Research Parks in the 21st Century

Science and technology research parks are seen increasingly as a means to create dynamic clusters that accelerate economic growth and international competitiveness. A concept that is now 60 years old, research parks are widely believed to encourage greater collaboration among universities, research laboratories, and large and small companies, providing a means to help convert new ideas into the innovative technologies for the market.1 In this way, research parks are recognized to be a “proven tool to create successful new companies, sustain them, attract new ones—especially in the science, technology, and innovation sector— and make existing companies more successful through the use of R&D.”2

Today, countries as diverse as China, Singapore, India, and France are among those undertaking substantial national efforts to develop research parks of significant scale and scientific and innovative potential. In many cases, these research parks are expected to generate benefits that go beyond regional development and job creation. Indeed, to the extent that research parks are effective, they have the potential to shift the terms of global competition, not least in leading technological sectors. For example, as Senator Bingaman noted in his keynote remarks at

1

The first research park was established in Menlo Park, California, in 1948. Early successful parks, established in the 1950s and early 1960s, include the Stanford Industrial Park (est. 1953) in California, Research Triangle Park (est. 1958) in North Carolina, and Waltham Industrial Center (est. 1954) in Massachusetts. See Rachelle Levitt, ed., The University/Real Estate Connection: Research Parks and Other Ventures, Washington, DC: Urban Land Institute, 1987. See also Roger Miller and Marcel Cote, Growing the Next Silicon Valley: A Guide for Successful Regional Planning, Toronto: D. C. Heath and Company, 1987.

2

See the presentation of Dr. Ilona Vass, director of the Hungarian National Office for Research and Technology, in the Proceedings section of this report.



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Research Parks in the 21st Century Science and technology research parks are seen increasingly as a means to create dynamic clusters that accelerate economic growth and international competitiveness. A concept that is now 60 years old, research parks are widely believed to encourage greater collaboration among universities, research laborato- ries, and large and small companies, providing a means to help convert new ideas into the innovative technologies for the market.1 In this way, research parks are recognized to be a “proven tool to create successful new companies, sustain them, attract new ones—especially in the science, technology, and innovation sector— and make existing companies more successful through the use of R&D.” 2 Today, countries as diverse as China, Singapore, India, and France are among those undertaking substantial national efforts to develop research parks of signifi- cant scale and scientific and innovative potential. In many cases, these research parks are expected to generate benefits that go beyond regional development and job creation. Indeed, to the extent that research parks are effective, they have the potential to shift the terms of global competition, not least in leading technologi - cal sectors. For example, as Senator Bingaman noted in his keynote remarks at 1The first research park was established in Menlo Park, California, in 1948. Early successful parks, established in the 1950s and early 1960s, include the Stanford Industrial Park (est. 1953) in California, Research Triangle Park (est. 1958) in North Carolina, and Waltham Industrial Center (est. 1954) in Massachusetts. See Rachelle Levitt, ed., The Uniersity/Real Estate Connection: Research Parks and Other Ventures, Washington, DC: Urban Land Institute, 1987. See also Roger Miller and Marcel Cote, Growing the Next Silicon Valley: A Guide for Successful Regional Planning, Toronto: D. C. Heath and Company, 1987. 2 See the presentation of Dr. Ilona Vass, director of the Hungarian National Office for Research and Technology, in the Proceedings section of this report. 

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8 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Box A Making Research Parks a Priority “Many countries have been able to use the mechanism of S&T parks to greatly advance their technological capabilities. We have not given it nearly the emphasis of other countries. I would like to see the government provide more assistance to states to make research parks a priority.” Senator Jeff Bingaman, Keynote remarks at the 2008 National Academies conference on S&T Research Parks the National Academies conference that are summarized in this volume, research parks focused on software design in India have supported that nation’s emergence as a global leader in software design and services.3 Yet, while investments by the world’s leading nations in research parks reflects an appreciation of their capacity to spur knowledge-based growth and enhance technological competitiveness through innovation, this potential of re - search parks appears to be less well understood by policymakers and the public in the United States. To better understand the role that research parks can play as sources of inno - vation, regional growth, and national competitiveness for the United States and to document recent developments in the growth of research parks around the world, the National Academies’ Board on Science, Technology, and Economic Policy (STEP) partnered with the Association of University Research Parks (AURP) to bring together leading figures from governments, universities, and research parks from the United States and around the world.4 3 In the early 1990s, the Indian government established a network of national software technology parks that provided broadband connectivity based on satellite and fiber technology, single-window clearance system to software exporters, and incubation services. These research parks have helped India generate a substantial return on national investments on research and training in science and engineering. Today, the software industry is dominated by globally competitive champions from India, including Tata Consultancy Services (TCS), Infosys, and Wipro Technologies, each of which has generated revenues in excess of US$1 billion a year in recent times. See Tilman Altenburg, Hubert Schmitz, and Andreas Stamm, “Breakthrough: China’s and India’s Transition from Production to In - novation,” World Deelopment 36(2):325-344, February 2008. Senator Bingaman’s keynote address is summarized in the Proceedings section of this report. 4The conference, which was organized in cooperation with AURP, took place on March 13, 2008, at the National Academy of Sciences in Washington, DC, AURP is an association of planned and operating research parks around the world. Its mission is “to promote the development and operations of research parks that foster innovation, commercialization and economic competitiveness in a global economy through collaboration among universities, industry and government.”

