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Science-Based Economic Development edited by Susan Raymond
Michael A. Salvato
Director, Policy Programs
New York Academy of Sciences
Oregon
Science and Engineering Profile
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Actual | 50-State Rank |
|---|---|---|
| General | ||
| Population, 1994 | 3,086,000 | 29 |
| Civilian Labor Force, 1994 | 1,643,000 | 28 |
| Personal income per capita | $20,419 | 28 |
| Gross state product, 1992 (billions) | $62.7 | 28 |
| Science and Engineering | ||
| Doctoral scientists, 1993 | 5,871 | 24 |
| Doctoral engineers, 1993 | 789 | 30 |
| S&E doctorates awarded, 1993 | 294 | 26 |
| S&E post-doctorates, 1993 | 265 | 28 |
| S&E graduate students, 1993 | 4,366 | 31 |
| Federal Spending | ||
| Total Expenditures, 1994 (millions) | $13,057 | 31 |
| R&D obligations, 1993 (millions) | $229 | 33 |
| Total R&D performance, 1993 (millions) | $774 | 29 |
| Industry R&D, 1993 (millions) | $471 | 30 |
| Academic R&D, 1993 (millions) | $226 | 27 |
| of which, in life sciences | 59% |
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| of which, in physical sciences | 10% |
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| of which, in environmental sciences | 14% |
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Higher education current-fund expenditures, 1993 (millions) |
$1,868 | 28 |
| Number of SBIR awards, 1990-93 | 158 | 21 |
| Patents issued to state residents, 1994 | 556 | 24 |
The economy of the state of Oregon is in profound transition, from one historically reliant on primary industries, such as forestry and agriculture, to one with a more diversified base that includes the manufacturing of advanced electronic and computer components and producer services. New growth industries, particularly technology-based manufacturing, demand more basic research, industrial innovation, and scientific and engineering training than that which was previously required by the state's more mature industries. Over the last thirty-five years, the state's industrial, academic, and governmental leadership have made several attempts to better utilize scientific and technological assets to fuel economic diversification and growth. These attempts have, however, met with only limited success. Science- and technology-based initiatives in Oregon, lacking a clearly focused, compelling man date and an enduring political champion, have been hampered by competing political interests, institutional resistance, fragmentation and underfunding. After a long, turbulent period for science-based policy, which lasted over three decades, a new governor, elected in November 1994, has promised to make science and technology the centerpiece of the state's economic agenda through the end of the century. This paper focuses on the evolution of Oregon's public policies designed to coordinate the activities of the state's scientific, educational, and technological assets in meeting the need of both mature and emerging industries.
Background
The state of Oregon is located on the Pacific seaboard of the northwestern United States. The Cascade mountains divide the state into two distinct regions. The coastal towns and river valleys of the western region enjoy a moist, mild climate. The eastern part of state is a high desert plateau subject to greater extremes in temperature. A rugged coastline, forests, river valleys and mountains make Oregon an attractive location for outdoor sports and recreation. 1 The population of Oregon grew by 2.1 percent in 1993, increasing to 3,038,000 people. This high growth rate, twice the national average, is due in part to the in-migration of young professionals and retirees from California and Washington state. Quality of life is cited by new residents and businesses as a reason for their relocation.
Approximately 36 percent of the state's 62 million acres is used for commercial timber production; much of this land is owned or controlled by the U.S. government. Many small communities scattered throughout the state are dependent on forestry, farming, or fishing. These areas are currently experiencing economic hard ship and population decline, with unemployment rates greater than 11 percent in several rural counties. The most vigorous economic growth is occurring in the state's most urbanized areas, concentrated along the north-south interstate transportation corridor. Portland, Oregon's largest city, is located 110 miles inland on the Columbia River and is the third busiest port on the United States' West Coast.
Historically, the leading sources of wealth and employment in the state have been in the areas of primary production, particularly forestry and agriculture. 2 Oregon has a $3.3 billion lumber industry, and an $859 million paper products industry. Forest-related industries account for 25 percent of the state's manufacturing employment, despite a large decline in employment in these industries during the last fifteen years. Agriculture is the state's second largest industry. Gross farm and range sales totaled over $2.8 billion in 1991 and the state's famous salmon-fishing industry is also one of the world's largest.
