Panel II
North American and European S&T Parks

Moderator: Peter Engardio

BusinessWeek


Mr. Engardio continued the discussion by noting that development of S&T parks is “a global game,” and that the transition from the parks in Asia to those in North America and Europe would build a comprehensive picture of how planners around the world are adopting similar policies to spur innovation.

THE ENGLISH EXPERIENCE

Jane Davies

Manchester Science Park United Kingdom


Ms. Davies said she has been CEO of Manchester Science Park Ltd. (MSP) since 2000. She also chairs the U.K. Science Park Association (U.K.SPA), the umbrella membership organization, which has 67 member parks and 10 in the planning stages. Together they provide nearly 2 million square meters of accommodation, space for 3,400 companies, and about 75,000 employees. She noted that things in the “old country” are a bit smaller than recently described projects in Asia.

She said that parks in the U.K. also differed from U.S. parks in both scale



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Panel II North American and European S&T Parks Moderator: Peter Engardio BusinessWeek Mr. Engardio continued the discussion by noting that development of S&T parks is “a global game,” and that the transition from the parks in Asia to those in North America and Europe would build a comprehensive picture of how planners around the world are adopting similar policies to spur innovation. THE ENGLISH EXPERIENCE Jane Daies Manchester Science Park United Kingdom Ms. Davies said she has been CEO of Manchester Science Park Ltd. (MSP) since 2000. She also chairs the U.K. Science Park Association (U.K.SPA), the umbrella membership organization, which has 67 member parks and 10 in the planning stages. Together they provide nearly 2 million square meters of accom - modation, space for 3,400 companies, and about 75,000 employees. She noted that things in the “old country” are a bit smaller than recently described projects in Asia. She said that parks in the U.K. also differed from U.S. parks in both scale 0

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1 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS and ownership. The early science parks in the U.K., built in the 1980s, tend to be owned by universities and operated as income-generating properties. However, since technology transfer and business incubation have emerged as important drivers in the development of modern economies, the public sector has also be - come active in stimulating and funding new parks; Manchester is one example of such a shift. In the 1990s and in the 21st century, parks have been developed in the U.K. and in Europe with capital funding from regional development agen - cies which see science parks as tangible evidence of their region’s developing knowledge economy. A Mix of Ownership Many of these parks, she said, are partnerships between government and lo - cal universities, which in the U.K. receive funding from central government for this “third-mission” activity. She likened it to the development described earlier for the University of Maryland. More recently, private property developers have taken an interest in the science park idea, beginning to forge their own partner- ships with public entities and adding yet more kinds of collaborations to the mix. Today about 11 percent of parks are privately owned, 19 percent are university- public partnerships, 27 percent are university-owned, and 43 percent are partner- ships between universities and other public or private bodies. Privately owned University-owned (11%) (27%) Par tnership between public bodies without universities (19%) Par tnership between university and other public/private bodies (43%) FIGURE 2 UK parks ownership profile. PROC Figure 02 R01413 redrawn

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2 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS In 2003, the U.K.SPA contracted with Angle Research to examine the impact of science parks on the U.K. economy. They examined some 900 companies altogether, comparing the economic and innovation performance of park tenants with similar firms located outside parks. The results showed that the single most important factor affecting the performance of science parks is the state of the sub-regional economy in which they operate. Also, the companies in parks were found to have higher growth rates, in terms of both turnover and employment, and better access to risk financing. Manchester Science Park She turned to Manchester Science Park itself, which is one of the older S&T parks in the U.K., started in 1984 as a 22,500-square-foot building on a 15.5-acre site. Today there are 305,000 square feet of buildings on three sites that employ about 1,100 people. She offered some of the reasons for its success, beginning with its location next to the campus of Manchester University, a major research university which aims to become world-class in science and technology. Another advantage is a corporate structure that guarantees every tenant flexibility and independence. The city has strong civic leadership with a vision of becoming global. It has a history of working in partnership with the private sector and is the only U.K. city outside London that has “the economic assets and the will” to become the second engine of the U.K. economy. Even local strength in sports can be a recruiting asset for the park, which proudly reminds candidates of the presence of Manchester United, one of the U.K.’s premier football clubs. Like so many parks, MSP was created as an economic development initia- tive. Manchester was badly weakened by the downturn in manufacturing of the 1980s, suffering job losses and much personal pain. Having heard about and visited Research Triangle Park, representatives of Manchester government, the university, and the commercial sector came together to set up a science park, raising an initial capital investment of 210,000 Pounds. The city built the first building, and MSP was engaged to manage it. In 1999, MSP formed a joint venture with a regional builder-developer, Pochin Plc. This venture successfully developed three buildings on a site adjacent to the main campus, one of which was sold in 2005. The park has received only limited public funding in its 24-year history, in the form of gap funding for three of the buildings. All the partnership activities of tenants and the university have been paid for out of MSP’s profits. The park has never paid a dividend to investors, who are content to see the value of their holdings increase as a result of park activities.

