Panel I
Leading Asian Models of S&T Parks

Moderator: Lawrence Schuette

Office of Naval Research


Dr. Schuette asked the speakers in the first panel to address several basic questions: (1) What are we trying to do in regard to parks?; (2) What are the mechanisms and instruments to accomplish those goals?; (3) What level and type of funding is available?; (4) What achievements have been recorded; (5) What metrics are used to evaluate those achievements?; and (6) What are the current challenges?

He noted that the Office of Naval Research (ONR), a major sponsor of research around the world, is highly interested in the process of commercializing technologies. ONR sponsors research in 70 countries, has offices in four countries, including Singapore and Japan, and studies the issues associated with the valley of death. He said that in his view, “research parks appear to be an excellent place to cross that valley between the invention and the marketplace.”



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Panel I Leading Asian Models of S&T Parks Moderator: Lawrence Schuette Office of Naal Research Dr. Schuette asked the speakers in the first panel to address several basic questions: (1) What are we trying to do in regard to parks?; (2) What are the mechanisms and instruments to accomplish those goals?; (3) What level and type of funding is available?; (4) What achievements have been recorded; (5) What metrics are used to evaluate those achievements?; and (6) What are the current challenges? He noted that the Office of Naval Research (ONR), a major sponsor of re - search around the world, is highly interested in the process of commercializing technologies. ONR sponsors research in 70 countries, has offices in four coun - tries, including Singapore and Japan, and studies the issues associated with the valley of death. He said that in his view, “research parks appear to be an excellent place to cross that valley between the invention and the marketplace.” 5

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5 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS CHINA: NAVIGATING AT THE FRONTIER OF LIFE SCIENCES SILK ROAD Zhu Shen BioForesight Dr. Zhu Shen is CEO of a California-based international consulting firm called BioForesight, which consults for companies in biomedical and related sectors. She began by saying that China is becoming one of the most significant world powers in science-based economic development. She said she would at - tempt to describe the “flavor” of the Chinese science and technology parks where she has the most experience: those in Beijing, Shanghai, and Suzhou. She recalled the old Silk Road coming out of China as a key element of long- ago global commerce, and said that a modern version of the Silk Road exists. This time, China, instead of exporting spices, is “at the frontier of the Silk Road for the life sciences” and other technological innovation. The epicenters of this innovation, she said, are the major research parks, where many major research- based corporations are locating. She cited two of them as success stories. The first is WuXi Pharmatech (WX), which she said symbolizes the coming of age of the Chinese pharmaceutical industry. WuXi is the largest contract research organiza - tion in China, founded by her friend Dr. Guh Lee, one of the noted “sea turtles”— those who have gained their advanced education and work experience overseas and have returned home to become entrepreneurs and scientific leaders. The second corporation is Hutchinson Medipharma, a UK-based company with R&D operations based in Shanghai’s Zhangjiang High-Tech Park, which she called one of the world’s most successful science and technology parks. She displayed a photo of signers of a strategic partnership between Hutchinson Medipharma and Eli Lilly, which she called a “very rich deal, like those we are accustomed to seeing in the U.S. between Western companies.” Growth of Pharmaceuticals in China She said that the Chinese pharmaceutical market has “grown by leaps and bounds” in the past 15 years. In 1995 it ranked number ten in the world, has risen rapidly to number seven at present, and is predicted to become number five by 2010. “My prediction,” she said, “is that it will pass the U.S. to become num - ber one in the global pharmaceutical market in just two decades.” The Chinese government, she said, has designated the pharmaceutical industry as a key to the growth of China. In addition to its increasing economic importance world-wide, the primary causes of death in China—cancer, cardiovascular disease, and heart disease—are similar to those in the United States and Europe so drugs developed locally will have global markets.