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 INTRODUCTION The conference was timely, reflecting the growth of research parks around the word in terms of numbers, scale of operations, and the participation of many leading global corporations. The conference was also timely with respect to re- cent legislation introduced by Senators Bingaman, Bunning, and Pryor to provide federal assistance to states that are seeking to develop research parks. 5 This report of that conference captures the rich discussion of the diverse roles that university- and laboratory-based research parks play in national innovation systems. It also captures the central role of government support in the growth of research parks in countries as varied as China, Singapore, India, Hungary, France, the United Kingdom, Mexico, and the United States. The conference presenta - tions demonstrated the range of objectives and the substantial differences in scope and scale of activity characterizing research parks around the world, while also identifying common challenges. ADDRESSING THE 21ST CENTURY INNOVATION CHALLENGE The global proliferation of research parks reflects the recognition by national and regional governments that future economic growth and competitiveness lies in developing a robust knowledge economy. The proliferation of research parks highlights the need for a better understanding by U.S. policymakers of the am - bitious objectives and sheer scale of these programs in terms of their structure, operation, and funding levels. Indeed, these partnership programs and supporting policy measures are of great relevance to the United States and other countries both for their potential impact on national competitiveness and for the policy lessons they offer. A New Urgency From the U.S. perspective, one cannot assume that American preeminence as an innovative nation is assured in this new global competition. As the National Academies noted in its recent report, Rising Above the Gathering Storm, “this nation must prepare with great urgency to preserve its strategic and economic 5 In 2004, through Senator Bingaman’s introduction of S. 2737, “The Science Park Administration Act of 2004,” and again in 2007 through Senator Pryor’s introduction of S. 1373, “The Building a Stronger America Act,” the U.S. Congress considered, but did not pass, a bill to provide grants and loans to states and local authorities for the development and construction of university parks. Implicit in these bills is the assumption that R-S-T parks are an important element in the U.S. national innova - tion system and as such should be fostered because of both the knowledge-based and employment- based spillovers that will result. The Science Park Administration Act of 2004 was reintroduced in S. 1581 as the Science Park Administration Act of 2005. Albert Link, in his overview of the academic literature (in this volume) on research S&T parks, notes that “in the United States, public investment at state universities is used to underwrite the formation and development of R-S-T parks,” which is, by definition, a limited source of investment.

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10 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS security. Because other nations have, and probably will continue to have the competitive advantage of low-wage structure, the United States must compete by optimizing its knowledge-based resources, particularly in science and technology, and by sustaining the most fertile environment for new and revitalized industries and the well-paying jobs they bring.”6 If the United States is to respond to this challenge, its policymakers must understand what is happening at the cutting edge of policies to advance science, technology, and innovation around the world. In his remarks, James Turner, the Chief Counsel of the House Committee on Science at the time, affirmed that U.S. policies must address these new realities if the nation is to compete successfully in the 21st century. To contribute to policymakers’ understanding of global developments in innovation, the National Academies’ STEP Board has undertaken a compara- tive review of policies and programs around the world designed to stimulate knowledge-based growth. The study highlights the growth around the world of investments in research and development as well as new public-private partner- ships to foster the collaboration needed to translate ideas born in the laboratory into competitive new products for the marketplace.7 The Role of Public-Private Partnerships Public-private partnerships are widely seen as a tool required to address today’s innovation imperative. By stimulating cooperative research and develop - ment among industry, government, and universities, partnerships can play an instrumental role in introducing new technologies to the market.8 A recent review by the National Academies of best practices among U.S. innovation partnerships shows that cooperative research and development among industry, universities, 6 National Academy of Sciences/National Academy of Engineering/Institute of Medicine, Rising Aboe the Gathering Storm: Energizing and Employing America for a Brighter Economic Future, Washington, DC: The National Academies Press, 2007. 7 For an overview of some of the key innovation programs currently underway around the world, see National Research Council, Innoation Policies for the 21st Century, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2007. Other volumes in the series include National Research Council, India’s Changing Innoation System: Achieements, Challenges, and Opportunities for Cooperation, Charles W. Wessner and Sujai J. Shivakumar, eds., Washington, DC: The National Academies Press, 2007, and National Research Council, Innoatie Flanders: Innoation Policies for the 21st Century, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2008. 8 Not all policy observers accept the view that partnerships can play an important, even determinant, role in bringing technologies to market. Some would argue that most innovations come from the pri - vate sector acting alone and that government’s role in supporting innovation is limited. They believe that the vitality of the U.S. economy rests almost exclusively on the dynamism of the private sector. These perspectives ignore the real-world gaps and irregularities in information that often preclude successful collaboration within the private sector. The Nobel Committee in awarding the 2001 Nobel Prize in Economics to George A. Akerlof, A. Michael Spence, and Joseph E. Stiglitz recognized their pathbreaking analysis of these information asymmetries.

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11 INTRODUCTION Box B The Role of Public-Private Partnerships “Partnerships facilitate the transfer of scientific knowledge to real products; they represent one means to improve the output of the U.S. innovation system. Partnerships help by bringing innovations to the point where private actors can introduce them to the market. Accelerated progress in obtaining the benefits of new products, new processes, and new knowledge into the market has positive consequences for economic growth and human welfare.”a Government-Industry Partnerships for the Development of New Technologies A Report of the National Academies aNational Research Council, Government-Industry Partnerships for the Development of New Technologies, Charles W. Wessner, ed., Washington, DC: The National Academies Press, pp. 2-3. and government laboratories can work if properly designed, effectively led, and adequately funded.9 The growing importance of collaboration in bringing re- search to the market and the positive role of federal support for innovative small companies is documented in a recent independent study of the changes in the United States innovation landscape over the past four decades.10 Research parks are a type of public-private partnership that “fosters knowl - edge flows—often between park firms and universities and among park firms—and 9A National Research Council Committee led by Gordon Moore concluded that “Public-private partnerships, involving cooperative research and development activities among industry, government laboratories, and universities, can play an instrumental role in accelerating the development of new technologies from idea to market.” See National Research Council, Goernment-Industry Partnerships for the Deelopment of New Technologies: Summary Report, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2003, p. 23. 10 See Fred Block and Matthew Keller, “Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1970-2006,” The Information Technology and Innovation Forum, July 2008. Accessed at . The authors analyze a sample of innovations recognized by R&D Magazine as being among the top 100 innovations of the year over the past four decades. They find that while in the 1970s almost all winners came from corporations acting on their own, more recently over two-thirds of the winners have come from partnerships involving business and government, including federal labs and federally funded university research. Moreover, in 2006 77 of the 88 U.S. entities that produced award-winning innovations were beneficiaries of federal funding.

