THE ROLE OF AMERICAN RESEARCH UNIVERSITIES IN ECONOMIC DEVELOPMENT

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THE ROLE OF AMERICAN RESEARCH UNIVERSITIES IN
ECONOMIC DEVELOPMENT

• Presentation by Dr. Raymond Bye
• Florida State University

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HISTORICAL OVERVIEW
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Early American Universities

• Modeled after European counterparts
• Morrill Act of 1865
• Late 1800s industrial advancement led to
  industry dependence on universities
• Advances in sciences key to success of
  manufacturing sectors

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20th Century Universities

• First 40 years corporate growth
• Rise of US manufacturing
• of chemists employed
• of engineers
• Indispensable role in job training

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20th Century Universities

• Early University Funding
• Until WWII, funded by States or private
  endowments
• State focus on local industries developed
  partnerships
• Mining, agriculture and oil exploration

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20th Century Universities

• WWII and Beyond
• 1940-1950 50 million to 525 million
• Focus? Basic Research (defense health)
• Agencies NSF, ONR, NIH

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New Role for Universities

• More fundamental knowledge created
• Increased role for research
• Training students for high-level careers/teaching
• Economic Development jobs

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Economic DevelopmentBiotech

• Research as driver
• Exponential growth
• Biotech companies near universities
• State ED efforts ? biotech
• Clean industry
• Role in health care
• 1.2 million employees, high wages

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Economic DevelopmentBiotech (cont)

• Growth 1.6 annually thru 2014
• Importance of industry-university partnering
• Patent and license revenue Bayh-Dole Act
• AUTM data push to commercialize research
  results

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The University and ED

• Should University be ED player?
• Richard Florida (1999) gone too far
• Moving away from basic research
• Pushed to commercialize
• Refocus on students and education
• Graduate student is most effective technology
  transfer vehicle
• University a contributor or a significant
  contributor

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Economic Impact of Universities

• In a global environment in which prospects for
  economic growth now depend importantly on a
  countrys capacity to develop and apply new
  technologies, our universities are envied around
  the world. If we are to remain preeminent in
  transforming knowledge into economic value, the
  US system of higher education must remain the
  worlds leader in generating science and
  technological breakthroughs and in preparing
  workers to meet the evolving demand for skilled
  labor. Alan Greenspan

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Economic Impact of University of California System

• 370,000 jobs
• 15 billion impact on GSP
• Projections thru 2011
• 150 billion to GSP
• 56 billion in state/local tax revenues
• 2.5 million statewide jobs
• Leads in of patents received

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Return on Investment

• UC ROI
• 1in state-funded expend ? added 2.63 in federal
  RD funding ? 1.26 in private funding
• 3.69 for each dollar invested

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Economic Impact

• National Impact of Universities - 2002
• 37.02 billion in research
• 15,573 IP disclosures
• 7741 new patent applications
• 3673 new patents issued
• 1.27 billion in licensing income
• 450 new spin-off companies

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Economic Impact

• Research activities create high-wage, skilled
  jobs
• Strength of research programs, faculty grad
  students ? impetus for small companies to
  incubate, re-locate or expand

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Universities ED

• 3 events in early 1980s (Richard Florida)
• Economic Recovery Tax Act of 1981
• Bayh-Dole Act of 1980 Patent Trademark Act
• NSF Engineering Research Centers and ST centers
  mid 1980s
• Changed laws, expanded opportunities to partner
  w/ industry changed culture

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Michigan and Florida
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(No Transcript)
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Luring a California Enterprise to Florida

• FL economy tourism, agriculture, services
• One of nations largest small business
  populations
• Manufacturing aerospace, telecom, computer
  software

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The Proposal - FL

• Jeb Bush proposed to locate Scripps Research
  Institute of La Jolla, CA to FL east coast
• 310M one-time federal pass-thru funding for
  staff infrastructure
• 200M in land from local bonds
• Private land holdings donated
• By 2006, local govt cost rose to 340M because
  of environmental legal issues

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FloridaPolitical Economic Environment