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 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS Measuring Success In measuring success, the park uses the strategic objectives of economic development and knowledge exchange. The first metric is growth in tenant com - panies. “We are much more interested in the companies than we are in the park itself,” said Ms. Davies. “We look at how our companies are doing as a measure of the impact we’re after.” Tenant companies are asked to fill out a questionnaire annually, and growth is measured by employment, company turnover, and expan- sion within the park. To measure innovation, companies are asked how they are developing their links with higher education, such as how many graduate students they employ. They are asked about their licensing activity and about new products and services; and about sources of investment (friends and family? venture capital? stock offer- ings?) which indicate how successful they are at bringing new money into the local economy. The park management also provides assistance to its companies and even tracks the alumni companies to monitor their development. In 2007, for example, MSP found that 79 percent of the companies operating in 2001 were still in business. By comparison, the average survival rate of all firms in Manchester is 64 percent. MSP also found that 70 percent of companies that left the park were still operating in the city region. For Manchester, said Ms. Davies, this figure is just as important as the growth of the park companies. The next science parks to be built in the U.K. will represent a third genera- tion, she said, and each is likely to be: • A global player with local roots. • Part of the local community. • A healthy business (making money and attracting investment). • An essential element of university activity. • Part of a multiplicity of networks. • Focused on the needs of tenants. The Challenge of Small Size In reviewing some challenges for MSP, Ms. Davies said that the most impor- tant one is its small size. “We are making a positive impact,” she said, “but be- cause of our size we cannot make a regional impact as we would like to do. We’re looking at expansion in the city region. I think we’ll see in the U.K. that some parks will come together under common management.” She cited an example from the Basque country of northern Spain, where three parks merged under one board so as to contribute more effectively to the region’s prosperity.

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 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Another challenge locally is the patchy nature of the innovation system in the Manchester city region. Further, finding sufficient risk capital remained a challenge, as did the problem of young people avoiding science and engineering. “We need ways to rebuild our resources of bright people,” she concluded, “by showing students that science and engineering offer exciting careers. I think if we started paying them as much as bankers, that would have a bigger effect than any program at kindergarten level.” MONTERREY: INTERNATIONAL CITY OF KNOWLEDGE PROGRAM Jaime Parada Research and Innoation Technology Park (PIIT) A new S&T park is unfolding in Monterrey, Mexico, said Mr. Parada, with much support from the federal government. The city of Monterrey has an advan - tageous location near two U.S. border crossing points and 320 miles from the major east-coast port of Altamira. The city also has a dynamic industrial base, 4.3 million inhabitants (4 percent of the population), a GDP of US$69.2 billion, and per capita income of US$15,975, nearly twice the national average. The city produces 11 percent of Mexico’s manufacturing goods, equivalent to US$12.1 billion. The province of Nuevo Leon also has a good higher educational system to anchor park activities, including 93 colleges and universities. 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. The province also has a strong base for R&D, with more than 1,500 researchers in public and private research institutions. Preparing for Long-term Alliances The core ingredient in the Monterrey park strategy, he said, is to prepare for long-term alliances among universities, businesses, and government. The park will be oriented to achieve economic growth and quality of life through the “triple helix” of education, R&D, and innovation. He summarized the park’s long-term (2025) vision as expecting: • To increase the state’s GDP per capita from $15,975 to $35,000 by 2020. • To become one of the world’s 25 most competitive regions. • To consolidate a world-class education, research, and innovation system.

