[Senate Hearing 111-517]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-517

                   RESEARCH PARKS AND JOB CREATION: 
                     INNOVATION THROUGH COOPERATION

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            DECEMBER 9, 2009

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation










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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            JOHN ENSIGN, Nevada
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 GEORGE S. LeMIEUX, Florida
CLAIRE McCASKILL, Missouri           JOHNNY ISAKSON, Georgia
AMY KLOBUCHAR, Minnesota             DAVID VITTER, Louisiana
TOM UDALL, New Mexico                SAM BROWNBACK, Kansas
MARK WARNER, Virginia                MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                   Bruce H. Andrews, General Counsel
             Ann Begeman, Acting Republican Staff Director
             Brian M. Hendricks, Republican General Counsel
                  Nick Rossi, Republican Chief Counsel
















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on December 9, 2009.................................     1
Statement of Senator Pryor.......................................     1
Statement of Senator Johanns.....................................     2
Statement of Senator Nelson......................................     3
Statement of Senator Warner......................................     4
Statement of Senator Begich......................................     6
Statement of Senator LeMieux.....................................    16
Statement of Senator Udall.......................................    17
    Prepared statement...........................................    18
Statement of Senator Klobuchar...................................    20

                               Witnesses

Hon. John R. Fernandez, Assistant Secretary of Commerce, Economic 
  Development Administration, U.S. Department of Commerce........     6
    Prepared statement...........................................     8
Charles W. Wessner, Ph.D., Director, Technology, Innovation, and 
  Entrepreneurship, Board on Science, Technology, and Economic 
  Policy, National Research Council, The National Academies......    22
    Prepared statement...........................................    24
Brian Darmody, President, Association of University Research 
  Parks and Associate Vice President for Research and Economic 
  Development, University of Maryland............................    26
    Prepared statement...........................................    28
Jonathan Sallet, Managing Director, The Glover Park Group........    30
    Prepared statement...........................................    31
Anthony Townsend, Research Director, Technology, Horizons 
  Program, Institute for the Future..............................    37
    Prepared statement...........................................    39

                                Appendix

Hon. Olympia J. Snowe, U.S. Senator from Maine, prepared 
  statement......................................................    71
Hon. David Vitter, U.S. Senator from Louisiana, prepared 
  statement......................................................    72
Russ Lorince, Director, Research and Economic Development Office, 
  West Virginia University, prepared statement...................    72
Response to written questions submitted to Hon. John R. Fernandez 
  by:
    Hon. Mark Warner.............................................    74
    Hon. Olympia J. Snowe........................................    76
Response to written questions submitted by Hon. David Vitter to 
  Dr. Charles Wessner............................................    79
Response to written questions submitted by Hon. Olympia J. Snowe 
  to:
    Brian Darmody................................................    81
    Jonathan Sallet..............................................    84
    Dr. Anthony Townsend.........................................    86

 
    RESEARCH PARKS AND JOB CREATION: INNOVATION THROUGH COOPERATION

                              ----------                              


                      WEDNESDAY, DECEMBER 9, 2009

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:34 p.m. in room 
SR-253, Russell Senate Office Building, Hon. Mark Pryor, 
presiding.