Forest products and related industries, historically the foundation of Oregon's economy have declined dramatically as a proportion of the state's total economic activity. 3 In the early 1980s, after years of steady decline in production, lumber out put hit record lows. Increased productivity has improved the forest industry's out look in recent years, although cutbacks in employment and wages continue. Federal restrictions on timber harvests, increased mechanization, and plant closings have created severe pockets of unemployment in timber-dependent communities.
Fortunately, plentiful, low-cost hydroelectric power and a reliable supply of water have helped Oregon develop a solid manufacturing base with much of the state's recent manufacturing job growth occurring in "high technology" industries, such as electronic instruments, computer components, and semiconductors. 4 Leading corporations, such as Sony, INTEL Epson, and Hewlett-Packard, have opened or are expanding their branch-plant production in the Portland area. Other so-called "sunrise industries," such as biotechnology and environmental services, have also shown significant gains in recent years. 5 The software industry, for example, grew by 13 percent in 1993.
Since the founding of Tektronix, the state's first and most prominent technology start-up company in 1945, the Portland area has developed a "critical mass" of technology manufacturing. 6 The $2.2 billion facility planned by the INTEL corpo ration for Washington County is currently the most striking example of the bright side of the changing Oregon economy. Management cites the state's cheap energy, non-unionized work force, affordable housing, and pleasing quality of life as important factors to their location decision.
Science Policy Trigger
The state's economy is moving from one dependent on natural resource-related industries to one with a more diversified base that includes value-added food and wood products, technology-related manufacturing, sunrise industries, and producer services. A knowledgeable and skilled work force is becoming the raw material of Oregon's vital new economy. New business and job opportunities are emerging in industries that include environmental services, software, and semiconductor manufacturing. Even primary industries, such as agriculture and timber, require a more sophisticated labor force as they deploy such new technologies as biotechnology, satellite imaging, and sustainable harvests.
However, the scientific and technological capabilities of the state's work force, business community, and supporting institutions have become the major factor limiting Oregon's economic growth and competitiveness Specifically, there is a mismatch between new job opportunities and the scientific and technical skills of the existing labor force. Up until the 1960s a basic high school education and minimal job-specific training were sufficient to secure a well-paying job in many industries. Today, the work force is asked to operate automated equipment, program software, test for environmental contaminants, and manipulate information, all of which require more advanced levels of education and technical skills. Even primary industries require more technologically competent labor and management; the forest and agricultural products industries, for example, are using new technologies to increase yields, productivity, and quality.
INTEL, Hewlett-Packard, and other high-technology companies are currently importing as many as 90 percent of their senior scientists and engineers and 50 per cent of their technical labor from out-of-state. This is occurring while unemployment in many of Oregon's rural counties exceeds 11 percent. Preparing labor, business, and supporting institutions to use science and technology in both mature and emerging industries is the critical challenge to the state's transition to a new economy.
Historic Links between Science and Economic Development
Until recently, Oregon's resource-based economy created very little demand for basic research, technological innovation, or a technically proficient work force. Forestry and agriculture were not traditionally large consumers of research and development, nor big employers of scientists and engineers. Oregon Agricultural College, a land grant institution founded in 1868, is the state's historic link between science and industry. Now known as Oregon State University, the institution has provided courses and extension services in agriculture, forestry and marine biology.
Federal research spending is a second factor shaping the role of technology in the state's economy. The absence of federal defense research institutions is a legacy of the Cold War, resulting from the strong antiwar position taken by state congressional representatives. In the 1950s and 1960s, the U.S. government used defense organizations to channel federal research and development funding to the states. Unable to earmark this type of funding to Oregon for defense purposes, the federal government gave the state an unusual concentration of federal research facilities related to natural resources and the environment. 7 Oregon's nascent environmental services industry can build on this base of talent, economic resources, and interrelationships. However, the potential of this science-driven economic engine to assist the state's economy has only recently been recognized and is still largely unrealized.
The growth and demand created by new technology-based manufacturing has been the driving force behind state policy initiatives to link science and technology to economic development. Since the 1960s, technology-related manufacturing has been viewed by many as the best means of moving the state's economy away from its dependence on resource-based industries. Oregon's state government has advanced several policy initiatives to help fuel the growth of a technology manufacturing cluster in the Portland area. In the past, these efforts included the development, in 1963, of Sunset Science Park; the founding of the Oregon Graduate Center in 1969; and the successful recruitment of leading technology manufacturers, such as Sony, INTEL, and Hewlett- Packard, to locate major operations in the state.