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55 PANEL I: LEADING ASIAN MODELS OF S&T PARKS China’s economic growth is not a new story, she said. Its GDP growth rate leads the world, averaging about 9.4 percent per year over the past three decades. The nation has grown from being the “world’s factory,” she said, featuring low- level jobs, to “the world’s talent pool,” with many S&T centers, outsourcing services, and new companies being formed in life science parks and high-tech parks. Today China has more than 54 state-level economic and technological development zones, and 53 national high-tech development zones. The Beijing Park She illustrated the dramatic pace of change in China with pictures of what is now Zhongguancun Science Park in Beijing, both 20 years ago and today. “This is where I grew up,” she said. “The changes have been transformational.” The park hosts over 20,000 enterprises and 950,000 employees, receiving total income of 850 billion Yuan (about US$ 110 billion). More than 800 enterprises have income exceeding 100 million Yuan. Of the industries represented in the park, the majority (56.6 percent) are classified as information technology, 12.5 percent as “new energy,” 12.3 percent as biomedicine, 9.4 percent as advanced manufacturing, and 8.4 percent as new materials. The park has attracted almost 10,000 “sea turtles,” she said, who have set up 4,200 companies in Zhongguancun Science Park. The Shanghai Park She turned to Shanghai’s Zhangjiang Biotech and Pharmaceutical Base, which is part of the Zhangjiang High-Tech Park. This is considered by the Chinese leadership and industry insiders to be the most successful biotech and pharmaceutical park in China. Started in 1992, Zhangjiang High-Tech Park has developed 17 out of 25 square kilometers and hosts more than 3,600 companies, of which more than 140 are foreign. It employs more than 100,000 researchers and other workers. The Zhangjiang High-Tech Park emphasizes three major areas: life science, which accounts for about 50 percent of revenues; software; and information technology. Its corporate tenants in the life sciences include six of the world’s top ten pharmaceuticals: Roche, Eli Lilly, Pfizer, Novartis, GE, and AstraZeneca. IT tenants include Hewlett-Packard, Lenovo, Infineon, and Intel. Software tenants include IBM, Citibank, Infosys, SAP, and eBay. Specialty chemical companies include DSM, Henkel, Solvay, Dow, DuPont, and Rohm & Haas. Among the biotech tenants are not only foreign companies, but more than 110 indigenous firms, she said, “many of which I know personally.” These include more than 60 small-molecule drug development companies, 35 medical device and diagnostics firms, and more than 15 traditional Chinese medicine companies. Hutchinson

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56 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS MediPharma began as a traditional medicine company, but leadership quickly built up its novel drug discovery capability, and this attracted Eli Lilly. The Zhangjiang High-Tech Park is located in Pudong, a district of Shanghai. Started in 1992 on undeveloped farmland, Pudong has emerged as a major finan - cial and commercial hub. Dr. Shen noted that the 228 square kilometer Pudong site accounts for 25 percent of Shanghai’s GDP, 50 percent of foreign trade, and 30 percent of foreign investment. It is also “a pilot area for reform.” “I don’t think we can find a park like this in the United States, yet,” she said with a smile. In line with Shanghai’ new slogan, “Better City, Better Life,” the Zhangjiang High-Tech Park organizers recognize that “the economy is not everything.” They want to represent Shanghai as “a city that is truly metropolitan and international, with an open-minded population, clean environment, and beautiful parks that can attract returnees and talent from the world over.” The Suzhou Park The third Chinese park she described is the “up-and-coming” Suzhou Indus - trial Park (SIP). Established in 1994 in a location “well known for its classical gardens and beautiful ladies,” she said. Suzhou today is known for its “innovative spirit and ability to attract top talent world-wide.” It is a joint development be - tween the Chinese and Singapore governments, which she called unprecedented, it is considered first among all regions in China in “pro-business mentality,” ef - ficiency, and consistency of policies. Located 80 kilometers west of Shanghai, Suzhou has taken its place at the high-tech frontier of the global economy, she said. In land area only 0.1 percent and in population 0.5 percent of China, it ac - counts for 2.3 percent of GDP, 1.5 percent of financial revenue, 10 percent of imports and exports, and 8.3 percent of foreign investment. Of the Fortune 500 companies, 113 have set up operations in Suzhou. Some Lessons from the Chinese Experience Dr. Shen said that even though the Chinese S&T parks had been started only two decades ago, long after the major initiatives in the United States, there were valuable lessons to be learned: • Government support is critical. The Chinese government has invested more than US$ 1.4 billion in the Suzhou park alone. o Governments must be involved at the national, regional, and municipal levels. o The right policies, incentives (tax waivers, free rent), infrastructure, financing, and resources are needed to attract multinationals, “sea turtles,” and local entrepreneurs.