             OPENING STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Go ahead and call this meeting of the 
Commerce Committee to order.
    Thank you all for being here; I know that we have several 
in the audience. And also my colleagues, thank you.
    This is the hearing on Research Parks and Job Creation: 
Innovation Through Cooperation.
    I want to first welcome the Assistant Secretary, John 
Fernandez, for being here today. Thank you for coming, and I'll 
give you a chance in a few moments to make your opening 
statement. I know we'll have some questions. And then, we also 
have a second panel.
    The Nation is still experiencing an economic downturn. The 
national unemployment rate is right at about 10 percent. At a 
time when the economy has stalled and international competition 
is growing, we need to do everything we can to provide good-
paying jobs for American workers. While fiscal and monetary 
policies provide dollars to bolster the economy, it is 
innovation of new ideas, products, and technologies that 
provides long-term growth.
    During the last several years, the United States has 
undergone a dramatic transformation as the Nation moves to an 
economy driven by knowledge and technology. However, states and 
regions must still have a strong economic base that can support 
the creation of the next generation of manufacturing jobs.
    Research parks are a typical public-private partnership 
that enables knowledge flow, often between parks--excuse me--
park firms and universities, and contribute to regional 
economic growth and development. By providing a location in 
which researchers and companies can operate in very close 
proximity, research parks create an environment that fosters 
collaboration and innovation, leading to the commercialization 
of new products and technology. A lot of companies and products 
are spun out of these. And what they really do is, they 
institutionalize entrepreneurship, and they get good momentum 
going in certain areas with certain communities and certain 
universities, and the successes just keep flowing from that.
    Other nations view research parks as the catalyst for the 
development of innovative clusters that support rapid economic 
growth. One approach to creating regional innovation clusters 
is through the deliberate creation of research parks. Today, 
successful created innovation clusters, such as the Research 
Triangle Park, are being emulated around the world, often on a 
much larger scale. Many countries, such as China, Hong Kong, 
Singapore, India, Japan, and the European Union, are investing 
heavily in research parks to attract talented, educated 
workforce. America should, too.
    Unfortunately, Federal programs to support research parks 
and regional innovation clusters have been lacking, but the 
trend is beginning to reverse itself. This Administration's FY-
2010 budget requested $100 million for economic development 
administration to support a Regional Innovation Cluster and 
Business Incubator Program.
    Now, I know that these work, because we have some firsthand 
experience in Arkansas, especially in Fayetteville, Arkansas, 
around the University of Arkansas. And that Arkansas Research 
and Technology Park has created 27 companies, 273 jobs, at an 
average salary of $72,000 per person. And they've done a lot of 
things that we can talk about there, but, really, if you look 
at the national studies, what's going on in Fayetteville, 
Arkansas, we're trying to duplicate in Jonesboro, Arkansas, and 
Little Rock, as well.
    If you look at the national studies, you see that there's a 
lot of upside to this. For example, the typical North American 
research park is located in a suburban community with a 
population of less than 500,000. Most parks are operated by 
university or university-affiliated nonprofits. More than 
300,000 workers in North America work in a university science 
park, and every job in a research park generates an average of 
2.57 jobs in the economy. So, we need to continue this, and 
invest in this, and not fall behind the rest of the world, when 
it comes to these research parks.
    But, again, I want to thank the Assistant Secretary for 
being here today. I look forward to hearing from you.
    But, first, I want to ask Senator Johanns if you have an 
opening statement.