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12 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS contributes to regional economic growth and development.”11 These partnerships enhance, both formally and informally, the efficiency of innovation within park firms, universities, and national laboratories. As Professor Albert Link of the University of North Carolina at Greensboro and others have noted, scientific research is often characterized by high “spill - overs” of knowledge.12 In such cases, private investors may not be able to capture the benefits of research at sufficient levels to justify investment in that research. Public investments in facilities such as research parks can reduce the costs faced by individual firms and thus increase the willingness of universities and private firms to perform research. The result of this research spills over to other firms in the park and in the local and national economy.13 Many countries around the world as well as some states here in the United States have adopted measures to lower costs for firms by providing commercial facilities that enhance the research process, lower its cost, and where appropriate speed its dissemination. Box C Parks as a Nexus of Innovation “Research Parks appear to be an excellent place to cross the Valley of Death between invention and the marketplace.” Dr. Lawrence Schuette, Office of Naval Research UNDERSTANDING RESEARCH PARKS Alternatively referred to as research parks, science parks, technology parks, technopoles, science centers, business innovation centers, and centers for ad - vanced technology, there appears to be no singular characterization of a research park.14 The International Association of Science Parks defines a Science Park as 11 See Albert N. Link, “Research, Science, and Technology Parks: An Overview of the Academic Literature,” in this volume. As Link notes these definitional characteristics are emphasized by Presi - dent Mote of the University of Maryland and President Barker of Clemson University in their confer- ence presentations. 12Albert N. Link and John T. Scott, “The Economics of University Research Parks,” Oxford Reiew of Economic Policy 23(4):661-674, 2007. 13 See the paper by Albert Link, “Research, Science, and Technology Parks: An Overview of the Academic Literature,” in this volume. 14There appears to be no uniformly accepted definition of a Science Park in the academic literature although some analysts have attempted to distinguish between Innovation Centers, Science Parks and Research Parks. For a survey of the literature, see Hans Löfsten and Peter Lindelöf, “Science Parks and the Growth of New Technology-based Firms—Academic-industry Links, Innovation and Markets,” Research Policy 31(6):859-876, August 2002.

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1 INTRODUCTION “an organisation managed by specialised professionals, whose main aim is to increase the wealth of its community by promoting the culture of innovation and the competitiveness of its associated businesses and knowledge-based institu - tions. To enable these goals to be met, a Science Park stimulates and manages the flow of knowledge and technology amongst universities, R&D institutions, companies, and markets; it facilitates the creation and growth of innovation-based companies through incubation and spinoff processes; and provides other value- added services together with high quality space and facilities.” 15 While this definition is comprehensive, the fact is that research parks around the world vary considerably in terms of their mission and scale. Their physical location can range from an exclusively urban settings—such as Singapore’s emerging Biopolis or the IIT-Madras Research Park in Chennai, India—to more spread out facilities—such as the Research Triangle Park in North Carolina—or even to very large sites like the Zhongguancun and Zhangjiang Science Parks in China. In practice, the terms “science park” and “technopole” are used most commonly in Europe, the term “technology park” is more prevalent in Asia, while the term “research park” is preferred in the United States and Canada.16 We use the term “research park” in this paper. Box D Understanding the Diversity of Research Parks “If you’ve seen one research park . . . you’ve seen one research park.” Prof. Albert Link, University of North Carolina at Greensboro Defining research parks in the most general terms, Professors Michael Luger and Harvey Goldstein refer to them as “organizational entities that sell or lease spatially contiguous land and/or buildings to businesses or other organizations whose principal activities are basic or applied research or development of new products or processes.”17 In complement, Professor Paul Westhead emphasizes 15Accessed at on January 22, 2009. 16 E.J. Malecki, Technology and Economic Deelopment, New York: John Wiley, 1991. 17Michael I. Luger and Harvey A. Goldstein, Technology in the Garden, Chapel Hill, NC: University of North Carolina Press, 1991, p. 5. This volume was a seminal study of the research parks phenomenon. With support from the Economic Development Administration of the U.S. Department of Commerce, Professors Luger and Goldstein have recently updated their study. See M. Luger and H. A. Goldstein, Research Parks Redux: The Changing Landscape of the Garden, Washington, DC: U.S. Economic Development Administration, 2006. This update reflects the evolution of the perceived role of research parks over the past two decades. Reflecting the evolution of the role of research parks, the 1991 study focused on the distribution of park benefits among different groups in the population, while the 2006 study focuses on the capacity of research parks to stimulate innovation and regional development.

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1 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Box E Research Parks and the Nonlinearity of Innovation The term, “basic research” refers to the advancement of fundamental knowl- edge and the theoretical understanding of the relations among variables. A re- searcher’s curiosity, interest, and intuition often drive its exploratory nature. By contrast, the term “applied research” describes the use of accumulated theories, knowledge, methods, and techniques, for a specific purpose. Thus separated, basic research logically precedes applied research, which in turn precedes the development of an idea into a practical application. This linear model of innovation (see Figure E-1) creates the misimpression that increasing public and private investments in research will automatically result in greater commercialization, strengthening, in turn, a nation’s competitiveness in global markets.a As Dr. Robert McMahan of the North Carolina Board of Sci- ence and Technology noted at the conference, academic R&D creates innovation capacity, but does not by itself raise economic output or create the fast-growing “gazelle” firms that spur new growth. In practice, distinctions between basic and applied research are often obscure, with the different stages of research intermixing frequently. (Figure E-2 shows a more complex “feedback model” of innovation.) This is particularly true for research and development in biotechnology and electronics, where fundamental research can be undertaken alongside work intended to develop new products. This can also be the case in areas where public- and private-sector partners col- laborate in order to develop greater insight into areas of interest. In this regard, a key advantage of research parks is that they offer scientists, Commercialization Basic Research Applied Research Development FIGURE E-1 A linear model of innovation. R01413 Intro Fig E-1.eps the collaborative and catalytic environment that research parks provide that helps transform ideas born from research into products for the market.18 18 P. Westhead, “R&D ‘Inputs’ and ‘Outputs’ of Technology-based Firms Located In and Off Science Parks,” R&D Management 27(1):45-62, 1997. In addition to infrastructure investments in build - ings and equipment and the employment of researchers and engineers, research parks often house incubation programs to provide resources that enhance the founding of new technology-based firms, although the effectiveness of these incubation programs vary. See K. F. Chan and T. Lau, “Assessing Technology Incubator Programs in the Science Park: The Good, the Bad and the Ugly,” Technoation 25(10):1215-1228, October 2005. The authors find that the benefits required by technology founders at different stages of development are varied, and therefore, the general merits that are claimed by incubators as useful to technology start-ups are debatable.

