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Clustering for 21st Century Prosperity Summary of a Symposium Charles W. Wessner, Rapporteur Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives Board on Science, Technology, and Economic Policy Policy and Global Affairs
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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by Contract/Grant No. DE-DT0000236, TO# 28, (base award DE-AM01-04PI45013), between the National Academy of Sciences and the Department of Energy; and Contract/Grant No. N01-OD-4-2139, TO# 250, between the National Academy of Sciences and the National Institutes of Health. This report was prepared by the National Academy of Sciences under award number SB134106Z0011, TO# 4 (68059), from the U.S. Depart ment of Commerce, National Institute of Standards and Technology (NIST). This report was prepared by the National Academy of Sciences under award num- ber 99-06-07543-02 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the National Institute of Standards and Technology, the Economic Development Administration, or the U.S. Department of Commerce. Additional support was provided by the Heinz Endowments, the Association of University Research Parks, Acciona Energy, Dow Corning, IBM, and SkyFuel, Inc. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number-13: 978-0-309-26413-6 International Standard Book Number-10: 0-309-26413-8 Limited copies are available from Board on Science, Technology, and Economic Policy, National Research Council, 500 Fifth Street, NW, W547, Washington, DC 20001; 202-334-2200. Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2012 by the National Academy of Sciences. All rights reserved. Printed in the United States of America
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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examina- tion of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the Na- tional Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org
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Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives* Mary L. Good, Chair Donaghey University Professor Dean, Donaghey College of Engineering and Information Technology University of Arkansas at Little Rock and STEP Board Richard A. Bendis W. Clark McFadden II CEO Partner Bendis Investment Group, LLC Dewey & LeBoeuf, LLP Michael G. Borrus David T. Morgenthaler Founding General Partner Founding Partner X/Seed Capital Management Morgenthaler Ventures Susan Hackwood Edward E. Penhoet Executive Director Director California Council on Science and Alta Partners Technology Tyrone C. Taylor William C. Harris President President and CEO Capitol Advisors on Technology Science Foundation Arizona *As of February 2010.
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PROJECT STAFF Charles W. Wessner Study Director McAlister T. Clabaugh Peter Engardio Program Officer Consultant David E. Dierksheide Adam H. Gertz Program Officer Program Associate (through June 2010) David S. Dawson Senior Program Assistant Sujai J. Shivakumar Senior Program Officer
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For the National Research Council (NRC), this project was overseen by the Board on Science, Technology, and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the STEP Board is to advise federal, state, and local governments and inform the public about economic and related public policies to promote the creation, diffusion, and application of new scientific and technical knowledge to enhance the productivity and competitive- ness of the U.S. economy and foster economic prosperity for all Americans. The STEP Board and its committees marshal research and the expertise of scholars, industrial managers, investors, and former public officials in a wide range of policy areas that affect the speed and direction of scientific and technological change and their contributions to the growth of the U.S. and global economies. Results are communicated through reports, conferences, workshops, briefings, and electronic media subject to the procedures of the National Academies to en- sure their authoritativeness, independence, and objectivity. The members of the STEP Board* and the NRC staff are listed below: Edward E. Penhoet, Chair Mary L. Good Director Donaghey University Professor Alta Partners Dean, Donaghey College of Engineering and Information Lewis W. Coleman Technology President & CFO University of Arkansas at Little Rock DreamWorks Animation Amory Houghton, Jr. Alan M. Garber Former Member of Congress Henry J. Kaiser, Jr. Professor Professor of Medicine David T. Morgenthaler Stanford University Founding Partner Morgenthaler Ventures Ralph E. Gomory Research Professor William F. Meehan, III Stern School of Business Lecturer in Strategic Management New York University Raccoon Partners Lecturer in and Management President Emeritus Stanford University Alfred P. Sloan Foundation and Director Emeritus McKinsey and Co., Inc. * As of February 2010.