                STATEMENT OF HON. MIKE JOHANNS, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Johanns. Well, Mr. Chairman, thank you.
    Very briefly, I want to start out and just tell you how 
much I appreciate what you're doing here. This is something 
that we can really dig our teeth into and work together on a 
bipartisan basis.
    There are so many good examples, around this country, of 
industry and universities developing very powerful 
partnerships. And through these partnerships, they pool their 
talents, their resources; they assemble that critical mass of 
expertise and training and basic research that results in that 
investment that you alluded to in the job creation. Not only is 
it a win-win for the direct participants, but the community 
wins, the economy wins, the state wins. And that's just good 
news, in the current economic environment.
    I would be remiss if I just didn't mention a wonderful 
example of all this occurring back at the University of 
Nebraska. The university is in the process of constructing and 
developing what has been called the ``Nebraska Innovation 
Campus.'' It's a public-private research campus. It's set on 
250 acres that I believe will be an economic catalyst for our 
state. And it sits right on the edge of the downtown in 
Lincoln.
    What you are trying to do here today could complement not 
only the efforts of those folks in my state, but other States, 
as well. The university and the community are really doing 
their best to accomplish several goals. They're reaching out, 
they're working with the community to foster innovation, expand 
economic growth, and create jobs. They're also putting their 
money where their efforts are; they're offering the expertise 
of their professors, and technical instructors to help drive 
R&D that supports economic development and also advances job 
training.
    Well, I wanted to be here today to applaud this effort, but 
also to applaud your efforts. This really makes a lot of sense. 
I think it's going to get a lot of support. I think if we lay 
the proper groundwork, we've got a winner, here.
    Thank you.
    Senator Pryor. Thank you.
    Senator Nelson.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Mr. Chairman, thank you for having this 
hearing. And, of course, it comes at an enormously important 
time. And this little agency is--just can be absolutely 
critical to helping out a number of areas.
    Now, you particularly tied the--this hearing to the 
research parks. And when this agency has the premise of helping 
Federal economic development by promoting innovation and 
competitiveness, then it is exactly--when you tie it in with 
the research park, it just makes all the more to create private 
investment and to generate jobs.
    I have had the privilege, Mr. Chairman, of talking to the 
Assistant Secretary before, because we--and I'm going to wait, 
because I want you to hear this particular part, because you're 
my chairman and I'm going to have to come to you, because we 
are about to experience some massive layoffs at the Kennedy 
Space Center. Here is some of the finest technical expertise in 
the world, and, through no fault of their own, NASA had dropped 
the ball in the last 10 years and doesn't have the new rocket 
developed in time for when the Space Shuttle is going to be 
shut down. And so, the Kennedy Space Center, being the launch 
center, doesn't have that business. But, they do have the 
beginning of a research park, called Exploration Park, that 
does a lot of stuff in life sciences right now. And you're 
going to have this wealth of talent, skilled labor, that needs 
to be employed.
    And so, when we get around to the questions--and I've 
already talked to Mr. Fernandez about what could the EDA--and I 
think he's going to have some answers--help us with the 
situation where 7,000 people are going to be laid off. And you 
know how many families that affects. That ripple effect is 
three to one; that's 21,000 people, all within a confined 
geographical area.
    And so, as we get into this, I want to look at the unique 
assets that the Kennedy Space Center has, and how that can be 
leveraged to increase the private-sector investment and attract 
jobs, in addition to what we already have going on there.
    So, thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Warner, do you have an opening statement?
    Senator Warner. No, Mr. Chairman. Are we still on opening 
statements?
    Senator Pryor. We are.
    Senator Warner. Good. OK, I will----