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5 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS • To demonstrate to the regional population the importance of education, knowledge, R&D, and innovation in their lives. He acknowledged that “Monterrey, City of Knowledge” is “a grand name,” and suggested seven strategies designed to live up to it: • To redesign the curricula of the education system in Nuevo Leon to incor- porate S&T and innovation. • To enhance the existing universities and R&D centers and attract new research centers and investment in technology-based companies. • To promote innovation in existing companies through tax incentives and other measures. • To create new innovation-based companies using appropriate financial instruments. • To promote a new culture of innovation in Nuevo Leon society. • To create a competitive urban infrastructure and quality of life. • To generate the necessary legal framework, governance, programs, stra- tegic projects, and mechanisms to sustain park development for 25 years. Monterrey site planners have studied many parks around the world, but Mr. Parada acknowledged that building the PIIT is “a brand-new experience for us.” The site has the potential advantage of two anchors, one being the airport located five minutes away, and the other a proposed sub-city called Aerotechnopolis. This circular area already has a number of manufacturing parks and would contain the airport, new park, and adjacent neighborhoods of Monterrey as well. Primary Objectives The primary objectives of the PIIT are to (1) promote applied research and innovation; (2) link research to the needs of the market and companies; (3) use and develop Nuevo Leon’s intellectual capital; and (4) incubate new innovation- based businesses. Main centers in the park include a variety of R&D groups, in operation or under construction. These include universities and public research centers in different fields, including electronics, biotechnology, mathematics, advanced materials, food industry, nanotech, water research, and others. The three major universities, he said, are critical in providing the expertise to compete in these complex new fields. Because of this ongoing research, the park already has an important set of private firms located or planning to locate in the park, including AMD, Motorola, PepsiCo International, Owens Corning, and Infosys. An impor- tant ingredient, he said, is partnership with several U.S. universities, including Texas A&M (logistics and mechatronics), University of Texas (IC2, business incubators), and Arizona State University (nanotechnology).

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6 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS The park is still very new. As of January 2008, the facilities were 20 percent to 100 percent complete. A 150-room Hilton hotel is planned, with facilities for conventions and meetings, a gym, and a swimming pool. Almost 80 percent of the area is said to be committed to prospective tenants. Now under construction are the following: • CIDESI, Center for Engineering and Industrial Development (mechatronics). • CIMAV, the Center for Research on Advanced Materials. • CINVESTAV, the Center for Research and Advanced Studies (medical physics and biotechnology). • CIATEJ, Research Center for Biotechnology and Food Industry. • IIE, Research Center for Energy (electrical equipment and renewable energies). • ITESM-CiDEP, the Center for Research and Strategic Product Design (product design, business incubators). • Monterrey IT Cluster (42 local software companies). • Water Institute of Nuevo Leon (recycling methods, technology commercialization). • UANL-CiiDIT, Center for Innovation, Engineering and Technology Design (advanced materials and nanotechnology, mechatronics, IT and software). • UdeM, Center of Innovation for Packaging Design and ID Technologies (design services, R&D). • Also the most important Industrial Groups are committed to install their Technology Centers in the park (CEMEX, ALFA-Sigma, VITRO, METALSA, and others). Planners envision completion of construction in about two years. The Park’s Main Features Main features of the park include a total area of 175 acres, investment in in - frastructure of $100 million, and investment in buildings and equipment of $150 million. Projected employment over the next five years is 3,500 researchers and engineers. 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. Six years ago, Mexico began provid- ing tax incentives for those who invest in R&D, absorbing 30 percent of annual R&D expenses. The main challenge, from the government’s point of view, is resources. The park will launch this year a new legal framework supporting R&D and innova- tion, including a 25-year commitment of financial support. For universities, the

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 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS challenge is to balance the market-driven innovation strategies with the traditional support for basic research. For the private sector, the challenges are to promote an innovation culture, stimulate human resources formation, and provide the scholarships that bring students and faculty to work in private companies. One program, for example, pays the employment costs of a masters or PhD holder to work in a company for 1.5 years. Mr. Parada concluded by saying that his team has much to learn about the process of transferring expert knowledge into successful business. “We would like to learn from the experience of others with their parks,” he said “—about specialized infrastructure, park operation, and successful incubation models. For that reason I am very happy to be here.” DISCUSSION Mr. Parada was asked how supportive the multinationals already in Monterrey were in supporting the vision of PIIT. He answered that until very recently, Mexico was known for the maquila style of manufacturing,8 which is “not very attractive.” Now, he said, “we are attracting engineering and R&D centers because we can be successful in cost, quality, and human resources. So we are bringing an opportunity to companies already in Monterrey to move beyond that model: to product development, testing, R&D, and technology centers. “We are giving tax incentives, and some additional money. For example, Motorola will probably have its own facility in one year. In the meantime we provide temporary facilities, the student candidates to be hired for training, and all the necessary support for companies interested in taking the next step in innovation.” SCIENCE AND TECHNOLOGY PARK DEVELOPMENTS IN HUNGARY Ilona Vass Hungarian National Office for Research and Technology Ms. Vass, vice president of the National Office for Research and Technol- ogy, began by saying that her country of Hungary is “a newcomer to this arena,” having become a market economy only a decade and a half ago. She said that Hungary is still among the “catching-up countries in the European Union, with weaknesses outweighing the strengths.” She noted the presence of a strong science base and a very weak industrial 8A maquila or maquiladora is a factory that imports materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then re-exports the assembled product, usually back to the originating country.