• Oct 2003 Gov calls special legislative session
  to approve his proposal
• Palm Beach County then approved monies for
  revenue bonds
• Created Scripps Florida Funding Corporation
• No added funding for universities

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FloridaEconomic Impact/Results

• Scripps CA
• 2900 employees
• 1 research institute for NIH funding
• 40 biotech companies spun-off
• 3 Nobel Laureates on faculty
• Scripps very much like a research university

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FloridaEconomic Impact/Results

• Scripps FL projected
• 6500 jobs ? 1.6B in addl income
• Increase State GDP by 3.2B over 15 yrs
• 40,000 jobs created ? industries coming to FL to
  work w/ Scripps
• 310M one-time investment ? Gov claims 44.8 ROI

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FloridaEconomic Impact/Results

• 4 nearby community colleges revised curricula to
  emphasize biotech training
• State Board of Administration invested 1B in
  venture capital to attract biotech companies near
  Scripps
• Cleveland Clinic medical research center
• Pfizer - 100M to collaborate w/ Scripps
• Merck research partner w/ USF

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FloridaEconomic Impact/Results

• Yale University School of Medicine clinical
  trials enhanced medical svcs in Palm Beach area
• New biotech firm Burnham Institute for Medical
  Research
• Torrey Pines Institute for Molecular Studies to
  locate nearby

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FloridaUnique Aspects

• Governors personal involvement, relationships
  and drive
• One-time funding
• Little research university involvement or
  proximity
• Buying research expertise rather than home-grown
• Scripps university

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Michigans Prospects for the 21st Century

• MI economy dependent on auto and component
  manufacturing, pharmaceuticals, chemical
  products
• Difficult economic times
• Strong research universities RD intensive
  industry
• Ranks 3rd in total RD (1998)
• Ranks 9th in RD at Universities

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MichiganThe Proposal

• Governor John Engler proposed a Michigan Life
  Sciences Corridor
• Funding source
• Money from the tobacco industry settlement
• 50M a year to total 1B over 20 yrs
• Partnership with major universities and life
  science pharmaceutical industries
• Shared facilities, equipment, and economic
  stimulus for new companies
• New economic base in life sciences

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MichiganKey Players

• Strength Research Universities w/ 600M in
  federal research revenues in 2003 and 1.3B in
  total RD by 2004
• UM, MSU, Wayne State
• MLSC initiative to support basic research at
  these 3 Univ. and Van Andel Institute
• Along with Pfizer and Pharmacia Corp ? Core
  Technology Alliance

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MichiganPolitical Economic Environment

• Funding allocation
• 20M basic research
• 25M applied research w/ industrial partners
• 5M technology transfer, commercialization
  spin-offs
• Budget Reality
• Declining economy declining funds reduced
  budgets

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MichiganPolitical Economic Environment

• Further cuts under Gov. Jennifer Granholm
• Change in focus ?
• Life sciences
• Homeland security
• Automotive technologies
• Morphed into Tri-Technology Corridor

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MichiganEconomic Impact/Results

• Linked network of 5 advanced labs at 3
  universities
• All labs designed for life sciences research
• By 2003, Michigan Economic Development Corp had
  made 96 awards for 175M
• Additional 40M in awards 2004-2005
• 95 new life sciences companies attracted to
  state, according to Gov

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MichiganEconomic Impact/Results

• Recently additional ED components proposed
• Funding remains uncertain

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MichiganUnique Aspects

• Initiated by Gov Engler (R) and revised and
  reduced by Gov Granholm (D)
• Budget dropped as economic conditions worsened
• Dependent on annual appropriations immediate
  impact vs. longer term research
• Original focus broadened
• Focus can shift quickly Term-limited investment
• Relied on University research as magnet
• Local governments not involved

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Concluding Points

• Florida has growing economy
• Florida lacks stable tax structure, therefore
  needs windfall funds
• Florida funds directed to research institute, not
  university RD
• Political decision in Michigan 2 different
  governors involved
• Florida approach is working
• Michigan funding too inconsistent