               STATEMENT OF HON. MARK R. WARNER, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Warner. Thank you, Mr. Chairman.
    And a real pleasure to see you again, Mr. Fernandez.
    And I just want to make a couple quick comments.
    One, I appreciate your service as mayor and as somebody who 
has been involved in the nitty-gritty of economic development, 
I just want to commend--I know you've got, in your written 
testimony--you cite some of the wonderful roles that research 
parks can play, particularly in rural communities, and I just 
wanted to point out two in my home State of Virginia, one being 
down in Danville, Virginia, Mr. Chairman, who is a part of our 
State that, not unlike part of Arkansas and part of Florida, 
that tobacco, textile, and furniture, where the long-term 
industries have been hard hit. We've got a very innovative 
collaboration between Virginia Tech and the community, with an 
advanced learning research institute, where we've actually 
taken some of the research components from the home-based 
Virginia Tech in Blacksburg, and moved them down to a rural 
community, where they have built a close to $20-million 
building--fully staffed up, at this point, about 20-odd start-
ups in and around it. And I appreciate the fact that you 
recognize that. And on kind of a more expanded basis, back--
again, citing Virginia Tech, which I think has got some of the 
best records of research facility--or research university 
trying to branch out around the state, where--and, again, in 
more rural Southwest Virginia, the corporate research park 
there has now expanded to over 400 companies that are actively 
engaged in collaboration with the university.
    So, I do appreciate and concur with my colleague from 
Florida, Senator Nelson, that the real value of these research 
facilities and their economic development potential.
    I also want to put a plug in for another issue that you and 
I have discussed, and as a--I've got a former mayor, to the 
right of me, who constantly reminds me of how much better 
mayors supposedly are than Governors. But, whether you're a 
mayor or a Governor----
    Mr. Fernandez. I'll stay out of that.
    Senator Warner.--you'll be----
    [Laughter.].
    Senator Warner.--you know, one of the things that we have--
we do a lot of in both of these positions is economic 
development.
    Mr. Fernandez. Yes.
    Senator Warner. And--whether it's a state or local economic 
development effort--and one of the things we've been working 
closely with you on in your department--and this is really to 
share with my colleagues--and we've got another Governor, a 
good friend, Governor Johanns--or Senator Johanns, behind--
across the table--we've been working on developing legislation, 
in conjunction with EDA, that would say, ``How do we supplement 
existing State and local economic development efforts for site 
location for those companies that--where the jobs might 
otherwise be going abroad?'' So, we've got and America Recruits 
Act legislation, that we're looking at introducing shortly, 
that would add a--up to a $10,000 forgivable loan; basically a 
$5,000-per-year credit that would be--for 2 years--that would 
be forgiven, as long as the jobs actually stay in this 
location, that would supplement existing economic development 
efforts. Because, too often, you know, it's--our economic 
development is Virginia steals from Arkansas, and Arkansas 
steals from Florida, and vice versa. This would be an effort 
that would not allow to supplement those efforts, but it would 
be for those companies, particularly foreign companies and 
others, that are looking at investing in America.
    I recall, a few years back, competing for a Dell plant that 
ended up--was looking at Korea, as well, where their national 
government was putting a lot of resources on the table. This is 
a small effort to add, at a national level, supplemental 
assistance to the kind of State and local economic development 
efforts, so that--again, not to compete between Nebraska and 
Virginia, but if we've got that German company that's looking 
at choosing Nebraska or Quebec, or that Indian company that 
might be talking about moving back some of those mid-tech jobs 
that went abroad, that, kind of, call-center-plus, where we 
weren't competitive a few years ago, but now, with broadband 
and--a lot of our rural communities are much more competitive--
could be that supplemental assistance. It would be money that 
would only be spent if jobs were added to the marketplace. It 
would not require--it would be a--working through EDA--but it 
would not require massive new bureaucracy administration, 
because we've already got that in place at the local level or 
at the State level; it would be that add on. And for those jobs 
that otherwise might end up aboard, to try to make sure those 
jobs locate in this country. I think it would be a great value, 
and I'd welcome my colleagues' ideas and input on this 
legislation. We hope to be introducing it in a bipartisan 
fashion in the next few weeks.
    And, again, I want to thank, particularly, Administrator 
Fernandez for his great effort in helping us get this program 
together.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Begich.

                STATEMENT OF HON. MARK BEGICH, 
                    U.S. SENATOR FROM ALASKA

    Senator Begich. Thank you, Mr. Chairman. I'll be brief. I'm 
anxious for the Assistant Secretary to talk a little bit about 
how he sees this working.
    I want to commend you, as mentioned earlier by several of 
our colleagues here, for your effort in bringing this forward. 
I think this timing couldn't have been better, in a lot of 
ways, as we struggle in figuring out how to move our economy 
forward with an over-10-percent unemployment rate, and working 
to figure out what's the right approach in engaging and 
partnering with entrepreneurs, small businesspeople, 
universities, and others, to find the best way to bring new 
jobs to the equation. But, also recognizing that, as we move 
forward, hopefully after the first year, on some new energy 
policy for our country--and energy technology is going to be 
huge in the future. It's big now, but I think the United States 
is losing its positioning in the global markets and the 
technology development, and I think this type of research-park 
job-creation idea may be able to, again, put us back in the 
forefront.
    So, I thank the Chairman for bringing this forward. I'm 
looking forward to helping support in any way I can, and then 
also hearing from the Administration how we can--not only if 
successful--the Chairman is successful in bringing the bill 
forward to a positive conclusion, how we implement it on a 
rapid basis, because I think sometimes we get great 
legislation, but it sits idle in the bureaucracy and waits and 
waits, and before we know it, we're--you know, other countries 
are moving much more--I mean, they're just moving at a rapid 
pace. And we have--need to catch up, in some cases, and be the 
leaders. And, obviously, in my area, of energy for Alaska, you 
know, the scenario--we're losing ground in. And yet, we develop 
some of the greatest technologies, but other countries have 
moved much further than we are. So, I look forward to it.
    Again, Mr. Chairman, thank you for bringing this idea 
forward and having this hearing today.
    Thank you.
    Senator Pryor. Thank you.
    I'm going to go ahead and introduce our first panel, our 
panel of one, and that would be Mr. John Fernandez. He's 
Assistant Secretary of Commerce for Economic Development and 
Administrator of the Economic Development Administration. Prior 
to his appointment, Mr. Fernandez led the New Development and 
Acquisition Team at First Capital Group, an Indiana-based real 
estate investment firm. And he has a long resume. I'm not going 
to read it all, but very accomplished, very diverse background. 
But, to Senator Begich's eternal glee, he is the former Mayor 
of Bloomington, Indiana.
    So, welcome. Thank you.