The Struggle to Link Science to Development, 1958-87. 8
The clash between Oregon's troubled resource industries and the state's emerging technology-based industries manifested itself in the inability of government to create a coherent set of policies to link higher education to the needs of industry. In the 1960s, and again in the 1980s, governmental initiatives designed to meet the needs of new industries for scientific research, technological development, and a highly skilled technical work force met institutional resistance from the state's system of higher education. The modernization of the state's more traditional industries was also slowed as old and new industries struggled to control the limited resources dedicated to basic research, technology transfer, and technical training. These unresolved conflicts between industrial and educational interests resulted in fragmented and ineffective policies.
In the late 1950s, Governor Mark Hatfield began looking for ways to strength en the state's economic base through the use of the state's colleges and universities, in part as a response to the 1958 National Defense Education Act. The governor and others had determined that the lack of a graduate-level science and engineering university in the Portland area would severely limit the growth of new science-based industries. Over the course of several years, three separate blue-ribbon commissions recommended the establishment of a graduate education program in the Portland area to serve the needs of state industries.
Despite this clearly defined need, bitter rivalries between public educational institutions, coupled with administration and faculty resentment toward working in the interest of private industry, prevented the Oregon Board of Higher Education from carrying out the recommendations made by the three commissions. Instead, a small private graduate institution, the Oregon Graduate Center (OGC) was created by the electronics industry to meet its own needs. OGC has slowly developed staff, enrollment, and research programs for applied research in physics, biology, computers and environmental science. In 1982, OGC began developing a $120 million industrial science park, further demonstrating the university's commitment to industry.
At the same time, the state's thriving technology manufacturing industry was creating an increasing demand for a steady supply of scientists and engineers and more advanced research facilities. This, in turn, exerted more pressure on the state system of higher education. A campaign to increase the supply of qualified labor lead by the American Electronics Association (AEA) resulted in a 17 percent increase in funding for higher education in the 1983-84 biennial budget, although a political struggle ensued over who would control the research and technical education agenda and funding. Several science and engineering policy making bodies and programs were immediately formed, lead by either industry or academia. The goal of each of these groups was the same: to link higher education, technological innovation, and economic development.
Technology companies, represented by the Oregon chapter of the American Electronics Association, the Oregon Graduate Center and legislators from Washington County (near Portland) wanted an immediate increase in the supply of engineers and applied industrial research located within Washington County. However, the State System of Higher Education and its supporters, which included resource-based industries, fought for the distribution of funding throughout the existing educational system with an emphasis on basic research. Lead by Oregon State University in Eugene, this group had been historically divided over the issue of expanding the graduate programs in the Portland area that were discussed previously.
In 1983, the state legislature, again attempting to expand programs which linked higher education to economic development, created the Oregon Educational Coordinating Commission, allocating to it one million dollars, which were matched by the AEA. Simultaneously, the new chancellor of the State System of Higher Education formed the Council for Advance Science and Engineering Education/Research for Industry, whose mission was to coordinate educational and research programs essential to industry. Despite these efforts, these new policy making bodies, hampered by competing interests and limited funding, were unable either to quell the demands of industry or to fuel economic recovery.
However, many lawmakers in the state continued to believe that enhancing scientific, technical, and management education in the Portland area was essential to fueling growth in high-technology industries. In 1985, the state legislature funded another initiative, the Oregon Center for Advanced Technology Education, which had a specific mandate to serve the needs of the high-technology community in Washington County. The center was, in actuality, an academic curriculum, administered by the State System of Higher Education, which offered classes to corporate employees in computer science, electronics, and computer engineering. Unfortunately, this effort was also marred by factional infighting within the state's educational system and between the large number of organizations, including local community colleges and the Oregon Graduate Center, that shared responsibility for implementing the program.
Throughout the 1980s Governor Victor Atiyeh, the state legislature, and academic institutions continued to develop programs whose aim was to capture the economic benefits of advanced science and technology from academic institutions, industry, and federal labs. The Oregon State System of Higher Education, for example, created the Advance Science and Technology Institute, whose mission was to increase technology transfer and commercialization at its four major graduate centers. The state legislature also created an $8.5 million seed capital fund called the Oregon Resource and Technology Development Corporation.