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8 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS base, and a “very big mismatch between the two.” For example, she said, busi - nesses spend little on R&D, only 20 percent of Hungarian firms are “innovation- active,” and the bulk of STI activities are conducted by large, foreign-owned companies. There is poor cooperation between academia and industry, weak commercialization, and a lack of seed and venture capital. Among the country’s strengths are a moderately developed business climate, a good science base, and strong R&D capacities. The opportunities have become more interesting since joining the European Union (EU) in 2004, she said, with structural funding “pouring” into the country. These opportunities include closer integration of multinational corporations into R&D networks, promotion of networking among diverse stakeholders, and inte - gration into ERA Europe, the Electronic Retailing Association. Threats to the Economy She noted also “some very real threats” to the economy. For example, there is little cooperation among sectors, low growth, and a largely unproductive pursuit of Lisbon objectives, with a focus on simply spending money rather than on the purpose of the spending. The nation also suffers from a “dual” economy, she said. To date, the tech - nology development has been driven mostly by foreign direct investment. MNCs and other foreign-owned firms have moved in, and the difference between them and the domestic companies is wide. The foreign-owned firms are typically high- tech, well financed, and do enough R&D to add high value to their products. The domestic firms are technologically underdeveloped, perform little R&D, and are dominated by small and “micro” companies. “There is no way to build a knowl - edge economy,” she said, “with such a backward-looking private sector.” A positive for Hungary is that the growth rate of its R&D intensity is very high and accelerating.9 “So we have a new and unique opportunity now to pro- mote and accelerate economic growth by investing in R&D and innovation,” she said, “—to change from external investment-driven growth to innovation-driven growth, as we have seen in the Asian countries. The good news is that all the stakeholders in Hungary recognize that innovation is the main driver for com- petitiveness, growth, and creating a knowledge society.” A National STI Strategy In response, a national STI strategy has been set up for the period 2007- 2013. An important element of this strategy is to expand R&D activities beyond Budapest, where “everything is very much centered.” Industrial parks are being set up, along with cooperation centers to build relations between industry 9 Calculated as GERD as a percentage of GDP. Source: DG Research.

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 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS and academia. Incubators, services, and technology platforms are planned to strengthen and increase the small number of science-based start-ups and spin- offs. The government is trying to decide where to focus the country’s now- fragmented R&D elements and which specialties to build up. It is also trying to encourage business-to-business cooperation, “which is not a tradition.” More broadly, the strategy will attempt to better connect science to commercialization, move domestic firms up the value chain, and build critical mass “to be sure we are visible in the world.” Hungary is betting on science and technology parks largely on the basis of experiences elsewhere. As Ms. Vass puts it, the S&T park is a “proven tool to create successful new companies, sustain them, attract new ones—especially in the STI sector—and make existing companies more successful through the use of R&D.” However, the country is under no illusion that this complex development tool is easy to use. She quoted Winston Churchill: “Success is the ability to go from one failure to another with no loss of enthusiasm,” noting that for a new economy like Hungary’s, it is important to know more about failures in the S&T park field, “because those are what we would like to avoid.” Challenges for Implementing the Strategy A central question, she said, is how to implement the national STI strategy quickly and in coordinated fashion. “We know that a park has to be a physical location with shared facilities and infrastructure,” she said. “It has to be based on private-public partnerships, with a common vision. Unless everyone is included, it’s not going to work. This would mean continuing in the same fragmented way.” Although Hungary does not yet have fully functioning research parks, it has about 179 parks with a business or industrial focus, with 2,989 tenant companies and 171,000 employees. These parks, she said, have above average performance in exports and innovation activities. It is not yet clear whether any of these would be transformed into science and technology parks. A first step has been to set up “regional knowledge centers” to strengthen universities’ research capacities and steer their research toward the needs of in- dustry in the regions. These centers plan to integrate university research, educa - tion, and commercialization activities into one coherent strategy that involves the private sector as well. One problem is that the 19 centers designated so far may be too numerous, and too specialized; each has a specialty, such as genomics, e-science, cell biology, info-bionics, neurobiology, and medicine.