        STATEMENT OF HON. JOHN R. FERNANDEZ, ASSISTANT 
          SECRETARY OF COMMERCE, ECONOMIC DEVELOPMENT 
          ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Mr. Fernandez. Thank you, Chairman Pryor.
    You've all been so kind, I'd, kind of, like to just quit 
while I'm ahead and say thank you, but----
    Members of the Committee, I really do appreciate the 
opportunity to testify on behalf of the Economic Development 
Administration.
    You know, our policy priorities are designed to encourage 
collaborative regional economic development. You know, you 
noted, at the beginning, the title included ``cooperation,'' 
and I think that's an essential part of what we try to do at 
the local and State level as we work to promote 
competitiveness, innovation, cultivate entrepreneurship, and 
spur our economic development partners to take advantage of 
opportunities in a global marketplace.
    The Obama Administration has developed a strategy to lay a 
new foundation for America's innovation economy, investing in 
American innovations, such as fundamental research, world-class 
workforce, our physical infrastructure, and information 
technology. These all comprise key elements of the President's 
strategy.
    As the economy begins to stabilize, our focus shifts from 
rescue to recovery. And at EDA, our priorities will reflect our 
view that, moving forward, we need a new framework for 
sustained economic growth.
    And this framework builds on two very important economic 
drivers, and that's innovation and regional strategies. Now, 
this new framework really helps build the 21st-century 
infrastructure, which includes science and technology parks.
    Science and technology parks, when integrated into the 
region's innovation strategy, can help create the environment 
where America's world-class scientists can collaborate with 
entrepreneurs, they can commercialize technologies, create jobs 
and businesses that provide the products and services that are 
in demand in the global marketplace.
    Science parks are seen by many as a very effective policy 
tool to realize larger, more visible returns on the Nation's 
investments in research and development. The intent of science 
parks is to encourage greater collaboration between our 
universities, private research labs, large and small companies, 
all in order to convert new ideas into innovative technologies 
for the market. They're widely used as a tool to encourage the 
formation of innovation, innovative high-tech companies, they 
generate employment and make existing companies more 
competitive through cooperative R&D, shared facilities, and all 
the benefits derived from colocation. These are important--an 
increasingly important tool for national and regional economic 
development.
    As was mentioned by many of you, the investments in 
research parks are being launched all over the world. In many 
instances, our international competitors come to the United 
States, they visit the Research Triangle, they go to other 
places around the--our country, and they learn from us some of 
the best techniques for building these innovative economies, 
and then go back to their countries and invest very heavily in 
this same innovative approach to economic development. It's 
important, here, that we continue to sustain our efforts and 
investments in this proven methodology for innovative job 
creation.
    The Surrey Research Park outside of London, for example, is 
currently a home of 110 tenant companies that help to support 
the tech transfer work from the University of Surrey and a 
wider knowledge economy into their international commerce 
efforts. Now, the Surrey Research Park continues to contribute 
significantly to their regional economy, even during the global 
recession. These are important sources of income and employment 
for all of the southeast region. And this is just one of many 
international examples.
    As was alluded to earlier, here in the United States there 
are many examples that EDA has helped fund. I won't go into all 
of them. And we're going to run short on time, so I'll be happy 
to, maybe, present some examples, if you need them, during the 
Q&A.
    But, as was mentioned, as well, the 2010 budget for EDA 
includes additional funding to support regional innovation 
clusters, which are a part of this important innovation 
infrastructure.
    I'm going to just wrap it up there, and, again, just thank 
the Chairman and the members of the Committee for inviting me 
here today, and I certainly look forward to any questions you 
might have.
    Thank you.
    [The prepared statement of Mr. Fernandez follows:]

