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State Investment in University Research: Leveraging R&D for Economic Development Heike Mayer, Ph.D. Assistant Professor Urban Affairs and Planning Program – Alexandria Virginia Tech November 15, 2007 Research conducted for Pew Center on the States and the National Governors Association

State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

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Page 1: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

State Investment in University Research:

Leveraging R&Dfor Economic Development

Heike Mayer, Ph.D.Assistant Professor

Urban Affairs and Planning Program – AlexandriaVirginia Tech

November 15, 2007

Research conducted for Pew Center on the States and the National Governors Association

Page 2: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

Shifting Sources of Wealth

Inherited Assets

GeographyClimateNatural ResourcesPopulation

Created Assets

Top UniversitiesResearch CentersTalented PeopleEntrepreneurial CultureNetworksWorld-Class Amenities

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The Role of UniversitiesHighly effective• Education & talent creation• Research & new ideas• Attraction of firms, entrepreneurs, people, etc.• Anchor institution & public space• Extension & technical assistance, outreach• Faculty acting as consultants• University-industry collaborations

Limited• Entrepreneurial startups & support• Technology transfer & commercialization• Patenting & licensing

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University-Industry Relationships

0 20 40 60 80 100 120 140 160

Hiring graduates

Collaborative research projects

University staff as consultants

Company staff teaching classes

Donations to university

Training programs run by university

Licensing or patenting of research

Faculty working part-time in firmBeing part of research consortia

Collaboration with research centers

Utilizing ONAMI user facilities

Collaborate with Lab 2 Market

Faculty on the company's board

PSU's Business Outreach Program

IC Design & Test Lab

PSUOHSUWSUOSUUofO

Source: Silicon Forest Survey, 2007Note: N=112

Silicon Forest Survey of High-Tech Firms:Which of the following types of relationships has your firm had with the Oregon universities?

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Industrial Innovation is ChangingCompanies are more and more interested in

PARTNERING & COLLABORATING

with universities

Why?• Decline in in-house R&D• External sources of knowledge reduce cost & risks

Examples• Intel’s “lablets”• Procter & Gamble• Virginia Tech College of Science & Oxford Diffraction Inc.• VT’s Micron Technology Semiconductor Processing Laboratory

Page 6: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

R&D Funding in the United States

0%

10%

20%

30%

40%

50%

60%

70%

80%

1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

Federal Industry OtherSource: National Science Foundation

Federal R&D funding share declines as industry’s rises

Page 7: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

State R&D Investment Funds• Most states have dedicated R&D funds

• Evolution of funds– 1980s: Small amounts to build research capacity– Today: Partnerships, collaboration, industry engagement

• Funds are used for– Research: Collaboration, Leverage, Synergies, Social Problems– Talent: Eminent scholars, Scholarships– Facilities: Centers of Excellence, Laboratories

• HOW states spend money is just as important as how MUCH is spend

Page 8: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement
Page 9: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

How Do States Fund Investments?Type of Funding Examples

Earmarked Taxes Arizona: Proposition 301West Virginia: Research Challenge Fund

General Fund Appropriation Georgia: Georgia Research AllianceKentucky: Bucks for Brains

Tobacco Settlement Money Washington: Life Sciences Discovery Fund

Tax Increment Financing Kansas: Emerging Industry Investment Act

Bonds California: Institute for Regenerative Medicine

Privatizing State Assets Missouri: MOHELAIndiana: Hoosier Lottery

Foundations Minnesota: MedicaIndiana: Lilly EndowmentPennsylvania: Heinz Endowment

Leveraging Industry Support North Dakota: Roundtable on higher ed

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MarylandBasic & Translational ResearchStem Cell Research Fund

FY 2007: $15MFY2008: $23M

Commercialization & Tech Transfer• University Technology Development Fund• TechStart• Technology Transfer Fund• Fort Detrick Tech Transfer Initiative

University-Industry Partnerships• Maryland Industrial Partnership• $1.35M annually

University- Industry

Develop-ment

Research

Page 11: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

Georgia

Eminence inResearch

Georgia Research Alliance- $30M annually- $400M since 1990

Eminent Scholars Program- 57 Scholars- 18 Centers of Excellence- $2B leveraged- 125/4000+ firms/jobs

Venture Lab

- $8M from GRA since 2002- 66 early-stage companiesTech

Transfer &Commercialization

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Investmentsin GeorgiaResearchAlliancereach acrossthe state!

Page 13: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

Kentucky• Kentucky Postsecondary Education Improvement Act

• Research Challenge Trust Fund or “Bucks for Brains”– $350 M

• Kentucky Science & Engineering Foundation

• Kentucky Innovation Act– $53M

Page 14: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

Arizona8 big steps to createa bioscience niche

1. Industry Clusters2. University Research &

New American University ($1B/20yrs)3. Bioscience Road Map4. Genomics5. Research Facilities6. Community Colleges7. Science Foundation Arizona ($25M)8. Personalized Medicine

Ongoing: Measuring Results

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The Virginia Situation• Growing economy & high job creation rates

• Reliant on high-tech service industries

• Strong urban-rural divide

• Need to upgrade traditional industries

• Innovation rankings fall short

• Low rates of entrepreneurship

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A Good Start:Commonwealth Research Initiative

Initiatives (GF $ in M) FY 2007 FY 2008 Total

Biomedical Research & Biomaterials Engineering

$19.6 $19.6 $39.2

Modeling & Simulation $5.8 $5.8 $11.6

Debt Service for HEETF research supplement $0.0 $6.0 $6.0

Institute for Advanced Learning & Research $2.1 $2.4 $4.5

Research Commercialization* $5.0 $0.0 $5.0

Graduate Financial Aid $5.0 $5.0 $10.0

Total $37.5 $38.8 $76.3

Source: State Senate Finance Committee*Includes $2M for CTRF with 1-to-1 match of non-general funds.

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6 Guidelines for R&D Investments

1. Put all the pieces together2. Make the right bets3. Invest in collaboration4. Enlist experts, outside peer reviewers5. Be consistent while embracing change6. Measure results

Page 18: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

Why Do We Need to Invest?United Kingdom:

$2B for innovation& tech development

Finland:€465 M in

R&D projects

Germany:Funding for

elite universities

India:100 incubators

Singapore:Doubling R&Dbudget; $8.9Bbetween 2006

and 2011

Ireland:Science Foundation

invested $700 Mbetween 2000 and 2006

Bahrain:Plans for a $1B

Science & TechnologyPark

United States:America

Competes Actauthorizes

$43.4B in S&T spending for

FY08-10;No national innovation

policy; State R&D funds

less than 3%

Canada:$105M to 7 centers

of excellence; Quebec: $888M

Page 19: State Investment in University Researchsfc.virginia.gov/pdf/retreat/2007 Retreat...$19.6 $19.6 $39.2 Modeling & Simulation $5.8 $5.8 $11.6 Debt Service for HEETF research supplement

Thank You!Heike Mayer, Ph.D.Urban Affairs and PlanningVirginia Tech – Alexandria Center

E-mail: [email protected]: 703.706.8122

Report is available from National Governors Association:http://www.nga.org/Files/pdf/0707INNOVATIONINVEST.PDF