Best Practices in
State and Regional
Innovation Initiatives

Competing in the
21st Century

Charles W. Wessner, Editor

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

NATIONAL RESEARCH COUNCIL
OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.

www.nap.edu



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page R1
Charles W. Wessner, Editor 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

OCR for page R1
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. Department of Commerce, National Institute of Standards and Technology (NIST). This report was prepared by the National Academy of Sciences under award number 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. 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: 978-0-309-28734-0 International Standard Book Number 10: 0-309-28734-0 Library of Congress Control Number: 2013941001 Additional copies of this report are available for sale from the National Academies Press, 500 Fifth Street, N.W., Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu/ . Copyright 2013 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

OCR for page R1
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 examination 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 National 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

OCR for page R1

OCR for page R1
Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives* Mary L. Good (NAE), Chair W. Clark McFadden II Dean Emeritus, Donaghey College Senior Counsel of Engineering and Information Orrick, Herrington & Sutcliffe LLP Technology Special Advisor to the Chancellor David T. Morgenthaler for Economic Development Founding Partner University of Arkansas Morgenthaler Ventures at Little Rock Edward E. Penhoet (IOM) Michael G. Borrus Director Founding General Partner Alta Partners X/Seed Capital Management Tyrone C. Taylor William C. Harris President President and CEO Capitol Advisors Science Foundation Arizona on Technology, LLC *As of May 2013 v

OCR for page R1
PROJECT STAFF Charles W. Wessner Sujai J. Shivakumar Study Director Senior Program Officer McAlister T. Clabaugh David E. Dierksheide Program Officer Program Officer David S. Dawson Thomas R. Howell Senior Program Assistant Consultant vi

OCR for page R1
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 Board on Science, Technology, and Economic Policy 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 competitiveness 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 ensure their authoritativeness, independence, and objectivity. The members of the STEP Board* and the NRC staff are listed below: Paul L. Joskow, Chair Alan M. Garber (IOM) President Provost Alfred P. Sloan Foundation Harvard University Ernst R. Berndt Ralph E. Gomory (NAS/NAE) Louis E. Seley Professor Research Professor in Applied Economics Stern School of Business Massachusetts Institute New York University of Technology John L. Hennessy (NAS/NAE) Jeff Bingaman President Former U.S. Senator, New Mexico Stanford University U.S. Senate William H. Janeway John Donovan Managing Director Senior Executive Vice President and Senior Advisor AT&T Technology Warburg Pincus, LLC and Network Operations AT&T Inc. Ellen Dulberger Managing Partner Ellen Dulberger Enterprises, LLC continued *As of May 2013. vii

OCR for page R1
Richard K. Lester Kathryn L. Shaw Japan Steel Industry Professor Ernest C. Arbuckle Professor Head, Nuclear Science of Economics and Engineering Graduate School of Business Founding Director, Industrial Stanford University Performance Center Massachusetts Institute Laura D'Andrea Tyson of Technology S.K. and Angela Chan Professor of Global Management David Morgenthaler Haas School of Business Founder University of California-Berkeley Morgenthaler Ventures Harold R. Varian Luis M. Proenza Chief Economist, Google Inc. President Professor Emeritus, University University of Akron of California-Berkeley William J. Raduchel Alan Wm. Wolff Independent Investor/Director Senior Counsel McKenna Long & Aldridge LLP STEP Staff Stephen A. Merrill Charles W. Wessner Executive Director Program Director Paul T. Beaton David S. Dawson Program Officer Senior Program Assistant McAlister T. Clabaugh David E. Dierksheide Program Officer Program Officer Aqila A. Coulthurst Sujai J. Shivakumar Program Coordinator Senior Program Officer viii

OCR for page R1
Contents PREFACE xi EXECUTIVE SUMMARY 1 I. INNOVATION AND PLACE-BASED ECONOMIC DEVELOPMENT 5 Chapter 1: Innovation in the States 7 Parameters of this Study, 9 State-led Development of Innovation Clusters, 11 Identifying Best Practices, 15 Overview of the Report, 24 Chapter 2: State and Regional Development and Clustering 27 Natural Development Advantages Enjoyed by States and Regions, 28 The Innovation Cluster Phenomenon, 31 “History Matters”—Part Dependency and Path Creation, 37 The Importance of Entrepreneurship, 43 Lessons Learned, 45 II. THE CATALYTIC ROLE OF PUBLIC PURPOSE ORGANIZATIONS 47 Chapter 3: Universities as Innovation Drivers 49 Universities and Industrialization, 54 The Emergence of Cooperative Research Centers, 57 Challenges Facing Public Research Universities, 57 Harnessing the University of Hawaii as an Engine of Growth, 59 The Growing Role of Community Colleges, 65 Lessons Learned, 68 ix