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5 PANEL I: LEADING ASIAN MODELS OF S&T PARKS o Park firms need many business resources: one-stop services such as accounting, IP advice, corporate counseling, and VC investment. • Competition creates competence, and “if your park isn’t good enough, the top talent won’t come.” • Cooperation fosters excellence, especially cooperation between home- grown companies and those of the government research institutes. • Visiting S&T parks worldwide can bring valuable lessons. • The arrival of “sea turtles” generates change. Dr. Shen is also associated with SABPA, the Sino-American Biomedical and Pharmaceutical Professional Association. Established in 2002 in San Diego, it has more than 1,500 members, one-third of them non-Chinese. Its mission is to stimulate networking, career development, education, and Pacific alliances, and it highlights its presence through an Annual Pacific Forum held in November each year in San Diego. She also summarized the activities of BioForesight, which include corporate developing, financing assistance, corporate strategizing, and media relations. She concluded by suggesting that the Apple iPod is a possible model for the global alliances of the future. Designed in the United States and manufactured in China with technology from India, it is truly a global product—but Apple captures most of the profit from sales of the iPod. This is a model for the science parks and indigenous companies in China to ponder, she said—how to control the major value chain of their products. THE SINGAPORE SCIENCE AND TECHNOLOGY PARK Yena Lim Singapore Agency for Science, Technology and Research Ms. Lim gave a brief introduction to Singapore, which she characterized as an island state with an area slightly smaller than that of New York City, and one of limited natural resources. Since winning independence from Malaysia in 1965, the population has approximately tripled, from 1.6 million to 4.5 million, while its economy has grown a hundredfold, from S$2.1 billion to S$210 billion. Dur- ing this period, she suggested, Singapore moved quickly through major stages of economic development—from labor-intensive in the 1960s and 1970s, to skill- intensive in the 1980s, to technology-intensive in the 1990s. GDP per capita has grown from a mere US$512 in 1965 to US$35,640 in 2006—very close to the U.S. GDP per capita of US$47,330. The education level of the population had improved significantly with 24 percent of the population entering university in 2006 and 41 percent entering polytechnics.

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58 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Tradition of Excellence in Math and Science She attributed this rapid progress at least partly to Singapore’s “ability to reinvent and transform itself.” It watched closely as the world began to understand the capabilities of China and India and how these high-growth nations would change the economic order. The Singapore government decided to leverage on its tradition of excellence in science, mathematics, and technology and embarked on an ambitious growth strategy that invested substantial resources in R&D to catalyze knowledge and innovation-intensive economic activities. The strategy has clearly paid off. According to the World Competitiveness Yearbook 2007, Singapore ranked second in competitiveness, after only the United States. It ranked first in “Ease of Doing Business,” according to the World Bank’s “Doing Business 2008,” and seventh on the Global Competitiveness Index. In mathematics and science, Singapore led the world in the TIMSS report for 2003. Singapore students have done very well internationally, ranking first in Grade 4 and Grade 8 mathematics, and first in Grade 4 and 8 sciences. “Students also have more interest in pursuing tertiary education in the sciences,” she said, “as they see government’s strong commitment to creating an environment that is conducive for science and technology. These open up many employment op - portunities for the long term.” In terms of economic structure, manufacturing is the strongest sector in Singapore, accounting for 28 percent of GDP in 2006. Within manufacturing, the lead sectors are chemicals (33 percent) and electronics (32 percent). But “the interesting story for the last few years,” said Ms. Lim, “has been the knowledge- intensive biomedical sector, which has grown to 10 percent of all manufacturing output because of the inflow of top-ranked talent, strong base of biomedical research capabilities and state-of-the-art infrastructure.” In response to government policy, the economy is becoming more R&D in - tensive. In 2006, Gross Expenditure on R&D (GERD) was 2.4 percent of GDP, and the target is to reach 3 percent by 2010. Of this, about two-thirds of R&D expenditure was from the private sector. The flourishing research scene has led to greater research efficiency. At a Wiley-Blackwell Research Seminar in March 2008, Blackwell’s bibliometrics director Iain Craig provided data illustrating that the research output of Singapore was on track to reach and then exceed the world average in the next few years, having increased by some 72 percent from 2000 to 2007. With an R&D expenditure of US$3.1 billion in 2006, Singapore generated publications at a rate of 0.3 publications per researcher, higher than that of either China or Japan. Ms. Lim described the national R&D framework in broad terms, saying that the government has allocated a 5-year budget of S$13.55 billion (nearly US$10 billion4) for R&D. Of this, the National Research Foundation has S$5 billion, and 4 In comparison, the FY2009 budget request of the U.S. National Science Foundation is US$6.85 billion.