Although the importance of science and technology to the development of the economy was recognized by the state's political leadership in the 1980s, efforts to increase the use of the state's scientific and technological assets were hampered by competition between interest groups, limited funding, and the fragmentation of relevant policies. A clearly articulated, inclusive strategy that linked science and technology to economic development and also balanced the needs and interests of both the old guard and the new emerging industries in Oregon was still missing.
The Failure to Include Science and Technology in the State's Development Plan
When Governor Neil Goldschmidt was elected in 1987, he created the Governor's Science Council to advise him on how to better utilize Oregon's research strengths to aid existing industries and create new ones. The council issued its policy recommendations in October 1988 in a paper titled Linking Science and Technology to Economic Growth: A Strategy for Oregon. 9
The mission of the council was to identify how science could be linked with economic development efforts, focusing on how higher education could be better deployed to support the goals of the state. The council's fifteen-member body was composed of representatives from industry, academia, and government, and assessed the state's existing resources and strengths, technology transfers at the state's universities, and the state's science and technology needs and opportunities. It also studied the science and technology strategies of other states.
The Science Council supported its conclusions with the following findings:
The council's specific recommendations included:
The Science Council concluded that to remain competitive, Oregon would have to carry out a "comprehensive strategy of building more effective links between its scientific resources and the needs of science and engineering-based industries, both high technology and resource based." 10 The council prepared a strategy which it hoped would "more fully integrate science and technology into the economic life of Oregon." 11 The Science Council's work was complete when it issued its report in October 1988.
That same year, Governor Goldschmidt asked the State System of Higher Education and the Oregon Economic Development Department to act on the council's recommendations. The Office of Educational Policy and Planning was charged with the legislation which would establish a permanent Science Council. The Oregon Economic Development Department was responsible for developing technology-transfer capabilities in the state and studying them during the next five years. However, since neither agency had the authority to lead, manage, and integrate separate initiatives, agencies, or constituencies around the Science Council's more comprehensive, long-term strategy, their influence was limited.
By 1988, Governor Goldschmidt's attentions had turned to the state's strategic planning process. Armed with a dedicated funding stream from the new state lottery and some compelling arguments for change from the recently convened Commission of Futures Research, 12 the new governor unleashed his own twenty-year strategic planning effort whose mission was economic recovery and sustained growth. The vision of the resulting plan, titled Oregon Shines, 13 was one of well-paying, productive jobs, statewide economic health and a diversified industrial base. The plan focused its recommendations on creating jobs for displaced workers, developing basic work force skills, stabilizing small resource-dependent communities, and increasing the competitiveness of small business in domestic and international markets.
Having completed their assignment for the governor, the Science Council's efforts to find common areas between their own strategy and the state's strategic plan were overwhelmed by the breadth of the planning process. Oregon Shines acknowledged the technology was transforming mature industries, such as forest products and agriculture, and creating new industries, such as software and biotechnology. The plan also recognized that the competitiveness of traditional industries and the growth of emerging industries would rely increasingly on applied science and technology and a technically competent work force. However, the plan was flawed in that scientific research and industrial innovation were not cited as major issues affecting economic performance across industries. In the end, Oregon Shines did not make enhanced research, applied technology and graduate science and engineering education an integral part of the state's strategic plan.
In sum, although Oregon Shines identified technology as a force transforming the region's economy, it failed to position scientific research, technological innovation, and higher education as tools for shaping the future of the state's economy. The plan missed an opportunity to establish as a long-term goal the development of the state's scientific and technological capabilities to compete in the high value-added, knowledge-based economy of the future. Science, technology, and advanced education, thus, were not given the status of an officially recognized strategic economic development priority. Governor Barbara Roberts, who served from 1991 to 1995, terminated the Governor's Science Council during the first months of her administration. Science and technology would play a very limited role in the state's economic development efforts throughout the Roberts administration.