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15 INTRODUCTION Quest for Basic Understanding • New Knowledge • Fundamental Ideas Basic Potential Use Research • Application of Knowledge to New a Specific Subject Feedback : • Prototypicalization Unanticipated • Basic Research Applications Applied Needed for Discover y Research • Search for new Development of Ideas and Feedback : Products solutions to solve • Applied Research • Goods and Services longer-term Needed to Development issues design New product Characteristics Feedback: Market Signals/ Technical Challenge Commercialization • Desired Product Alterations or New Characteristics Cost/design trade -off • FIGURE E-2 A nonlinear feedback model of innovation. Intro Figure E-2.eps entrepreneurs, venture capitalists, and others a supportive environment that en- courages collaboration across disciplines and feedback across the different stages of innovation.b aWhile elegant, it is easy to forget that this linear theoretical model overlooks the complex collaborations that characterize real-world innovation processes. For an analysis of such collaborations, see Dries Faems, Bart Van Looy, and Koenraad Debackere, “Inter- organizational Collaboration and Innovation: Toward a Portfolio Approach,” Journal of Product Innovation Management 22(3):238-250, 2005. Drawing from an empirical study of Belgian firms, the authors highlight relevance of “adopting a portfolio approach to inter-organizational collaboration within the context of innovation strategies.” bAndrew C. Inkpen and Wang Pien, “An Examination of Collaboration and Knowl- edge Transfer: China-Singapore Suzhou Industrial Park,” Journal of Management Studies 43(4):779-811, 2006. The conference examined two important types of research parks—University Research Parks and Laboratory Research Parks—with both types seen as versatile and adaptable to differing missions and environments. University Research Parks Professors Albert Link and John Scott define a university research park as a “cluster of technology-based organizations that locate on or near a university campus in order to benefit from the university’s knowledge base and ongoing research. The university not only transfers knowledge but expects to develop knowledge more effectively given the association with the tenants in the research

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16 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS park.”19 Highlighting their role in fostering regional development, AURP refers to university research parks as property-based ventures that promote a university’s research and development activities as well as local economic development.20 AURP believes that effective parks can aid in the transfer of technology and business skills between university and industry teams, encourage the creation of startups, and promote technology-led economic development for the community or region.21 Adding to a University’s Prestige Speaking at the conference, Professor Albert Link of the University of North Carolina at Greensboro noted that while parks gain knowledge and prestige from their university partners, the universities gain as well. Association with a success - ful park can bring multiple benefits to a university such as: • Higher publication rates; • More successful patenting activities; • A greater ability to hire eminent scientists; and • An ability to garner larger extramural grants. He noted that provosts of universities associated with parks, interviewed in the course of his research, indicated that one result of successful university-industry partnership in the context of a research park is a shift in the university curricula toward more applied research. This also helps graduate students in science and engineering find employment following their degrees. As a result, the university as a whole becomes more interested in innovation. Faculty who mentor students are more attuned to the needs of industry. The change in the structure of the cur- riculum is reflected by improved student placements.22 19Albert N. Link and John T. Scott, “U.S. University Research Parks,” Journal of Productiity Analysis 25(1):43-55, 2006. For a thorough review of the Research Triangle Park, see Albert Link, Generosity of Spirit: The Early History of the Research Triangle Park, Research Triangle Park, NC: University of North Carolina Press for the Research Triangle Park Foundation, 1995. 20AURP Website, accessed at , July 11, 2008. 21 Research universities are increasingly recognized as an essential tool for regional economic develop- ment. Research universities are a key source of the fundamental scientific research that drives innovation, and this includes research in finance and economics and the dissemination of business methods. Most patent applications coming from industry research laboratories cite fundamental, exploratory research done at research universities. Research universities also produce the cadre of scientists and engineers who conduct research and development. They educate the workforce that brings innovation to fruition in commercial markets. See the speech by G. Wayne Clough, “The Role of the Research University in Fostering Innovation,” The Americas Competitiveness Forum, June 12, 2007. Accessed at . 22 See also Albert N. Link and John T. Scott, “U.S. Science Parks: The Diffusion of an Innovation and Its Effects on the Academic Missions of Universities,” International Journal of Industrial Orga-