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5 PANEL I: LEADING ASIAN MODELS OF S&T PARKS invests primarily in long-term projects and is overseen by a Research, Innovation and Enterprise Council chaired by the Prime Minister. “The top-level commit - ment to investing in science and technology for the long term,” she said, “will ensure that the Singapore economy has the capability to re-invent itself and keep its international competitiveness.” The budget of the Ministry of Education is about S$1.05 billion, and the Ministry of Trade and Industry receives about S$7.5 billion to promote R&D in the public and private sectors. Of the latter amount, S$5.4 billion goes to A*STAR, the Agency for Science, Technology, and Research. A*STAR funds the Biomedical Research Council (S$2.4 billion) to “deepen basic science capabili - ties and promote translational and clinical research”; the Science and Engineering Research Council (S$2.4 billion) to build multidisciplinary research in support of industry; the A*STAR Graduate Academy (S$450 million) to develop future research scientists and engineers; and Exploit Technologies (S$133 million) to commercialize the intellectual property of A*STAR. Biopolis: A Biomedical Hub She turned then to the Biopolis project, planned as “the biomedical hub of Asia,” a city within a city intended for scientists, researchers, and entrepreneurs. Located in central Singapore, it is designed to attract scientists from all over the world who will come for the quality of scientific research and the cosmopolitan work environment. “At the end of the day,” said Ms. Lim, “it is the quality of science and the concentration of top-notch researchers working together that will have impact.” In addition to the policy goal of encouraging public-private partner- ships, the buildings themselves are intentionally compact and close together, so that “when the researchers come out of the lab into a common space, they have no choice but to interact with one another.” She said that the planners of Biopolis asked themselves what it would take to create an environment that will attract not only top talent, but also people who have families. They decided against a “normal” science park, one that went dark each evening after office hours. Instead, the plan was to develop a self-sufficient S&T hub with areas dedicated to specific research fields; open and connective structures that would encourage interaction and innovation; and facilities for comfort and relaxation. The design brief, she said, was to be human-centric, to make the facilities both convenient and stimulating. Designed to Promote Interaction Both small and large details were designed to bring people together. For example, the buildings are connected by sky bridges so people can walk from one research institute to another—and meet each other as they do so—without having to descend to ground level or drive. For further interaction, Biopolis has an auditorium, lecture theatres, and meeting rooms. In and around the laboratory

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60 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS buildings are convenience stores, a gym, a childcare center, restaurants and cafes, and a pub. For the work environment, many facilities have been designed to be shared by scientists and engineers in related disciplines, including the Zebra fish facil - ity, bioreactor, electron microscopy, proteomics, MRI, histology, x-ray crystal - lography, DNA sequencing, flow cytometry, lab supplies, media preparation, and glassware washing. Biopolis was conceived and built quickly, said Ms. Lim. Phase I ground- breaking happened in December 2001, and Biopolis was officially opened in October 2003. Biopolis Phase 1 has an area of 185,000 hectares, Phase 2 has 37,000 hectares, and Phase 3 (scheduled for completion in 2009) will provide another 41,500 hectares. Future phases are on the drawing board. The buildings, under the aegis of A*STAR@Biopolis, have names indicating the kinds of activi - ties supported. For example, Genome houses the Genome Institute of Singapore; Nanos has the Institute of Bioengineering and Nanotechnology; and Proteos houses the Institute of Molecular and Cell Biology. Major companies such as the Novartis Institute for Tropical Diseases and the GlaxoSmithKline Center for Research in Cognitive and Neurodegenerative Disorders have built a presence in the Biopolis. Fusionopolis: The Physical Sciences and Engineering Hot on the heels of the Biopolis is Fusionopolis, located about half a mile from the Biopolis. Fusionopolis is designed to be an integrated and comprehen - sive work-live-and-play environment. Slated to open in October 2008, it will have public- and private-sector labs, homes, service apartments, hotels, a shopping mall featuring smart-shopping technologies, food and beverage outlets, and an experimental theatre for art performances. Envisaged to be a one-stop science and engineering R&D powerhouse, it will offer a broad array of capabilities in an integrated manner, in the fields of physical sciences and engineering, to address complex problems facing industry and soci - ety. It will focus on the physical sciences and engineering research, especially: • Energy (fuel cells, organic photovoltaics). • Home 2015 (assistive technologies for health monitoring and rehabilita- tion, medical devices and technology). • Aerospace (computational fluid dynamics, manufacturing processes, automation). • Nanotechnology. • Sensors and sensor networks (wireless communication and robotics for remote monitoring). • Cognitive science, with future applications in social robotics.