Governor Roberts, guided by Oregon Shines and the Oregon Progress Board, 14 went on to reorganize the State's economic development efforts into a program based on regional strategies, "key industries," 15 and human investment. 16 This strategy addressed the needs of small, resource-dependent communities, developed the basic skills of the state's work force, and increased the competitiveness of key industries by targeting economic development programs. However, research and technology transfer and even advanced science education lacked the widespread, populist appeal sought by Governor Roberts. While her program has been successful in addressing issues affecting a large number of Oregonians, it neglected investment in the state's scientific and technological resources and infrastructure for the future.
Current Status of Efforts to Link Science to Economic Development
The use of science and technology as a strategy for developing the state's economy reemerged with the 1994 election of John Kitzhaber, an emergency-room physician, as the thirty-fifth governor of Oregon. During his election campaign, the corner stone of Kitzhaber's economic platform was creating jobs for Oregonians in "tomorrows industries," and using technology to assist mature industries in transformation. 17 Kitzhaber stated that he viewed science, technology and industrial modernization as an integral part of his economic development philosophy for strengthening the state's economic base and preparing Oregon for the twenty-first century.
During his campaign, Kitzhaber proposed:
Kitzhaber's economic proposal incorporates recommendations similar to those advocated by former Governor Goldschmidt's Science Council in 1988, such as creating a science and technology advisory body, directing research toward areas important to the state's future, and improving university linkages with industry. However, it appears Kitzhaber will broaden the mantle of science and technology to more fully embrace the economic needs and interests of industry.
Conclusions
The history of Oregon's policies for science-based development has been riddled with the conflict between the state's traditional industrial and academic interests and new, emerging powers. Perhaps such tension was inevitable while the state's economy evolved during the later half of the twentieth century. The relative decline of resource-based industries and rise of new, knowledge-based. technology-driven industries triggered fundamental structural change in the state's economy, forcing labor, higher education, and government to adjust to a new economic reality. Over the past thirty-five years, several state policies have attempted to support new science-based industries by better aligning the state's system of higher education to the needs of key industries. Policy makers in Oregon have yet to determine how to best employ the state's scientific and technological assets to fuel economic diversification, industrial modernization and the growth of new industries. The failures and successes of past science policy initiatives contain important lessons for the state's future governments as they prepare Oregon for competition in the global economy of the twenty-first century.
In the future, the health of the Oregon economy will depend on the ability of local industries to exploit research and innovation to create new products and enhance productivity. Policies for science-based development could enable the state's labor force, businesses, and supporting institutions- in both new and mature industries- to use scientific research and technological innovation as a tool for business development and industrial competitiveness. Linking science and technology to economic development can enhance the quality and availability of scientific and technical resources in the state, as well as encourage businesses to exploit the research and innovation potential inherent at each stage of the product life cycle. The challenge for Oregon's new government is to develop a set of science policies that fuel the state's emerging companies while also assisting companies in resource-based industries. Policy efforts should satisfy the immediate need for industrial modernization and qualified labor while building the institutional infrastructure to support the state's economic growth into the twenty-first century.
Oregon's new governor, with legislative support, can integrate science and technology into the state's development plans. The Oregon Progress Board can develop a set of benchmarks to measure the state's progress towards a long, sustained effort that will increase the amount of basic and applied research performed in state, the number of patents held by Oregon's universities and businesses, the number of link ages formed between the state's educational system and industries, and the number of Oregonians pursuing technical, scientific, and engineering degrees.
To be successful on a sustained basis, Oregon's science policies will also require the leadership and support of each of the state's thirteen key industries. In the past, the political clash between the state's traditional industries and newer, growth indus tries undermined science-policy initiatives. Policy makers must thus be careful not to alienate key economic interests. Broadly defined initiatives in the area of research, training, and investment incentives will enable each industry to determine where and how to allocate much of its resources. Industry's needs for more specialized research, innovation, and work force training can be achieved through these incentives and through key industry development strategies, which will help provide direction to universities and other science and technology providers.
In Oregon's new knowledge-based economy, universities and other sources of research and innovation have become sources of raw material for the state's economic growth. Policy makers should encourage universities and colleges to work with industry in developing new and better products and processes to enhance the productivity and competitiveness of businesses located in the state. Of course, increasing the quality and supply of technicians, scientists, and engineers remains an important goal. But providing basic science, applied research, and technical assistance to industry should also be viewed as proper roles for universities in Oregon's new science-driven economy. Oregon's system of higher education may need to adjust its policies and academic culture to encourage entrepreneurial activities by students and faculty. With proper policies, the state's universities, coupled with the federal laboratories, can provide the resources needed to sustain Oregon's economic future.