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1 INTRODUCTION Box F Research Parks and the Missions of the 21st Century University The wealth and competitiveness of nations increasingly depends on their ability to convert new knowledge into products for the market. Universities have traditionally been devoted to the production of new knowledge and its dissemina- tion through their mission to educate students. Universities have, in fact, always been active in both research and in its ap- plication. With the acceleration of knowledge-based competition by both estab- lished and emerging economies around the world, institutions of higher education increasingly find that they have no choice as to whether to be entrepreneurial or not. Indeed, the issue today for many of today’s university leaders more squarely concerns how the university can assist in accelerating the commercialization of new knowledge and the development of local economies.a One consequence of the conference was to highlight the growing role of re- search parks in helping universities balance their 21st century missions in educa- tion, research, and commercialization. aRobert E. Litan and Lesa Mitchell, “Should Universities be Agents of Economic De- velopment?” Astra Briefs, Vol. 7, Nos. 7-8, Summer 2008. Expanding the University’s Reach Dr. C. D. Mote, President of the University of Maryland, noted that a univer- sity research park is an “essential tool for institutions with an entrepreneurial and innovative culture that hoped to benefit from complicated partnerships on a global scale.” One need is the physical space and facilities afforded by a park that are not available on a university campus. Another is the need to be able to do proprietary or classified research, which is not easily done in an academic environment. 23 A third is the ability to accommodate a large off-campus work force to achieve the clustering, resonance, and mutual energy of people working and thinking together. Finally, a research park can uniquely bring in the many nonuniversity nization 21:1323-1356, November 2003. 23 This is a particularly important consideration for the University of Maryland, which is lo - cated near several federal agencies including the National Oceanic and Atmospheric Administration (NOAA), the National Institute for Standards and Technology (NIST), the Department of Homeland Security, the National Security Administration, the Food and Drug Administration, the National Institutes of Health, NASA, the Small Business Administration, and the National Archives. Some of these agencies conduct classified research, and many research universities have policies prohibiting classified research on campus, but not at affiliated research parks.

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28 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Box J Mega Parks in China Noting that China has more than 54 state-level economic and technological development zones, and 53 national high-tech development zones, Dr. Zhu Shen of BioForesight described the development of three large science parks as a lead- ing examples of Chinese policy and achievement. Zhongguancun Science Park in Beijing The park hosts over 20,000 enterprises and 950,000 employees, receiving total income of 850 billion Yuan (about US$124 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” (Chinese scientists who return home after acquiring skills abroad) that have set up 4,200 companies in Zhongguancun Science Park. Shanghai Zhangjiang Hi-Tech Park Established in July 1992 in the middle of Pudong New Area, the park com- prises the Technical Innovation Zone, Hi-Tech Industry Zone, Scientific Research and Education Zone, and Residential Zone. The Zhangjiang High-Tech Park em- phasizes three major areas of innovation: 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 and informa- tion technology companies. Chinese tenants include more than 60 small-molecule drug development companies, 35 medical device and diagnostics firms, and more than 15 traditional Chinese medicine companies. The park now accounts for 25 percent of Shanghai’s GDP, 50 percent of foreign trade, and 30 percent of foreign investment. Of 25 square kilometers, 17 are already developed, hosting more than 3,600 companies, more than 140 of them foreign, and more than 100,000 employees. Reflecting this impressive investment, Dr. Shen observed, “I don’t think we can find a park like this in the U.S., at least not yet.” Suzhou Industrial Park Established in 1994, Suzhou Industrial Park is a unique joint development between the Chinese and Singapore governments. Located 80 kilometers west of Shanghai, Suzhou has taken its place at the high-tech frontier of the global economy. In land area only 0.1 percent and in population 0.5 percent of China, it accounts 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.

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2 INTRODUCTION environment. Opening in October 2008, Fusionopolis 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. Both the Biopolis and the Fusionopolis, another research and development complex, are located within One-North, which is a larger area situated within Singapore’s 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. One-North is well located—just 10 minutes from the city center and 20 minutes from the Changi International Airport. It is planned, Dr. Lim concluded, as a vibrant dynamic environment because “the research community must not be iso - lated.” The ambitious premise of the design is to create “an ecosystem designed to nurture new ideas and push them quickly to reality.” Support for France’s Grenoble-Minatec France has an active policy to capture the benefits of its strong investments in research and to reinforce the now vibrant Grenoble high-technology cluster. Once a relatively small alpine community of 450,000, Grenoble was selected in 1957 as the site as 1 of 10 national centers dedicated to French nuclear research. Around the year 2000, as the potential for industry-government high-tech partner- ships became clear, and as traditional nuclear engineering stagnated, the idea for Minatec was born. It offered a place and a rationale for formalizing new public- private partnerships within a major S&T park that could expand into new fields of cutting-edge research. A research center focused on micro-nano technologies, Minatec is an exten - sion of France’s national laboratory system that has been redesigned to stimu - late economic development.42 Combining a research campus with a network of companies, researchers, and engineering schools, the success of the project in focusing on new products and miniaturized solutions for industry is such that the Grenoble region is now called France’s Silicon Valley. Speaking at the conference, Dr. David Holden of Minatec noted that the development of a research park in Grenoble has benefitted from a substantial 3.2-billion-Euro investment from the French government, with the local govern - ment adding about 150 million Euro, most of it to pay for infrastructure, such as highways and access roads. This investment, he said, has been more than paid 42 Minatec members include CEA-Leti, one of Europe’s largest microelectronics research institutes; INP-Grenoble, a French technical university; and industrial partners like the Crolles 2 Alliance of STMicroelectronics, Philips, and Freescale Semiconductor. Minatec facilities provide the space, tools, and expertise to companies locating their research and development projects in Grenoble. See Junko Yoshida, “Grenoble Lure: Un-French R&D,” EE Times, June 12, 2006.