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61 PANEL I: LEADING ASIAN MODELS OF S&T PARKS The watchword for Fusionopolis, she said, is integration: of R&D capa- bilities in the physical sciences and engineering; of the physical sciences and engineering with biomedical sciences; and of academic and industrial science, to speed research results along the path toward economic application. A*STAR will also play a role in the last phase, integrating the work of research institutes with MNCs, SMEs, and start-ups, as well as with other agencies, such as the Economic Development Board and SPRING Singapore. Finally, both the Biopolis and the Fusionopolis are located within One-North, which is a larger area situated within a science and education talent belt, that also encompasses the National University of Singapore, the National University Hospital, part of the Nanyang Technological University, Singapore Science Park, and the Ministry of Education. There are public housing estates nearby, and there are plans to build a major hotel and a large number of condominium units. The research community consists of a community of more than 3,000 research scientists and engineers from more than 50 countries, bringing a mix of talents and including a major commitment to the arts and art creation in situ. One-North is well-located—just 10 minutes from the city center and 20 minutes from the Changi International Airport. It is planned, she concluded, as a vibrant dynamic environment because “the research community must not be isolated.” The ambi - tious premise of the design is to create “an ecosystem designed to nurture new ideas and push them quickly to reality.” INDIAN SCIENCE AND TECHNOLOGY PARKS M. S. Ananth Indian Institute of Technology-Madras Professor Ananth began by giving some recent context for research park de- velopment in India. Before the early 1990s, the national government was strongly socialistic and kept the country’s economy largely closed. Government leaders did not encourage the kinds of government-industry-academic partnerships that characterize modern S&T parks. As a result, no formal research parks were lo - cated near universities, although some inter-sector partnerships were encouraged informally within campuses. In 1990-1991, however, the government of India launched a process of eco- nomic liberalization. Discussions about parks began, and some university-industry partnerships began to form and move off campus into formal research parks. “When I went to the government and asked them for formal permission to build research parks,” recalled Dr. Ananth, “I quoted Louis Pasteur, who said, ‘Dis- covery is the result of chance meeting of prepared minds.’ I said that I have been preparing minds for such opportunities for 50 years.” He explained that chance had been meeting prepared minds in the United States for many years, and that all the

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62 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS discoveries were occurring there. “We needed to wake up to the fact that we must create these opportunities in India as well,” he told the government. Beginnings of the Park Movement By about 1999, the S&T park movement began to take off, he said, as India’s entrepreneurial spirit was being liberated. Initially, India took advantage of its strong cost advantage, but this advantage is disappearing as India moves up the value chain. The backbone of Indian higher education in science and engineering is formed by its 12 S&T institutes of national importance. These include the seven Indian Institutes of Technology, five of which were formed soon after indepen- dence in the 1950s (including Dr. Ananth’s institute in Chennai); one was added in 1995 and another in 2001.5 The strong national recognition and status of the IITs makes them logical anchors for research parks as they provide leadership in every field of science and engineering. The objective of the Indian science and technology parks, said Dr. Ananth, is to promote and foster the spirit of innovation. The nation’s parks still have a long way to go in terms of the infrastructure and support systems necessary for competitive R&D, he said. Nonetheless, economic growth has been remark - able—consistently around 9 percent, he said, with manufacturing growing at 12 percent. The parks are intended to: • Incubate early-stage entrepreneurial ventures based on technology and innovation. • Facilitate networking with professional resources for the incubated companies. • Identify technologies and innovations that have potential to be commer- cial ventures. Indian research parks are still relatively small and not generally associated with universities. The bigger ones have varying mixes of tenants and partnerships. One group of parks is the Andhra Pradesh Biotech Parks. These include: • Shapoorji Pallonji (SP) Biotech Park near Hyderabad. It has about 140 acres under development and contains about 17 companies with an investment of about Rs 4 billion (or approximately US$93 million). • The Marine Biotech Park occupies 218 acres near Visakhapatnam. In association with the Andhra University, it focuses on marine resources, marine foods, nutraceuticals, and fisheries. 5Additional IITs will be inaugurated in 2008-2009.