New technology-based industries are locating and prospering in Oregon, despite the failure of state government policies and the resistance of the state system of higher education to meet their needs. Strong location factors, such as the availability of land, power, and water and the desirable quality of life have outweighed the state's relative scarcity of scientists, engineers, and skilled labor and its limited research and development capabilities. Lawmakers, however, remain concerned about creating jobs and economic opportunities for Oregonians, which for them entails both assisting the state's traditional industries and sustaining the diversification and growth of the state's economy. The state's traditional economic strengths, forest-products and agriculture, are distressed by new technologies, federal regulations, and changing market structures and are no longer reliable sources of employment. Thousands of Oregonians formerly employed in these industries are without work. Although unemployment is over percent in some parts of the state, technology firms still have to import workers from out of Oregon because the state's work force does not have the skills they require. Science-based development policies can address the needs of both the state's mature and emerging industries as well as help prepare the state's labor force for the high-skilled positions that will be created in the not-so-distant future.
Notes
Notes
Note 1: Tourism has increased 72 percent since 1987, adding $3.1 billion to the state's economy. Back.
Note 2: The total gross state product (CSP) in 1993 was $6.7 billion. Oregon exports 9 percent of its GSF much of which is sold to the growing nations of the Pacific Rim. Back.
Note 3: Forest-related industries once accounted for 7 percent of the state's total employment. During the past six years, lumber and wood manufacturers have reduced employment by 15,000 workers. Back.
Note 4: Since 1988, high-technology employment has grown an average of 3.6 percent. Back.
Note 5: Total technology-related employment added 9,000 jobs between 1987 and 1993. Back.
Note 6: More than half of the state's 30,718 high technology 924 manufacturing jobs are in Washington County, minutes from downtown Portland Back.
Note 7: Oregon is home to the research and development programs of the U.S. Geological Survey, the U.S. Forest Services, the U.S. Bureau of Mines, the U.S. Department of Interior, the U.S. Department of Agriculture. and the U.S. Environmental Protection Agency. In addition, the Department of Energy's Hanford Atomic Energy Reservation, which includes a $300 billion dollar environmental clean up budget, is nearby in Washington state. Back.
Note 8: This section is based, in part, on Gordon B. Dodds' book The Silicon Forest, published in 1990 by the Oregon Historical Society. Back.
Note 9: Report of the Governor's Science Council, Linking Science and Technology to Economic Growth: A Strategy for Oregon, October 1988. Back.
Note 10: Science Council, 1988. Back.
Note 11: Science Council, 1988. Back.
Note 12: Commission on Futures Research, Emerging Trends: New Oregon Perspectives for the Year 2010, Progress Report, 1986. Back.
Note 13: State of Oregon, Oregon Shines: An Economic Strategy For The Pacific Century May,1989. Back.
Note 14: The Oregon Progress Board was a key innovation of the Oregon Shines plan. The Progress Board is an independent state planning and oversight agency designed to build consensus around the state's development goals set forth within a twenty-year strategic plan. The board's nine-member panel, chaired by the governor with the assistance of a small staff, keeps the state accountable for achieving the goals out lined in Oregon Shines. The Progress Board uses a private sector mechanism called "benchmarks," quantitative performance measures which are translated from strategic goals and objectives. These benchmarks serve as a guide for setting public priorities and making choices in state, local, and private activities. Today, the Progress Board plays a key role in assuring that public and private sector leaders remain focused on the future. Back.
Note 15: The health of the state's overall economy is directly related to the vitality and competitiveness of thirteen key industries designated in Oregon Shines: aerospace, agriculture, biotechnology, environmental services, film and video, fisheries, forest products, high technology, metals, plastics, professional services, software, and tourism. Back.
Note 16: Based on interviews with senior staff at Oregon Economic Development Department. Back.
Note 17: The Governor outlined his position on economic development during the campaign in a ten-page policy paper titled John Kitzhaber: On the Issues a place for you in Oregon's growing economy Back.
Note 18: He emphasized technology-driven industries such as software, biotechnology, and environmental engineering. Back.
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