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0 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS back in the form of corporate taxes over the four-year period, and the local gov - ernment is still benefiting from a net positive of 1,000 technical jobs and perhaps three times as many support jobs. Dr. Holden also noted that the Minatec model has influenced how other sci - ence and technology clusters in France are financed. France is trying to decentral- ize its financial system, with the regions promoting more of their own economic development. Competitive clusters, called “pôles de croissance,” are creating groups to screen project applications and then ask for funding from the central government, a process put in place by President Sarkozy’s government several years ago when he was Minister of the Interior. According to Dr. Holden, Presi - dent Sarkozy is using the process at Minatec as the basis for the current French parks model. Under this system, Minatec received in just two years about 1.2 billion Euros (US$1.86 billion) for 113 projects and 315 million Euro (US$487 million) in financing from the government. Developing a Research Park in Mexico: High-Technology Growth in Monterrey Dr. Jaime Parada of Mexico’s Research and Innovation Technology Park reported that a new research park is unfolding in Monterrey. The 175 acre re - search park draws on the dynamic industrial base of the city of Monterrey, which produces 11 percent of Mexico’s manufacturing goods, equivalent to US$12.1 billion. Dr. Parada added that the province of Nuevo Leon also has multitiered higher educational institutions of good quality, including 93 colleges and univer- sities that teach the skills and conduct research needed to support park activities. Monterrey Tech and the University of Monterrey, he said, are two of the most prestigious universities in Latin America, and the University of Nuevo Leon is ranked as one of the best state universities in Mexico. He noted that the province also has a strong base for research and development, with more than 1,500 re - searchers in public and private research institutions. Projected employment over the next five years is expected to grow to 3,500 researchers and engineers. The research at the Monterrey research park is to be sustained with substan - tial support from the federal government of Mexico. According to Dr. Parada, this includes investment in infrastructure of $100 million, and investment in buildings and equipment of $150 million. Two business incubators have been designed, one for nanotechnology and one for biotechnology, at a cost of $20 million. The state’s first seed and venture capital fund is being assembled by private partners, the government, and the national bank to a level of $30 million. In addition, he noted that Mexico absorbs 30 percent of annual R&D expenses as tax incentives for those who invest in research and development. Dr. Parada also reported that the Monterrey research park will launch in 2008 a new legal framework support- ing research, development, and innovation, including a 25-year commitment of financial support.

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1 INTRODUCTION CREATING SUCCESSFUL PARKS Given the growth of new research parks around the world, how can we enhance the success of these ventures?43 Several conference participants drew attention to a set of factors necessary for success.44 Perhaps one of the most important factors is the presence and involvement of a large research university or laboratory supporting a critical mass of knowledge workers.45 Also, key is availability of funding over a sustained period. Strong and committed leadership is also essential to facilitate and guide the development of the park’s physical infrastructure and quality-of-life amenities. Finally, and not least, a successful park needs skilled entrepreneurs and managers. Talented and motivated individu - als and teams in the private sector are needed to commercialize the knowledge generated.46 If the benefits of a successful park are to be realized over the long term, a critical combination of these factors must be present, although they are not sufficient to ensure success. Drawing on the experience of the Research Triangle Park, widely seen as a successful research park, Dr. Robert McMahan, the Science Advisor to the Governor of North Carolina, noted the importance of a policy environment that is patient, adaptable, and focused on commercialization. The Importance of Patience Dr. McMahan noted that when a small group of planners, over 50 years ago, began to create structures to leverage innovation resources within the state, North Carolina was “desperately poor,” ranking 49th in the country in per capita in - come. Most of its population was involved in a few low-wage industries: tobacco, furniture, and textiles. What is distinctive about North Carolina’s approach is that it recognized the importance of “patient structures,” he said. For the first 10 years, 43Albert Link (in this volume) notes that research parks should not a priori be considered a primary element of a nation’s innovation system. While successful research parks stimulate two-way knowl - edge flows between universities and industry, the conditions where such beneficial interactions can take place require further study. 44 See, for example, the presentations by Ilona Vaas of Hungary, Jaime Parada of Mexico, and Yena Lim of Singapore in the Proceedings section of this report. See also David B. Audretsch, “The Prospects for a Technology Park at Ames: A New Economy Model for Industry-Government Partner- ship?” in National Research Council, A Reiew of the New Initiaties at the NASA Ames Research Center, op. cit., p. 119. 45 Link and Scott note that “More research-oriented universities, as measured by RD100, have within their research parks a greater proportion of tenants that are university spin-off companies.” See Albert N. Link and John T. Scott, “Opening the Ivory Tower’s Door: An Analysis of the Determinants of the Formation of U.S. University Spin-off Companies,” Research Policy 34:1106-1112, 2005. 46As Luger and Goldstein note, “Research parks will be most successful in helping to stimulate economic development in regions that already are richly endowed with resources that attract highly educated scientists and engineers.” See Michael I. Luger and Harvey A. Goldstein, Technology in the Garden, op. cit., p. 184.

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2 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS the park made little progress. But bridging institutions designed to institutionalize change, such as the North Carolina Board of Science and Technology, provided sustained support through successive elected state governments. Experimentation and Adaptability Dr. McMahan also noted that the North Carolina Board of Science and Technology experimented with organizational innovations, many of which have proved useful and have since served as models for newer research parks. Given the advantage of a long-term mandate, the Board has also been able to look ahead far enough to identify opportunities in new fields gaining momentum. He noted, for example, that the Board had urged the state to invest in biotechnology back when biotechnology was not yet a familiar term. Focus on Commercialization Given that a university-based park is part of a continuum of mixed infrastruc- ture and other measures, Dr. McMahan noted that “entrepreneurship becomes critical to the success of the parks and the larger economy.” Here, complementary public-private partnerships, like the Small Business Innovation Research (SBIR) program, can help maximize the state’s investments in research parks while am - plifying the impact of the federal government’s investment in research. SBIR is a federal program that offers competition-based awards to small high-technology firms with technically sound but commercially unproven ideas.47 Because new ideas are by definition unproven, the knowledge that an entrepreneur has about his or her innovation and its commercial potential may not be fully ap - preciated by prospective investors.48 This means that new ideas with commercial potential often do not attract sufficient private investment. SBIR awards provide this seed capital and, moreover, act as a signal to private venture capital markets, helping entrepreneurs secure the funds needed to bring new ideas to market. Dr. McMahan noted that North Carolina recently instituted one of the coun- try’s most substantial support programs for SBIR award winners as part of en- trepreneurship strategy. The state decided to award up to $100,000 in matching 47 Created in 1982 through the Small Business Innovation Development Act, the Small Business Innovation Research (SBIR) is the nation’s largest innovation program. For a comprehensive review of the concept and performance of this 25-year-old program, see National Research Council, An Assessment of the SBIR Program, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2008. 48 Joshua Lerner, “Public Venture Capital,” in National Research Council, The Small Business Innoation Program: Challenges and Opportunities, Charles W. Wessner, ed., Washington, DC: National Academy Press, 1999. For a seminal paper on information asymmetry, see Michael Spence, Market Signaling: Informational Transfer in Hiring and Related Processes, Cambridge, MA: Harvard University Press, 1974.