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80 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS Providing Innovation Services Because universities do not have proven strength in innovation services, Hungary has set up Regional Innovation Agencies to provide services like tech- nology licensing and transfer, IPR management, consultancy, technology broker- ing, and technical facilities. A voucher system was introduced for SME users of services, and two national tech transfer centers were set up and operated as businesses. The University of Texas at Austin was a major partner in setting up one of them. There are now about 40 business incubators in the country, with an average of 20 tenants and average tenancy of four years. Tenants are mostly in light manu- facturing, not emerging technologies. To establish some more modern models, in 2005 Hungary set up a bio-incubator program with two new incubators. In 2006, it established a pre-seed/seed capital fund, which has accumulated about 5 million Euros, and a business angel network. The country has emulated the European Technology Platform initiative in trying to bring all stakeholders in certain sectors together to set up a strategic research agenda. These stakeholders will then identify key developments needed to raise the impact of that sector on national development. About 11 such plat- forms are being set up. The Essential Step of Integration The next essential step is to integrate the elements of the strategy without allowing one or two to dominate. So far, the park activities have been regional and national, and there is a need to increase their international presence. Finally, the country must mobilize private equity funding and identify the best fiscal measures to stimulate growth in S&T parks. Ms. Vass said that she favors an approach designed in France of establish - ing parks as poles of RTDI (research, technology, development, and innovation) activities, including a university research center or research university. Seven such clusters are planned and named for their specialties in major cities, includ - ing Technopolis (Miskolc), Innopolis (Budapest), Biopolis (Szeged), Autopolis (Györ), Pharmopolis (Debrecen), Quality of life (Pécs), and Ecopolis (Veszprém- Székesfehérvár). They are based on the regional knowledge centers —universities that have already been strengthened with the goal of better meeting industrial research needs. A premise of this strategy, she said, is that science parks need to be run as businesses. “That means that in Hungary they will not be run by universities,” she said. “The good news is that we have the money available, which we did not have before.” The money from EU structural funds will be used to build infrastructure according to the New Hungary Development Plan (2007-2013). Complementary

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81 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS funding, which is necessary for ongoing R&D, will come from the national Re - search and Technology Innovation Fund, Ms. Vass’s employer. Potential Pitfalls “We are aware of potential pitfalls in this program,” she said, “especially in expecting too much too quickly and over-estimating the park’s role because of the high prestige attached to it by the regional governments. Everybody now wants one for themselves, everywhere.” A danger, she said, is that the regional govern- ments want to play a major role, but they have little management experience or vision, although some of these qualities will be contributed by Hungarians who have gained management experience in the United States and elsewhere. The parks have already encountered the problem of “too much interference from spon - sors,” and this she called very difficult, “because the government is providing all the money.” She said it is also difficult with multi-channel funding to ensure that needed funding comes to the right place at the right time. She concluded that Hungary’s greatest need in S&T development is to have a clear, coherent, and consistent strategy and, more important, an appropriate en - vironment to set it up and implement it. Old structures are difficult to change, she said, quoting John Kenneth Galbraith: “The conventional view serves to protect us from the painful job of thinking.” “The bottom line,” she said, “is that Hungary is experimenting with a model that is highly centralized in strategy formulation but decentralized in implementation.” INITIATIVES IN FRANCE Daid Holden Minatec Dr. Holden spoke about the evolution and current status of Minatec, the first European campus for micro and nanotechnologies, located in Grenoble, France.10 Minatec is relatively new, an extension of the national laboratory system that has been redesigned to stimulate economic development. The exercise has been sufficiently successful that the Grenoble region is now called the French Silicon Valley, focusing on new products and miniaturized solutions for industry. Grenoble, said Dr. Holden, in comparison to many places described at the symposium, is a relatively small community of 450,000, and the example of Minatec illustrates what can be done on a local and regional scale. Grenoble was known primarily as a mountain skiing village until just after World War II, when 10The full name is Maison des Micro et Nano Technologies.