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6 PANEL I: LEADING ASIAN MODELS OF S&T PARKS • The ICICI Knowledge Park is focused on facilitating business-driven R&D. It is located on 200 acres of land near Hyderabad and holds 13 companies with about Rs 420 million (or approximately US$9.8 million) invested. The state of Andhra Pradesh also has an Agro Park on 200 acres in the In - ternational Crops Research Institute for the Semi-Arid Tropics campus. The park comprises an Agri-Biotech Park, an Agri-Business Incubator, a Hybrid Seeds Consortium, and SAT Ecoventure. Three ventures have been developed in the Agri-Biotech Park, among them a facility for testing aflatoxin contamination in food crops. Elsewhere in the country, the Maharashtra Biotech Park is an international park, a joint venture between the Maharashtra Industrial Development Corpora - tion and TCG Urban Infrastructure Holding Ltd., a Chatterjee Group company. The total investment is Rs 2.5 billion (or approximately US$58 million) in a 110-acre park near Pune, which now holds three companies. The Uttar Pradesh Biotech Park has been set up in collaboration with the Council of Scientific and Industrial Research, universities, and industries in Luc - know, the capital of Uttar Pradesh. Here there are several biotech firms, biotech consulting services, clinical research centers, and other health-related companies, as well as the Software Technology Park of India and BioAlliance of Germany. In Tamil Nadu, where Dr. Ananth lives, Ticel Bio-Park has been developed in 2004 by the Tamil Nadu Industrial Development Corporation on a five-acre site at a cost of Rs 625 million (or approximately US$14.5 million), in collabo- ration with Cornell University; it now has three occupants. Tamil Nadu also has the Golden Jubilee Biotech Park for Women (2001), which Dr. Ananth believes is the first Asian biotech park dedicated exclusively to furthering the careers of women entrepreneurs. Covering 20 acres and holding 13 tenants, Golden Jubilee has created a database of over 500 technologies or projects covering about 150 research institutions. Partnerships with the IITs While these parks have been set up without major university affiliations, oth- ers have formed partnerships with the IITs and the Indian Institute of Science. Dr. Ananth noted that this is to be expected, since “entrepreneurship flourishes in the vicinity of high-quality educational institutions.” In addition, he said, “research parks spark innovation through the ‘idea-factory’ approach by bringing together three kinds of minds and experience: faculty, with knowledge of fundamentals; students, with their spirit to conquer the world; and S&T personnel, with their ability to convert ideas into marketable products. In America you may take this for granted,” he emphasized, “but you have to create this in other countries.” Dr. Ananth listed the following university-initiated projects:

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6 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS • One of the earliest university-affiliated parks is the Society for Innovation and Development, with a campus of about 400 acres, in partnership with IISc- Bangalore. Started in 1991, it has attracted participating companies in bioscience, computer services, software, pharmaceuticals, tropical diseases, and biosciences, as well as Tata Motors. • A newer research park is the Society for Innovation and Entrepreneurship, set up in 2004 on the campus of IIT-Bombay (located in Mumbai) as a business incubator. It now includes facilities covering 10,000 square feet and is supported by the Department of Science and Technology, the Technology Development Board, the National Entrepreneurship Networks, the IIT-Bombay alumni, and the Ministry of Communication and Information Technology. • The Foundation for Innovation and Technology Transfer (FITT) is an industry interface of IIT-Delhi established on the campus in 1992. It has been conceived and implemented as a technology business incubator by IIT-Delhi to provide infrastructure and techno-managerial support; funding source data on bridge capital for start-up companies; and networking with venture capital companies. • The IIT-Kanpur, in partnership with the Small Industries Development Bank of India (SIDBI), started an Innovation and Incubation Centre to scale up laboratory-proven concepts to commercial scale. Located on the IIT-Kanpur campus, it has three “tiers”: a “nursery” incubation project, technology-based start-up companies and technology/R&D units of an existing SME desiring close technology interface with IIT-Kanpur • IIT-Madras Research Park, located in Chennai, is an independent com- pany promoted by IIT-Madras with support from the government and alumni. It is outside the campus, he said, “but within cycling distance.” It is planned to have an area of 1.2 million square feet, built in three phases, to house R&D activi - ties of companies wanting to work with IIT-Madras as well as companies to be incubated. Some 27 companies have signed up, a few of which are MNCs. Many of them are automotive firms, including Tata, and automotive parts companies; Chennai is a center of automotive research in India. The goal is to have some 5,000 development engineers and finishing schools for up to 5,000 students per year. Dr. Ananth elaborated on the plans for the IIT-Madras Park, in which his colleague Dr. Ashok Jhunjhunwala and he have played a significant role. He noted especially the synergies to be gained by leveraging university expertise and knowledge, and by offering higher education opportunities for the park’s employees. Some 5 percent of R&D personnel are expected to teach as adjunct or permanent faculty, while 10 percent are expected to register for part-time masters and PhD programs in IIT-Madras. To the extent that this and other parks can attract highly qualified individu - als to R&D, he said, India could become a “design house” that develops higher

