenty of Bricks but No House

The leaders of the process have made the case that (1) Louisiana has, from an economic development standpoint, significant scientific and technological assets and (2) because these very valuable assets are not managed relative to one another, their economic development power is underexploited. If the first stages of this policy making effort are implemented in their current configuration, when the smoke clears there will be several significant and active stakeholders at the state level. They are the Department of Economic Development, the Louisiana Partnership for Technology and Innovation, the Office of the Governor, and the Louisiana legislature's Joint Subcommittee on Technology and Innovation. Other active groups of major policy stakeholders include the state's higher education institutions and the State Board of Regents, its association of economic development professionals, risk capital providers, the various chambers and economic development foundations, and the state's electric utilities.

At this juncture, a cohesive statewide plan to manage and coordinate the policy has yet to emerge, nor have the critical private sector linkages been established. However, the leaders of the policy initiative, the Department of Economic Development and the Louisiana partnership, are both committed to establishing strong, vigorous, and permanent links to the private sector. Both organizations hold that without such links the policy effort is a waste of time; that a policy that is not informed on an ongoing basis by those it seeks to assist will not work.

Although much of this has yet to be formally stated, here is a "best guess" snapshot of the organizational status of the four critical dimensions of the policy initiative.

  1. Policy Formulation
    State technology policy will most likely be formulated by the governor's office and the legislature's professionally staffed Joint Subcommittee on Technology and Innovation. It is anticipated that both of these entities will be advised by the Competitiveness Advisory Committee, Department of Economic Development and the Louisiana Partnership. Also, the ongoing use of private sector focus groups might also be employed to insure that the policy is grounded in private sector sensibilities.

  2. Funding
    There are two aspects of state funding for the policy and both of them are con trolled by the legislature. First is funding for existing technology-related pro grams. It is anticipated that the Joint Subcommittee on Technology and Innovation will recommend funding priorities based on its technology policy. Second is funding for new state-financed initiatives which will be also appropriated by the legislature. It is anticipated that the Joint Subcommittee on Technology and Innovation will also make funding recommendations on these items based on existing state policy. In view of the state's fiscal problems, funding sources for new initiatives will be few and far between for the foreseeable future.

    A final independent funding possibility is the Louisiana Partnership. This public purpose not-for-profit corporation might be used as the vehicle to lever age private sector funds, federal funds and state funds for certain high priority programs.

  3. Implementation
    Organizing for implementation should not be a problem because the structure is already in place. One would anticipate distributing implementation responsibilities among a number a major actors. Included among these are the Department of Economic Development for matters related to industrial competitiveness. The Louisiana Partnership for technological innovation programs, the Board of Regents for applied research funding within the universities, and the Board of Elementary and Secondary Education for K-12 math and science education.
  4. Management and Oversight
    The primary management point for activities related to technological innovation and industrial modernization would logically be the Department of Economic Development. The department is geared towards managing its own programs and managing funding to other entities. It is also directly accountable to the governor and the legislature. However, past this point, the management responsibilities for the many other aspects of this policy are much more problematic. It may be that a formal across-the-board management mechanism is created and funded as part of this policy-making effort. Assuming the first policy statement is implemented, oversight and accountability will be the province of the Joint Subcommittee on Technology and Innovation and its staff.

The Louisiana Technology Policy Future: Pitfalls, Lessons, and Prospects

The final portion of this case study will offer some observations on the future of Louisiana's technology policy initiative. First it will suggest some possible pitfalls that may be lurking just over the horizon. Second, it will reiterate several lessons from the Louisiana technology policy development experience that might be of use to other states or countries as they contemplate a similar venture. Finally it will attempt to qualify the prospects of this policy-making endeavor.