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Joseph P. Newhouse Jack W. Schuler John D. MacArthur Professor of Partner Health Policy and Management Crabtree Partners Harvard Medical School Laura D'Andrea Tyson Arati Prabhakar S.K. and Angela Chan Professor of General Partner Global Management U.S. Venture Partners Haas School of Business University of California, Berkeley William J. Raduchel Chairman Alan Wm. Wolff Opera Software ASA Partner Dewey & LeBoeuf LLP viii
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STEP STAFF Stephen A. Merrill Charles W. Wessner Executive Director Program Director Paul Beaton Adam H. Gertz Program Officer Program Associate (through June 2010) McAlister T. Clabaugh Program Officer Daniel Mullins Program Associate Aqila Coulthurst (through August 2011) Program Coordinator Sujai J. Shivakumar David S. Dawson Senior Program Officer Senior Program Assistant David E. Dierksheide Program Officer ix
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Contents PREFACE xv I. OVERVIEW 1 II. PROCEEDINGS 37 Welcome 39 Charles Wessner, The National Academies Introduction 41 Mary Good, University of Arkansas at Little Rock and STEP Board Panel I: Clustering for Growth 43 Moderator: Michael Borrus, X/Seed Capital Management Regional Innovation Clusters 44 Ginger Lew, National Economic Council Building a Clean Energy Economy Through Accelerated Innovation 47 Kristina M. Johnson, Department of Energy xi
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xii CONTENTS Enhancing Competitiveness and Speeding Innovation: Design and Initial Results of the NIST Rapid Innovation and Competitiveness Initiative 53 Marc G. Stanley, National Institute of Standards and Technology Panel II: Clustering for Growth (Continued) 60 Moderator: William Harris, Science Foundation Arizona Building Regional Innovation Clusters 60 Karen Mills, Small Business Administration Regional Innovation Strategies Initiative 64 John Fernandez, Economic Development Administration Panel III: Building 21st Century Clusters--The Role of State and Regional Governments 68 Moderator: Dan Berglund, State Science and Technology Institute Building on the Battery Initiative in Michigan 68 Doug Parks, Michigan Economic Development Corporation Making the Big State Bigger: Current Texas University Initiatives 73 David Daniel, University of Texas at Dallas Growing Northeast Ohio's High-Tech Economy 78 Rebecca Bagley, NorTech Panel IV: Lessons from Abroad--Clusters, Parks, & Poles in Global Innovation Strategies 81 Moderator: Stephen Lehrman, Office of U.S. Senator Mark Pryor (D-AR) An Integrated Approach: Brazil's Minas Gerais Strategy 82 Alberto Duque Portugal, Minas Gerais Secretariat for Science, Technology, and Higher Education, Brazil Brazil's New Innovation Strategy 86 Francelino Grando, Ministry of Development, Industry, and Foreign Trade, Brazil
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CONTENTS xiii Hong Kong Science Park--Optimizing Synergies 91 Nicholas Brooke, Hong Kong Science and Technology Parks Corporation Innovation and Clusters: Why They Are Back on the OECD Policy Agenda 94 Mario Pezzini, Organisation for Economic Co-operation and Development Luncheon Address 97 Gary Locke, Secretary of Commerce Introduced by Ralph J. Cicerone, National Academy of Sciences Panel V: Clustering Around the Lab-- Best Practices in Federal Laboratory Commercialization 101 Moderator: Jonathan Epstein, Office of U.S. Senator Jeff Bingaman (D-NM) Sandia National Laboratories as a Catalyst for Regional Growth 101 J. Stephen Rottler, Sandia National Laboratories Exploration Park at the Kennedy Space Center 105 Robert Cabana, NASA Kennedy Space Center Discussant107 Ken Zweibel, George Washington University Panel VI: University-Based Clusters 114 Moderator: Brian Darmody, Association of University Research Parks Current Trends and Challenges in University Commercialization 115 Ashley J. Stevens, Boston University and Association of University Technology Management Improving the University Model 124 Aris Melissaratos, Johns Hopkins University Building New Growth Clusters 127 James Clements, West Virginia University
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xiv CONTENTS Panel VII: A Policy Roundtable--What Should U.S. Policy Be? 134 Moderator: Mary Good, University of Arkansas at Little Rock and STEP Board III.APPENDIXES AAgenda 143 B Biographies of Speakers 147 C Participants List 166 DBibliography 173
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Preface Responding to the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow companies as well as attract the talent and resources necessary to develop regional innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include larger resource commitments, often with a sectoral focus and often in partnership with foundations and universities. Recent studies, however, have pointed out that many of these efforts lack the scale and the steady commitment needed for success.1 This has prompted new initiatives to coordinate and concentrate investments from a variety of federal agencies to develop research parks, business incubators, and other strategies to encourage entrepreneurship and high-tech devel opment in the nation's regions. Understanding the nature of innovation clusters and public policies associated with successful cluster development is therefore of current relevance. PROJECT STATEMENT OF TASK An ad hoc committee, under the auspices of the Board on Science, Technol- ogy, and Economic Policy (STEP), is conducting a study of selected state and 1See, for example, Karen G. Mills, Elisabeth B. Reynolds, and Andrew Reamer, "Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies," Washington, DC: The Brookings Institution Metropolitan Policy Program, April 2008. See also Jonathan Sallet, Ed Paisley, and Justin R. Masterman, "The Geography of Innovation," Center for American Progress, September 2, 2009. Also see Mark Muro and Bruce Katz, The New `Cluster Moment': How Regional Innovation Clusters Can Foster the Next Economy, Washington, DC: The Brookings Institution Metro politan Policy Program, September 2010. xv
