Annex B
Overheads on the Research Triangle Experience

Prof Michael Luger

THE ROLE OF S&T PARKS:

The Research Triangle Experience with Lessons for Sandia

Presentation at NRC Symposium on Industry-Laboratory Partnerships:

The Role of S&T Parks

April 22, 1998

Prof Michael Luger

University of North Carolina at Chapel Hill



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--> Annex B Overheads on the Research Triangle Experience Prof Michael Luger THE ROLE OF S&T PARKS: The Research Triangle Experience with Lessons for Sandia Presentation at NRC Symposium on Industry-Laboratory Partnerships: The Role of S&T Parks April 22, 1998 Prof Michael Luger University of North Carolina at Chapel Hill

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--> Outline of presentation I. Basis for remarks II. Overview of S&T (research) parks in the US III. What makes them ''successful?'' IV. The RTP phenomenon V. The rest of the world—further lessons Basis for remarks   1991 book on US parks, including case study of RTP Subsequent work on S&T parks and S&T policy in US, Europe, and Asia Subsequent work on the role of universities and research centers/labs in regional economic development Economic studies of Research Triangle; most recently, At the Crossroads: North Carolina's Place in the Knowledge Economy of the 21st Century

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--> Overview of S&T (research) parks in the US Type of park # of parks Median Age, 1995 Mean # tenants, 1989 Mean # tenants, 1995 Fast growing 17 16 32 58 Growing 30 11 3 19 Stagnant 12 12 34 41 Declining 3 14 33 35 Early parks, no data 13 12.5 8   Later parks, no data 28 13 35   Newcomers 41 5 8   No longer park 4   10   Not located 16 12 18   Skipped in 1989 20 11     TOTAL 184       Overview of S&T (research) parks in the US   Type of park % in NE and MA % in S % in W and NW % with access to university % with infrastructure Fast growing 42 29 12 88 76 Growing 10 30 24 80 80 Stagnant 25 33 33 58 33 Declining   67   67 33 Early parks, no data 30 38 15 77 62 Later parks, no data 18 25 21     Newcomers 35 34 9 66 59 No longer park 25 25 25     Not located 27 40 13     Skipped in 1989 44 17 22    

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--> Overview of S&T (research) parks in the US Specializations of different types of parks:   Fast growing telecommunications optics, lasers medical research biotech software chemical   Newcomers (>1988) medical equipment biomedical information technology software environmental health/medical/pharmaceutical semiconductor/advanced materials What makes parks "successful?"   "Success" is a normative concept; can be defined in several ways:   as a real estate project   in terms of "policy effectiveness" (outcomes vs. goals)   in terms of efficiency (is present value of net benefits > 0?)   in terms of ability to transform a regional economy (longer time horizon)

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--> What makes parks "successful?" The U.S. story, in brief Our 1991 study used net induced job creation in the region as measure of success; outcomes varied among parks    Research Park Success Indicators NAME OF PARK LOCATION YEAR ESTABLISHED DIFFERENCE (%) Ada Research Park Ada, OK 1960 -0.02 Ann Arbor Technology Park Ann Arbor, MI 1983 -1.49 Arizona State University Research Park Tempe, AZ 1984 -0.17 Carolina Research Park Columbia, SC 1983 -0.16 Central Florida Research Park Orlando, FL 1979 0.72 Charleston Research Park Charleston, SC 1984 -1.20 Chicago Technology Park Chicago, IL 1984 1.65 Clemson Research Park Clemson, SC 1984 0.38 Connecticut Technology Park Storrs, CT 1982 3.18 Cornell Research Park Ithaca, NY 1951 9.48 Cummings Research Park Huntsville, AL 1962 0.40 Engineering Research Center Fayetteville, AR 1980 0.02 Great Valley Corporate Center Malvern, PA 1974 0.08 Innovation Center and Research Park Athens, OH 1978 1.94 Interstate Business Park Tampa, FL 1983 -1.05 Johns Hopkins University Research Park Baltimore, MD 1984 -0.64 Langley Research & Development Park Newport News, VA 1966 -8.80 Maryland Science and Technology Center Adelphi, MD 1982 1.44 Massachusetts Biotechnology Research Park Worcester, MA 1984 3.48 Miami Valley Research Park Kettering, OH 1981 0.11 Morgantown Industrial & Research Park Morgantown, WV 1973 0.24 RTP DIFFERENCE is 4.45; DIFFERENCE is employment growth in park region minus employment growth in control counties after park opens.

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--> What makes parks "successful?" Regression analysis of 70 parks (DIFF on explanatory variables and a hazards model), and case studies of 3 parks (RTP, Stanford, Utah) indicated the following common success factors:   -   parks had marketing and development strategy appropriate for region's resources and culture -   parks provided services/infrastructure consistent with tenants' needs -   park businesses and nearby university connected in meaningful ways -   there was visionary leadership and cooperation -   there were deep pockets and patience -   there was good timing and good luck The Research Triangle phenomenon   The region in 1959/early 1960s  traditional, low wage manufacturing  universities were regional  severe brain drain as a consequence  strategic location at doorstep of "new south"  large tracts of centrally located land  enlightened leaders from government and business: Sanford, Hodges, Guess

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--> The Research Triangle phenomenon   Strategic decisions in park development  get government anchors  get blue chip corporate anchor; branch plant location as regional HQ  sell land with covenants  provide high level of services  make sure universities have meaningful input in governance RTP has used relatively little government assistance The Research Triangle phenomenon One out of 4 jobs created in the region between 1959-1990 traced to park (almost 60,000). INCLUDES:    jobs in park businesses (>30K, many would not have been there otherwise)  jobs created via spending multiplier from induced jobs in the park  jobs created in businesses that provide goods and services to induced businesses in the park  jobs in companies spun off from park businesses, and through that multiplier We did not count jobs in businesses that moved to region not to be in park, but because of reputation of region, due to park

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--> The Research Triangle phenomenon   The region in 1998  high tech employment in universities, labs, hospitals gives region one of highest ratios of Ph.D.s per capita  three research universities are nationally ranked  brain drain is now brain draw  considerable volume of spin-off activity from industry and universities  region is fast growing; 1.2 million population Spin-offs   Recent research identified a total of 32 high-technology spin-offs from North Carolina universities between 1972 and 1997. Sixteen of those taken place since 1991, implying a considerable increase in spin-off activity in recent years, though trend is difficult to assess since older spin-offs are more difficult to identify. Unsurprisingly, the state's three largest research universities, UNC-CH, Duke, and NCSU, generated almost all the spin-offs, and most were located in the Research Triangle area. Spin-off/start-up activity from industry comes from high-level scientists and engineers let go in restructuring. . . having severance, pensions, savings, and real estate to use as seed capital

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--> S&T parks worldwide Sample of S&T parks elsewhere:   South Africa (4) China (8) Japan (7) Thailand (2) Russia (11) Canada (18)   Finland (10) France (53) Italy (11) United Kingdom (44) Australia (15) Brazil (3) These countries differ widely in their levels of economic development Principles: Knowledge Along the Economic Development Continuum  

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--> Policy: Services Along the Economic Development Continuum   Lessons for Sandia    With proliferation of parks, it may be difficult to achieve success in conventional terms  Park may help establish region as growth pole, substituting for urbanization economies  Planners need to heed lessons from successes:  parks had marketing and development strategy appropriate for region's resources and culture  parks provided services/infrastructure consistent with tenants' needs  there was visionary leadership and cooperation  there were deep pockets and patience  there was good timing and good luck