Pitfalls

  1. One significant hazard area is that while this policy development effort is a priority for its leaders, it does not have their undivided attention. Neither the Department of Economic Development nor the Louisiana Partnership has the resources to allow them to detail anyone the this effort on a full-time basis. No one thinks about this twenty-five hours a day; as a consequence, this process itself is vulnerable to internally generated delay and an occasional loss of focus.
  2. A related threat is the loss of momentum. Circumstances have a way of intervening to take critical actors temporarily out of the loop. This has already happened several times to bad effect. Funding drives for the Louisiana Partnership, coping with unanticipated budget cuts for the Department of Economic Development, and dealing with the recurring fiscal crisis for the legislative leaders have conspired to cause the timetable for this effort to fall a year behind schedule. The lag has exacted a cost. For instance, the enthusiasm and interest generated by the statewide focus groups, which could have also served as an instant constituency, has faded with time. However, the initiative has persevered in spite of the delays. It is poised to be established by the governor through an executive order and refined, funded and held accountable by the legislature. If, however, it was forced to sustain another delay it would most probably be shelved for the foreseeable future.
  3. Another likely pitfall is that the implementation of this policy will disrupt politics as usual. The organizations and programs that were accustomed to obtaining funding through political clout will view a new, priority-driven funding process as a threat. They are likely to attempt to derail the process or at a minimum to circumvent it.
  4. The most formidable threat is loss of legislative commitment. The legislature has supported this effort throughout and has even hosted a number of the focus group meetings. However, while there are no signs that this commitment is flagging, in politics nothing is certain. In this case the requisite level of commitment is easy to gauge; if the legislature creates, staffs, and funds a Joint Committee on Technology and Innovation, then the commitment to high-impact technology policy making in Louisiana has a credible beginning. If this does not happen, there may well be some productive programs, but it is doubtful there will be an effective policy.

Lessons

  1. Context is as important as content when seeking insights into the relative value of policy development efforts. On the surface, at this moment Louisiana can claim no policy impacts because it has no established policy. However, if one begins to trace the evolution of this policy effort, beginning with the diversification mandate of the early 1980s, it can be argued that this process produced a number of impacts along the way. As detailed earlier in this study, the recent policy initiative's antecedents include the previously described technological infrastructure as well as institutions such as the Louisiana Partnership, the Louisiana Economic Development Corporation, and the Louisiana Seed Capital Corporation.
  2. The policy process, from its inception to its implementation is essentially political. While, hopefully, it may be informed by good technical information, it is not a deductive and deliberative journey. It is formed by a series of serendipitous, even whimsical events-not unlike the scene depicted in the preface.
  3. Timing is critical. One could argue that after a decade, the reason this policy making initiative is finally taking hold is that the timing is right. To the extent this is true, this also means that bad economic times do not necessarily mean bad timing for policy initiatives. In Louisiana's case, priority-driven funding for technology-related activities can provide legislators with much needed explanations to constituents who are accustomed to coming to them for funding and getting it (see pitfall three above).
  4. In the policy development process, get the support and participation of those who will be called upon to fund, implement, and manage the policy and its pro grams before soliciting public input. Remember Jim Clinton's single condition-the catch. It's a good idea to start with the legislative leadership.
  5. While it is important to have champions within the government, it is also essential to have champions outside the government. A credible, independent group of committed supporters from the private sector and colleges and universities can cross administrations and political and geographic boundaries. This group can provide the continuity and perseverance required for a successful long-term policy development and implementation effort.
  6. Focus groups used in the initial policy-making process can be organized to continue to inform the policy making and implementation effort and to serve as constituencies for the policy. It is possible for these focus groups to provide a continuous source of private sector input if the private sector participants learn through experience that their voice will be heard.
  7. It is no accident that this is called a "technology policy." The leaders of this initiative made a critical economic development distinction between scientific and technological endeavors while also defining key concepts and establishing guidelines to orient the policy debate. The attention to orientation produced two beneficial results. First, the focus groups' discussions were indeed focused, Second, there is clarity for the mission, goals and objectives of the policy and the policy- making process.

How do you spell "success"?

Technology policy making in Louisiana is a work in progress. It has yet to produce any tangible impacts because it is still several months away from being established. However, so far, this process has produced and implemented a bottom-up approach to formulating a state technology policy, drafted a first statement of the policy itself, and developed a plan for establishing an infrastructure within the state government for the Continuous management, assessment, and refinement of the policy.

While much progress has been realized, the verdict is still out on the success of Louisiana's efforts. In this case, success can be defined in two dimensions. First, Harold Price's concern in the preface must be addressed. That is, the process will be useful only to the extent it results in a policy that identifies technology-related economic development priorities for the state and then provides funding according to those priorities. Second, the policies and priorities themselves must be sound. They must be informed by good, incisive information; by what is politically possible and fair; and perhaps most importantly, by the wisdom accumulated through learning from their successes and failures.

Science-Based Economic Development