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82 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS France started to decentralize some of its research. In 1957, the government se- lected the site as one of ten national centers dedicated to nuclear research. Arrival of the Private Sector A decade later, Grenoble began to change when the Electronics Systems Group, Leti, was formed and gave presence to the private sector. In 1973, Thomson Semiconductor was created as a spin-off, and by 1985 Thomson was number 15 in the world in semiconductor sales. It merged with the Italian company SGS, and in 1988 SGS-Thomson signed a major R&D collaboration agreement with Leti. Soitec, a start-up created by Leti, began business in 1992. Around the year 2000, as the potential for industry-government high-tech partnerships became clear, and 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. Soon after that decision, Motorola and Philips joined ST Microelectronics in a major R&D alliance valued at 3.2 billion Euros (approximately US$5 bil- lion)—a large industrial investment for a small city. With ST then ranked about fourth world-wide in microelectronics sales, this alliance suddenly became the focal point for Minatec. In 2006, the Minatec campus became the first European campus for education, research, and industry, focused on micro- and nanotech - nologies. It now holds ten companies; three are American, and 42 percent of total jobs are related to foreign companies. A Campus Both Inside and Outside the “Fence” A major strategic decision for Minatec was to create a campus that is not entirely “inside the fence.” University campuses were planned, but, as discussed earlier by Dr. Mote of the University of Maryland, it is seldom easy to do clas - sified or industrial work on a university campus. So a balance has been created between the space allocated for classified work (“inside the fence”) and the un - classified activities elsewhere. Funds were raised for the new park from local and regional governments, and these funds were joined by private and federal investments. To encourage in - teractions, Minatec made the decision to seek out existing groups and bring them together on the same site, creating a critical mass. Typically, in France, there are many good researchers, but they have been scattered in small groups. The population of Minatec will soon reach 4,000, including 1,100 students and 1,900 researchers. Of the annual research budget of 320 million Euros, two-thirds comes from outside contracts. The strategic focus is on industri - ally driven research, based on Minatec’s competencies and infrastructure. The 200 industrial partnerships, using 20 joint laboratories on site, produce about

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8 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS 200 new patents per year and 1,360 scientific publications. The target for patents is one per year for every six applied researchers and for publications one per year per researcher. Facilities are state-of-the-art. Minatec’s 300mm silicon wafer center runs 24/7, operated by a public-private partnership. A MEMS 200mm prototyping line allows fast development of new products. Its nanocharacterization platform is unique in Europe, with both in-line and off-line abilities, a very high level of expertise, proximity to device production lines, and synergies between upstream and applied research times. Farther out on the frontier is a dedicated platform for cutting-edge, upstream research. There are major facilities for training and event facilities to bring people together, including a 400-seat conference room, modular meeting rooms, and quick access by foot from the railway station. Minatec hosted some 16,000 visitors in 2007, and a showroom for demonstrating Minatec capa - bilities to potential partners opened in 2007. “Companies don’t really understand Minatec,” said Dr. Holden, “unless you show them something.” Four universities on the campus now have 60,000 students, half of them studying the sciences. Three masters programs are offered—in collaboration with other institutions—in nanotechnology (the first in Europe), communications systems engineering, and advanced materials engineering. Attracting Venture Capital Minatec has industrial partnerships with companies world-wide, including Bic, Mitsubishi, Total, and Phillips. LETI has a research agreement with Caltech. Contract negotiation, supported by a highly specialized team of engineers and legal experts, has produced more than 250 contracts. Minatec is beginning to attract venture capital for its start-ups and spin- offs. First-round financing is now being generated in the 15-million-Euros (or US$23 million) range. For example, Crocus Technology, which produces second- generation MRAM products and technologies for semiconductor and electronic systems, received 13.5 million Euros (US$20 million) in first-round investment in May 2006. A spin-off from Leti called Movea, which designs microsystems to capture and quantify human motion, received a first-round investment of 7.3 million Euros (US$11.2 million), and was acquired by Gyration, Inc. in January 2008. Growing Impact on the Local Economy Minatec has a growing impact on local economic development. ST Micro- electronics has created about 6,000 jobs in the region and is the largest employer. The start-up Soitec has created about 900 jobs, and the other 30 or so start-ups have created thousands more. Altogether, the park produces about 15,000 direct jobs and 30,000 indirect jobs. “We’re small enough,” said Dr. Holden, “so you can