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65 PANEL I: LEADING ASIAN MODELS OF S&T PARKS FIGURE 1 The proposed IIT Madras Research Park. NOTE: The first tower will be inaugurated by the end of 2008. PROC Figure 01 R01413 quality products, participates in international standards bodies, and develops bitmapped image intellectual property rights. To advance such goals, the Chennai Park will fea - ture infrastructure for start-ups, availability of venture capital, consultancy, and prototype firms in the vicinity. Some 15 percent of park space will be reserved for start-ups and for facility and training companies at concessional or deferred rental. The remaining 85 percent of the space will be rented or leased at long term to companies leveraging R&D partnerships with the university. Earning Credits to Remain in a Park To remain in the park, each company must earn a minimum number of credits by interacting with IIT-M. The credit system is designed to promote entrepreneur- ial activity, inter-sector interaction, and partnerships. Thus, companies are given credits for the following actions: • R&D projects with IIT-M. • Consultancy to IIT faculty.

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66 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS • Earning royalties. • Sponsored PhD/masters students. • Serving as adjunct faculty. • Teaching at IIT-M. • Mentoring PhD/MS/BTech students. • Giving part-time employment to PhD/MS/Btech students. The total cost of the park has been modest, said Dr. Ananth, at approximately 3 billion Rupees. This money has come mainly from the government and from bank loans, while some donations from IIT-M alumni and internal accruals will make up the balance. The local government has also provided 11.5 acres of land and infrastructure that includes an approach road and electricity. It has made economic concessions to the park, including tariff concessions for electricity, sales tax, excise and custom duty, and floor space index. The park enjoys an interest-free, long-term loan from the central government of about Rs 1 billion (or approximately US$23 million). Dr. Ananth concluded by emphasizing the importance of incentives that promote university-industry interaction. “Traditionally,” he said, “we have found that one of the problems in situating parks near campuses is that they focus only on the real estate and they don’t interact with the university. We are working hard to change that.” DISCUSSANT Phillip H. Phan Rensselaer Polytechnic Institute Dr. Phan said he would make some specific observations about the science and technology parks in Asia and some general comments about science park policy. His first observation, relevant to both federal and state governments, was that innovation and entrepreneurship must become incorporated not only as they pertain to economic development policies, but also as cultural values. He said that India’s long history with the IITs has raised the profile of science and technol - ogy and created “a natural base on which many of its park initiatives are built.” In Singapore, the national government had built powerful educational programs from kindergarten through postgraduate levels, raising the value of learning and rewarding scientific and engineering excellence. “Without this fundamental ele - ment,” said Dr. Phan, “all the real estate and all the parks you build won’t go very far. You can’t build an innovative society purely from capital investments. That’s where you start, but eventually you have to build an indigenous ability to innovate.”

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6 PANEL I: LEADING ASIAN MODELS OF S&T PARKS Importance of the Right Metrics Dr. Phan emphasized the importance of finding the right metrics to evalu - ate S&T parks. Because parks are expected to be vehicles for innovation, the metrics will be different from those used to evaluate scholarship or business. He said that many park planners, especially in Asia, regard a research park primar- ily as a vehicle for attracting foreign direct investment and rate parks in terms of how many high-tech people they attract. “You don’t build a park just to generate employment,” said Dr. Phan. “You plan to create the conditions and lifestyle that will attract innovative people and the resulting innovation. You can’t just ‘build it and they will come’—you have to make it attractive in the first place.” Another feature that characterizes the more successful park development efforts, he said, is access to risk capital. Numerous studies, he said, demonstrate that local access to risk capital must be a precondition rather than an outcome of park development.6 Enabling access to exit markets, so risk capital providers can cash out, he added, should also be a policy target. If government-subsidized programs are to create strong business opportunities, firms must be able to move capital in and out quickly, and to rely on prompt returns on investments. Drawing on the Best Qualities of Public and Private He emphasized the need to create real partnerships between state-owned companies and private firms. Despite their different cultures, these sectors benefit from the park only when cooperation is deliberately embedded into their relation- ship. This, he said, can create a desirable kind of semi-public, privately owned entity that brings to bear the best qualities of both to promote innovation. He noted that in Asia it is possible and often necessary to offer special perks and a living environment that attract employees to parks, a lot of which goes on behind the scenes during the planning process. Some of these conditions may be harder to create in the United States, such as special economic export zones with tax and currency controls, and may be more realistic for local governments rather than the federal government to implement. In Asia, education is a critical component of innovation policy, especially the teaching of English. He said that China is trying to create a “parallel,” private education system to accelerate the learning of English. He mentioned two final challenges for Asian parks. One is a fundamental cul- tural gap concerning the researchers themselves. Most parks depend on proximity to universities, but university scientists do not traditionally see entrepreneurship as a priority. Another is the need for a supportive legal framework that addresses 6 For a review of recent studies, see Phillip H. Phan and Donald S. Siegel, “The Effectiveness of University Technology Transfer: Lessons Learned from Qualitative and Quantitative Research in the U.S. and U.K,” Rensselaer Working Papers in Economics 0609, Troy, NY: Rensselaer Polytechnic Institute, Department of Economics, 2006.