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 INTRODUCTION funds to each company that won an SBIR grant from the federal government. He noted that this approach has already succeeded in targeting high-potential small firms “and should be viewed as a powerful complement of research parks and other structures.” EVALUATING RESEARCH PARKS As countries, regions, and cities around the world invest—sometimes on a massive scale—to create new research parks as a means to accelerate technologi - cal and economic transition, the task of measuring the contribution of research parks becomes more important. However, the empirical literature related to the formation and performance of universities and firms parks has been characterized as “embryonic.”49 The conference participants discussed the need for evaluating research parks, some of the challenges of evaluation, and the need to refine the metrics of evaluation. Why Evaluate? In his conference remarks, Professor Link noted that research parks should be evaluated to make them more accountable to the public that invests in them and to understand, improve, and measure the benefits they provide to universities, laboratories, and businesses and to contributing scientists and engineers. Professor Link reported that more than 80 percent of research parks in the United States rely on government and/or university funds to develop park land and infrastructure. Given the size of this public expenditure, he noted that it is reasonable to expect that both “investors” and the local community will want accurate evaluations of parks. He added that this strong need for accountability is reasonable because park directors are stewards of public money, and the public sector has a long history of being accountable for its use of public resources. He went on to note that accountability is an especially important issue for universities, which “are not known to be good managers of research parks.” In this context, he sug - gested that evaluation exercises can actually help universities become better managers of research parks by helping them identify the multiple facets of the university that are affected by the park. Thus, another rationale for the evalua - tion of research parks is that they can reveal ways of increasing the efficiency of the science and commercialization efforts at the university and at independent companies. 49 For a review of the empirical literature on research parks, see Albert N. Link, “Research, Science, and Technology Parks: An Overview of the Academic Literature,” in this volume.

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 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS The Challenge of Evaluation While noting that the need for evaluation is clear, Dr. William Kittredge of the Department of Commerce affirmed that developing effective metrics to mea- sure the performance of research parks, and of economic development in general, is at best a “work in progress.” One fundamental limitation arises from the diversity of park characteristics and missions. As noted earlier, there is no commonly used definition of a research park. They can vary dramatically and—given their different goals, facilities, fund - ing, and management structures—comparing one research park with another is a complex task. As even the small sample of parks referenced in this conference demonstrates, their location can vary considerably from an exclusively urban site, to a much more park-like setting. The immediate economic, political, and social environments surrounding each research park also vary. The actual organization, management, legal status, and size also vary significantly among research parks. Thus, as Professors Luger and Goldstein have noted in their seminal analysis of research parks, “One of the conceptual difficulties is that there is no consen - sus about the definition of success. . . . The most commonly cited goals relate to economic development. But both the literature and our data from interviews with park developers, elected officials, university administrators, business leaders, and others confirm the existence of other goals, including technology transfer, land development, and enhancement of the research opportunities and capacities of affiliated universities.”50 Another limitation arises from the absence of a systematic framework to under- stand the dynamic interactions among the various stakeholders and participants of a research park and how the nature of these interactions affects behavior and hence outcomes. As Professors Phillip Phan, Donald Siegel, and Mike Wright have observed in their recent review of the literature, there is a failure to understand the dynamic nature of research parks as well as that of the companies located on them.51 Acknowledging this point, Dr. Kittredge noted in his remarks that qualita- tive measures may have an important role in park evaluation, adding dimensionality and nuance to more generalized, but limited, quantitative measurements. Some Possible Metrics These challenges notwithstanding, there are several metrics that can help gauge the relative success of a research park, as Professors Luger and Goldstein point out.52 These include: 50 Michael I. Luger and Harvey A. Goldstein, Technology in the Garden, op. cit., p. 34. 51 Phillip H. Phan, Donald S. Siegel, and Mike Wright, “Science Parks and Incubators: Observations, Synthesis and Future Research,” Journal of Business Venturing 20(2):165-182, March 2005. 52 Luger and Goldstein have used a multiple case-study approach along with a quasi-experimental design where multiple areas with parks were compared to similar areas without research parks in order

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5 INTRODUCTION • Meeting the goals of legislation. One plausible way to measure the success of research parks is to assess their performance against stated goals, as written into legislation and found in documents and interviews. • Return on public investments. Direct expenditures by government on land acquisition and infrastructure development, financial inducements, and the opportu- nity cost of the land for research parks versus other types of uses can be compared against changes in the tax rolls and other measures of economic growth. • Enhanced firm performance. This can be measured in terms of the change in income and corporate taxes collected by local, state, and federal gov - ernments as the result of the growth of successful businesses inside and outside the park, as well as in terms of net gains in jobs.53 • Enhanced university performance. As noted above, spillovers to the economy usually take the form of the creation of codified knowledge, which can be measured in terms of patents and publications. Spillovers can also be examined in other ways. Tenants often form research joint ventures with other firms in the park, and this can be tracked. Tenant companies may also provide benefits to the host university by sponsoring laboratories and professorships, hiring students, or associating themselves with co-patenting activity. • Value of the park to tenants. Another kind of measure is the value of the park to tenant companies that benefit from the richness of the flow of knowledge between them and universities. For example, firms may seek the cachet of work- ing in a successful park, which can benefit the host university, tenant firms, and the local community. RESEARCH PARKS: LESSONS AND IMPLICATIONS Research parks are widely seen as a proven partnership tool to increase the return on a nation’s investment in research and development.54 Found in both developed and developing nations, they are now a world-wide phenomenon. National governments are making very substantial investments in research parks to facilitate the commercialization of new technologies, to attract leading high- technology companies from around the world, to benefit from and contribute to university research and “market ready” students, and to create centers of regional and national economic development.55 to determine whether research parks did in fact meet their objectives. Michael I. Luger and Harvey A. Goldstein, Technology in the Garden, op. cit. 53 Luger and Goldstein point out that one must also consider jobs created outside the park area because of the park’s creation. Ibid. 54This point was emphasized by a number of speakers. See, for example, the remarks of Ilona Vaas of the Hungarian National Office for Research and Technology in the Proceedings section of this volume. 55 See, for example, the presentation by Yena Lim on Singapore’s initiatives and by Zhu Shen on China’s significant investments in research parks in the Proceedings section of this volume.