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8 UNDERSTANDING RESEARCH, SCIENCE AND TECHNOLOGY PARKS actually do the counting, and be fairly accurate.” There has been a net increase of 8,000 high-tech jobs since 2000, which are “the kinds of figures the local authorities like to see.” The Minatec model has also influenced how other S&T clusters in France are financed. The country is trying to decentralize its financial system, with the regions doing more of their own economic development. Competitive clusters are creating groups to screen project applications and then ask for federal money, a process put in place by President Sarkozy several years ago when he was Minister of the Interior. According to Dr. Holden, he used the process at Minatec as the basis for the current French model. Under this system, Minatec received in two years about 1.2 billion Euros (US$1.86 billion) for 113 projects and 315 million Euros (US$487 million) in financing from the federal government. A New Challenge In 2007, the Minatec landscape was altered when NXP, formerly Philips, announced it would leave the alliance, and Freescale did the same. ST decided to join the IBM semiconductor consortium developed in Albany, New York, cit- ing the prohibitive cost of microelectronics research. “When certain industries mature,” said Dr. Holden, “you have attrition of certain players and much more concentration of effort.” France decided at the federal level to purchase 260 mil - lion Euros’ worth (US$402 million) of ST from the Italian partner to balance ownership and a new 1.2-billion-Euro agreement for ST was signed for 2008- 2012 that included IBM. Although the amount of this agreement is smaller, it still represents significant activity. “I think this agreement is good for Grenoble,” said Dr. Holden, “because it’s focused on technology that is much more diverse and that is better for start-up creation.” A Response: Diversification The next stage for Minatec, which will be supported by annual inflow of about 320 million Euros, is to diversify into a research triad of micro-nanotech, biotech, and clean-tech (new technologies for energy). The park has added the element of urban development to its strategy, with the approval of the federal government. This element will require an additional 100 million Euros (US$155 million) from the government, which is currently contemplating an even more ambitious model for the park and its relationship to the city. “It is not a very conventional S&T park,” concluded Dr. Holden. “It is very active in the devel- opment of Grenoble and all of its urban development programs, so this new project meshes with what will happen in transportation and new tram lines and expressways, as well as science. So it’s very easy to sell when you have to go and ask for money.”

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85 PANEL II: NORTH AMERICAN AND EUROPEAN S&T PARKS DISCUSSION A questioner asked whether all the Minatec investment goes into pure R&D, and how jobs were created. Dr. Holden replied that in order to participate in Minatec, a partner has to have a research contract with them, but that job creation happens in many places. Some of the start-ups are in California; some have offices in both Grenoble and California. “There are no restrictions on that. In many ways, I don’t think that putting requirements on jobs is the best way to be successful. We find that typically the start-ups located in California still do R&D with us. So for the local economy, which is research focused, it’s beneficial.” Another questioner asked about comparisons with the Hungarian experience. He said that in both France and Hungary, as in the rest of Europe, it is typical for the government to help with the infrastructure. This is traditionally considered a public responsibility, meant to encourage the private sector to move in. Dr. Parada noted that in Mexico as well, the government leadership and financial support is critical. Once the government creates the necessary infra - structure, the park can attract private investors who put money into the research parks and innovation ventures. Dr. Holden added that in Grenoble, of the 3.2-billion-Euro investment, the local government put in about 150 million Euros, most of it to pay for infrastruc - ture, such as highways and access roads. This investment, he said, has been more than paid back in the form of corporate taxes over the four-year period, and the local government is still benefiting from a net positive of 1,000 technical jobs and perhaps three times as many support jobs. A questioner agreed that local job creation is desirable, though not the best true measure of park success, and asked what other metrics Minatec used. Dr. Holden said that the GDP of the tech sector is fairly easy to track, highlighting the impact on company business, growth rates, and salary levels. He also said that education is a good metric: “Here we see that we’ve tripled the number of engi - neers in the past decade, so that’s pretty significant. In the knowledge economy you have to have an educated population, and even though we may be draining other parts of France and Europe in some ways, we are creating this critical mass, and, to be competitive, that’s what’s necessary.” Dr. Wessner noted that the leading centers for silicon research today are no longer confined to Silicon Valley; they are in Austin, New York, Flanders, and Grenoble, and they all used public money to begin. He suggested that those local governments clearly recognized the value of the investments they were making. In Grenoble, for example, when conditions changed, the government increased its investments rather than shutting them off, and the park shifted its strategic planning to take the new conditions into account.