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68 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS intellectual property issues. “If anything is going to be a problem for China,” he said, “it is going to be dealing with intellectual property.” Policy Implications for the United States He described several federal policy implications for the United States. He proposed first that the federal government focus primarily on creating conducive legal and political institutions. He warned against overly restrictive intellectual property protection that can stifle creativity and innovation, citing the findings of Lawrence Lessig, chair of the Creative Commons project.7 He also recommended that the government consider unrestricted immigration for scientific, engineering, and creative talent. Every country building up S&T capacity is doing everything possible to import talent, and the United States will face a disadvantage unless it does the same. “The growth of endogenous talent can never exceed the total demand for talent,” he said, “so there is always a need for more. If you restrict flow of talent from outside, you are diminishing your absorptive capacity to ex- ploit existing talent.” He concluded with several recommendations for measures to support parks. In terms of state and local policy, he said, states should recognize that straight subsidies do not work very well. Any subsidies should accomplish some kind of leverage, such as education policies or incentives to attract risk capital from foreign sources. He advised against plain subsidies simply to compete with neighboring sites or regions in favor of investments in math, science, and liberal arts education, especially at the K-12 level; incentives for foreign and domestic college students to enroll in science and engineering programs; and reduced financial costs (e.g., business taxes and rules) for young foreign and domestic knowledge-based enterprises. DISCUSSION Dr. Shen said that in China a good deal of private money is waiting to “pig - gyback” on the activities of high-tech parks—so much so that parks are becoming more selective about tenants. There are committees, she said, to evaluate prospec- tive tenants from the private sector according to a set of rigorous standards. Ms. Lim noted that prospective tenants do not get any special support for joining a park. On the contrary, they are eager to come “mainly because of the special environment that we and other tenants have created there.” Dr. Phan reiterated his opinion that subsidizing park activities with infu - sions of capital tends to distort the market. Unless local government subsidies have sunset provisions, he said, subsidies simply transfer money from public to 7 Lawrence Lessig is a professor of law at Stanford Law School, founder of the school’s Center for Internet and Society, and author of numerous books.

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6 PANEL I: LEADING ASIAN MODELS OF S&T PARKS private entities. “The real issue,” he said, “is that you want these companies to want to locate in the parks. The key is to have policies that make it possible for risk capital to follow.” Dr. Shen commented that in China there are clusters of research institutes, universities, and laboratories around all the prominent high-tech parks. “The idea is that these are places where a lot of the top talents from different fields are clustered—this then is what attracts private enterprises. There is a multilateral collaboration among government-sponsored research institutions and those of the private industries, both locally and internationally.” Dr. Wessner ended the panel discussion by reminding the participants that “if the markets were working fine, none of you would be here. Markets are rarely, if ever, perfect, and you’re trying to make them work better.” In particular, he said, the markets do not work well in providing early-stage finance for start-ups. “Planners in Asia have looked at the outcomes of two centuries of markets that didn’t work to the advantage of young companies, and decided that they would like to change the terms of those markets. That’s what they are doing, just as the United States did 50 and 100 years ago. The debate is not one of whether something called ‘the market’ is ‘efficient,’ or whether it is ‘distorted.’ The issue, more practically, is how to help real-world markets work better by applying the right policies.”