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xvi PREFACE regional programs in order to identify best practices with regard to their goals, structures, instruments, modes of operation, synergies across private and public programs, funding mechanisms and levels, and evaluation efforts. The committee is reviewing selected state and regional efforts to capitalize on federal and state investments in areas of critical national needs. This review includes both efforts to strengthen existing industries as well as specific technology focus areas such as nanotechnology, stem cells, and advanced energy in order to better understand program goals, challenges, and accomplishments. As a part of this review, the committee is convening a series of public work- shops and symposia involving responsible local, state, and federal officials and other stakeholders. These meetings and symposia will enable an exchange of views, information, experience, and analysis to identify best practice in the range of programs and incentives adopted. Drawing from discussions at these symposia, fact-finding meetings, and commissioned analyses of existing state and regional programs and technology focus areas, the committee will subsequently produce a final report with findings and recommendations focused on lessons, issues, and opportunities for comple- mentary U.S. policies created by these state and regional initiatives. THE CONTEXT OF THIS PROJECT Since 1991, the National Research Council, under the auspices of the Board on Science, Technology, and Economic Policy, has undertaken a program of activities to improve policymakers' understandings of the interconnections of science, technology, and economic policy and their importance for the American economy and its international competitive position. The Board's activities have corresponded with increased policy recognition of the importance of knowledge and technology to economic growth. One important element of STEP's analysis concerns the growth and impact of foreign technology programs.2 U.S. competitors have launched substantial programs to support new technologies, small firm development, and consortia among large and small firms to strengthen national and regional positions in stra- tegic sectors. Some governments overseas have chosen to provide public support to innovation to overcome the market imperfections apparent in their national innovation systems.3 They believe that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of 2National Research Council, Innovation Policies for the 21st Century: Report of a Symposium, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2007. 3For example, a number of countries are investing significant funds in the development of research parks. For a review of selected national efforts, see National Research Council, Understanding Research, Science and Technology Parks: Global Best Practices, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2009.
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PREFACE xvii technical expertise, underscore the need for national R&D programs to support new and existing high-technology firms within their borders. Similarly, many state and local governments and regional entities in the United States are undertaking a variety of initiatives to enhance local economic development and employment through investment programs designed to attract knowledge-based industries and grow innovation clusters.4 These state and re- gional programs and associated policy measures are of great interest for their potential contributions to growth and U.S. competitiveness and for the "best practice" lessons they offer for other state and regional programs. STEP's project on State and Regional Innovation Initiatives is intended to generate a better understanding of the challenges associated with the transition of research into products, the practices associated with successful state and regional programs, and their interaction with federal programs and private initiatives. The study seeks to achieve this goal through a series of complementary assessments of state, regional, and federal initiatives; analyses of specific industries and technologies from the perspective of crafting supportive public policy at all three levels; and outreach to multiple stakeholders. The overall goal is to improve the operation of state and regional programs and, collectively, enhance their impact. THIS SUMMARY As the report of the STEP Board's second workshop on innovation clusters, this volume deepens the committee's review of policies to support innovation clus- ters. The first symposium explored, more generally, the role of clusters in promot- ing economic growth, drawing particular attention to the strategies of American states to promote cluster development.5 In complement, the second symposium focused more on the Obama Administration's efforts to develop an integrated cluster initiative and on the role of research parks in promoting innovation and regional and national economic development. The second workshop also reviewed selected best practices in regional and cluster development from other countries. This volume includes an introduction that provides an overview of the key issues raised at the second workshop as well as detailed summaries of each of the meeting's presentations. This workshop summary has been prepared by the workshop rapporteur as a factual summary of what occurred at the workshop. The planning committee's role was limited to planning and convening the work- shop. The statements made are those of the rapporteur or individual workshop 4For a scoreboard of state efforts, see Robert Atkinson and Scott Andes, The 2010 State New Economy Index: Benchmarking Economic Transformation in the States, Kauffman Foundation and ITIF, November 2010. 5For a summary of the first STEP workshop on innovation clusters, see National Research Council, Growing Innovation Clusters for American Prosperity: Summary of a Symposium, Charles W. Wessner, Rapporteur, Washington, DC: The National Academies Press, 2011.
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xviii PREFACE participants and do not necessarily represent the views of all workshop partici- pants, the planning committee, or the National Academies. ACKNOWLEDGMENTS On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the participants of this meeting. We are indebted to Pete Engardio for preparing the draft introduction and summarizing the proceedings of the meeting. We are also indebted to Sujai Shivakumar and David Dierksheide of the STEP staff for preparing the report manuscript for publication. NATIONAL RESEARCH COUNCIL REVIEW This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures ap- proved by the National Academies' Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process. We wish to thank the following individuals for their review of this report: Rebecca Bagley, NorTech; Daniel Berglund, SSTI; Robert Geolas, Clemson University; Randall Jackson, West Virginia University; and Andrew Reamer, Brookings Institution. Although the reviewers listed above have provided many constructive com- ments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. Responsibility for the final con- tent of this report rests entirely with the rapporteur and the institution. Charles W. Wessner Mary L. Good