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6 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS By fostering a more robust interface between universities and laboratories and entrepreneurs and small and large businesses, research parks are seen as an effective policy tool to realize large and highly visible returns on a nation’s R&D investments. Towards this end, many nations are adopting a variety of directed strategies to launch and support the development of research parks.56 Box K sum- marizes the recent evolutions in the scope and form of these parks. Box K Research Parks in the 21st Century—Some Recent Trendsa • Research parks are no longer a developed world phenomenon. Parks can be found in more than 60 countries at all stages of development. • Most research parks outside the United States are planned as part of a national strategy for industrial competitiveness. • Many parks employ cluster-based recruitment and marketing methods, including tax incentives, training programs, and other industry-targeted services. • Technological development at many research parks is increasingly inte- grated with university research, with faculty working with private firms and firms renting laboratories and incubator space in universities. • Beyond research universities, community colleges and regional technical schools are increasingly participating in research parks. aBased on M. I. Luger and H. A. Goldstein, Research Parks Redux: The Changing Landscape of the Garden, Washington, DC: U.S. Economic Development Administration, 2006. Best Practices in Research Parks What makes research parks effective? Several of the conference participants offered their own insights on some of the elements essential for success. 57 Some of their main points are summarized below. Committed Champions Successful parks generally begin with committed champions with long-term visions. In his presentation, Dr. Richard Stulen drew attention to the role that 56The presentations in this report provide a sample of efforts underway around the world to develop research parks. This includes specific parks in China, India, Singapore, Hungary, France, the United Kingdom, Mexico, and the United States. 57These views do not necessarily reflect those of the NRC Committee authoring this report.

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 INTRODUCTION effective high-level champions like Senator Bingaman have played in the growth of New Mexico’s Sandia Science and Technology Park. Park Leadership and Staff Well-managed and well-staffed parks are essential to the development of research parks, as documented in recent reviews by the National Research Coun - cil of the research parks affiliated with the NASA-Ames Research Center and Sandia National Laboratories.58 Professional managers can facilitate networking among researchers, entrepreneurs, venture capitalists, and other key players in the park’s innovation ecosystem. Well-managed incubators located within research parks can also nurture startup companies. Dr. Mary Good of the University of Arkansas emphasized the importance of a research park’s management and staff in her summary of the conference by underscoring that quality staffing is an es - sential element in success. Committed Funding Consequently, another ingredient essential to the emergence of research parks is the presence of committed funding. In his keynote address, President Barker of Clemson University emphasized the instrumental role played by the State of South Carolina as well as private donors like BMW in providing the funding needed to provide the ICAR “instant scale and instant density.” “I can’t overstate the importance of effective public policy and designated public fund - ing,” he concluded. “Otherwise, we would have had a great idea but no means of turning this idea into reality.” Bridging Institutions As Dr. McMahon noted in his presentation, dedication to a vision, pursued over several decades by North Carolina policymakers, university administrators, and business leaders, has been instrumental in the successful development of Research Triangle Park. Given that the tenure of these leaders, especially elected officials, is short relative to the life of a research park, bridging institutions, such as the North Carolina Board of Science and Technology, play an important role in sustaining support for research parks over the long run. 58 See National Research Council, A Reiew of the New Initiaties at the NASA Ames Research Center, op. cit., and National Research Council, Industry-Laboratory Partnerships: A Reiew of the Sandia Science and Technology Park Initiatie, op. cit.

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8 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Relative Scale Ms. Jane Davis of the Manchester Science Park noted that the impact of a research park is related to its scale relative to the local economy, available re - sources, and public expectations. Even relatively modest research parks, if ade - quately resourced and ably led, can have a major impact on a small community. Soft Infrastructure An innovative cluster is more than the sum of its capital investments. Describ- ing the case of Singapore, Dr. Yena Lim noted that the government has over the long course built a strong education system, raising the value of learning and rewarding scientific and engineering excellence. Human capital, in terms of education and skills training, a vibrant entrepreneurial culture, and the presence of networks among professionals all contribute to an indigenous capacity to innovate. A well- designed and supported research park can then capitalize on these investments. Implications for the United States In her concluding remarks, Dr. Mary Good reflected on the acceleration in the pace of planning and development of research parks around the world. Time and patience are important, she observed, “but we have heard an undercurrent of urgency from essentially all of the participants.” She noted further that sovereign states have decided to front-load economic development and to lean on their state-supported universities to contribute to national economic development of new technology-based companies. Research parks are clearly a key element of economic development today, and we need to learn from others and adopt and adapt those lessons to the United States, just as other countries are adapting what they see as positive lessons from the U.S. experience. “If we can look at what we’ve learned here today and disseminate it quickly, we can do some good.” Dr. Mary Good, University of Arkansas Research parks in the United States can and must flourish beyond today’s few dominant centers of science and technology expertise. This is a message, affirmed Dr. Good, which needs to be heard by governors and state legislatures around the nation. We need to capitalize on and support innovation around more of our universities throughout the country, she said, for the United States to continue to be as visible or viable in the next 50 years as we have been in the past 50 years.