OCR for page R1
x CONTENTS Chapter 4: State Strategies for Innovation 69 From Industrial Recruitment to Science- Based Development, 70 The Michigan Battery Initiative, 75 Lessons Learned, 83 Chapter 5: The Federal Dimension 85 Federal Funding of Scientific Research and Economic Development, 85 The Federal Role in Regional Development and Manufacturing, 98 The Impact of Federal Patents and Antitrust Policy, 102 International Trade Policy, 107 Government Procurement, 107 Lessons Learned, 108 III. REVIEW OF SELECTED STATE AND REGIONAL PRACTICES 109 Chapter 6: Rebuilding Ohio’s Innovation Economy 111 Revival Following a Generation of Economic Decline, 111 State Government Initiatives, 114 New Initiatives in Northeast Ohio, 116 Growing the Cleveland Biomedical Cluster, 123 Growing a Cluster in Flexible Electronics, 131 Youngstown—Sofware and Additive Manufacturing, 133 The Toledo Photovoltaics Cluster, 135 Ohio’s Challenge Ahead, 140 Lessons Learned, 141 Chapter 7: The New York Nanotechnology Initiative 143 Upstate New York: The Economic Challenge, 144 The Semiconductor Advantage—and Challenge, 145 New York’s Opportunity, 147 The College of Nanoscale Science and Engineering (CNSE), 153 Rensselaer Polytechnic Institute, 155 GlobalFoundries, 156 The Global 450 Consortium, 159 Start-ups, 161 Nano Beyond Microelectronics, 162

OCR for page R1
CONTENTS xi Semiconductors: The On-going Challenge from Abroad, 163 Lessons Learned, 164 Chapter 8: New Initiatives in Illinois and Arkansas 165 Growing a Biotechnology Cluster in Illinois, 165 Developing Arkansas’ Workforce and Wind Power, 172 Lessons Learned, 183 IV. BIBLIOGRAPHY 185 V. ANNEX A: STANFORD AND SILICON VALLEY 217 VI. ANNEX B: NORTH CAROLINA’S RESEARCH TRIANGLE PARK 229

OCR for page R1

OCR for page R1
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 draw the talent and resources necessary to develop innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include significant resources, often with a sector focus and often in partnership with foundations and universities. They often take advantage of complementary federal programs to develop regional centers of innovation, entrepreneurship, and high-technology development. It is significant to note that in many states and regions, both Democratic and Republican governors and legislatures have agreed on similar strategies and have undertaken substantial public investments in education, skills training, and infrastructure to create technology-based growth clusters. STATEMENT OF TASK An ad hoc committee, under the auspices of the Board on Science, Technology, and Economic Policy (STEP), has conducted a study of selected state and regional programs 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 reviewed selected state and regional efforts to capitalize on federal and state investments in areas of critical national needs. This review included both efforts to strengthen existing industries as well as specific new technology focus areas such as nanotechnology, stem cells, and energy in order to improve our understanding of program goals, challenges, and accomplishments. As a part of this review, the committee convened a series of public workshops and symposia involving responsible local, state, and federal officials and other stakeholders. These meetings and symposia enabled an exchange of xiii

OCR for page R1
xiv PREFACE views, information, experience, and analysis needed 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 has produced this final report with observations focused on lessons, issues, and opportunities for complementary 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.1 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 strategic sectors. Some governments have chosen to provide public support to innovation to overcome the market imperfections apparent in their national innovation systems.2 They believe that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of 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.3 These state and regional 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 that they offer for other state and regional programs. 1 For a review of growth of national programs and policies around the world to support research and accelerate innovation, and the resulting challenges facing the United States, see National Research Council, Rising the Challenge: U.S. Innovation Policies for the Global Economy, C. Wessner and A. Wm. Wolff, eds., Washington, DC: The National Academies Press, 2012. 2 For 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—Report of a Symposium, C. Wessner, ed., Washington, DC: The National Academies Press, 2009. 3 For 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.

OCR for page R1
PREFACE xv STEP’s project on State and Regional Innovation Initiatives has generated an improved understanding of the challenges associated with the transition of research into products, the practices associated with some successful state and regional programs, and their interaction with federal programs and private initiatives. This better understanding has been realized through a series of complementary assessments of state, regional, and federal initiatives; analyses of specific industries and technologies from the perspective of how supportive public policy at all three levels was crafted; and outreach to multiple stakeholders. Based on this knowledge, this project seeks to improve the operation of federal, state and regional programs and, collectively, enhance their impact. ACKNOWLEDGMENTS On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the many participants of conferences and meetings held over the course of this study. Thomas Howell played a key role in assisting the Committee both in the preparation of this report and though the Report Review cycle. Dr. Sujai Shivakumar of the STEP staff prepared multiple responses to review, making the many substantive changes to the original text required by the review process. We are also indebted to David Dawson of the STEP staff for his contributions to the preparation of this report. SPONSORS The National Academies Board on Science, Technology, and Economic Policy would like to express its appreciation for the sustained support of the following agencies and departments: the Economic Development Administration, the National Institute of Standards and Technology, the National Cancer Institute, and the Department of Energy. Their contributions of time, expertise, and financial support were essential to the success of the project. ACKNOWLEDGMENT OF REVIEWERS This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved 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 objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the process.

OCR for page R1
xvi PREFACE We wish to thank the following individuals for their review of this report: John Burris, Burroughs Wellcome Fund; Maryann Feldman, University of North Carolina; Robert Genco, Science, Technology Transfer and Economic Outreach; Howard Gobstein, Association of Public and Land-grant Universities; David Goldston, Natural Resources Defense Council; Mark Gorenberg, Hummer Winblad Venture Partners; Susan Hackwood, California Council on Science and Technology; George Heaton, Worcester Polytechnic Institute; Edwin Przybylowicz, Eastman Kodak Company (Retired); Andrew Reamer, The Brookings Institution; and Howard Rosen, Stanford University. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Maxine Savitz, Honeywell Inc. (Retired) and Stephen Fienberg, Carnegie Mellon University. Appointed by the National Academies, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution. Charles W. Wessner Mary L. Good