 Prepared Statement of Hon. John R. Fernandez, Assistant Secretary of 
   Commerce, Economic Development Administration, U.S. Department of 
                                Commerce
Introduction
    Chairman Rockefeller, Ranking Member Hutchison, and members of the 
Committee, thank you for this opportunity to testify on behalf of the 
Economic Development Administration (EDA). EDA's mission is to lead the 
Federal economic development agenda by promoting innovation and 
competitiveness, preparing American regions for growth and success in 
the world-wide economy. Through grants to local government entities and 
eligible non-profits to create jobs and generate private investment, 
EDA continues to seed our communities for success. Our investments 
create the conditions in which jobs are created, often in the midst of 
economic hardship or adjustment.
    EDA's investments have two major goals: creating higher-skill, 
living-wage jobs and attracting private capital investment. EDA's 
achievements are a reflection of our policy priorities: to encourage 
collaborative regional economic development; to promote competitiveness 
and innovation; to cultivate entrepreneurship; and, to spur our 
economic development partners to take advantage of the opportunities of 
the global marketplace.
Obama Innovation Strategy
    The Obama Administration has developed a strategy to lay the 
foundation for America's innovation economy of the future. The Office 
of Science and Technology Policy and National Economic Council's A 
Strategy for American Innovation: Driving Toward Sustainable Growth and 
Quality Jobs builds on well over $100 billion of American Recovery and 
Reinvestment Act (Recovery Act) funds that support innovation, 
education and infrastructure in the Recovery Act, the President's 
Budget, and novel regulatory and executive order initiatives. One of 
the key areas focuses on investing in American innovation, such as 
fundamental research, a world-class work force, physical 
infrastructure, and information technology.
    EDA is working to sharpen our strategic priorities in order to 
better promote innovation and entrepreneurship while integrating 
economic growth, environmental sustainability and global 
competitiveness. One way in which we can achieve these priorities is 
greater support for science and technology parks, which I would like to 
address here today.
    Science and technology parks provide the perfect environment for 
America's world-class scientists to collaborate with entrepreneurs to 
commercialize technologies and create the products and services that 
the global marketplace is demanding. Some might argue that in today's 
world, where advances in telecommunication have made it easier to share 
information and collaborate from dispersed locations, the need for 
science and technology parks is a thing of the past. However, ongoing 
economic research finds that commercialization and technology-based 
entrepreneurial activity continue to cluster near world-class 
scientific institutions where scientific discoveries take place. U.S. 
universities provide the base for new industries and jobs of the 
future, but discoveries alone are not enough to form these industries. 
This is where science parks come in.
    Specifically, these types of science parks are seen by many as an 
effective policy tool to realize larger and more visible returns on a 
nation's investments in research and development by bringing together 
established technology companies, technology incubators, and world-
class universities. The intent of science parks is to encourage greater 
collaboration among universities, research laboratories, and large and 
small companies, in order to facilitate the conversion of new ideas 
into innovative technologies for the market. They are widely used as a 
tool to encourage the formation of innovative high-technology 
companies, generate employment, and make existing companies more 
competitive through cooperative R&D, shared facilities, and the 
benefits derived from co-location. Science Parks are a rapidly growing 
phenomenon and an increasingly common tool of national and regional 
economic development.
International Community
    Many nations are currently adopting a variety of directed 
strategies to launch and support the development of science parks, 
often with significant financial commitments and policy support. To 
create a better understanding of the scope and scale of programs 
overseas to support the growth and development of science parks and to 
improve our understanding of the scale and contributions of parks in 
the U.S., the National Academies convened an international conference 
on global best practices in science parks. The resulting report 
captures the rich discussion of the diverse roles university and 
laboratory-based science parks play in national innovation systems. It 
was noted that in many cases, science parks are expected to generate 
benefits that go beyond regional development and job creation. Science 
parks are seen increasingly around the world as a means to create 
dynamic clusters that accelerate economic growth and international 
competitiveness.
    In the European Union, science parks are supported through a 
variety of local, national and EU programs. There are many programs 
that support the individual companies located within the parks.
    The Surrey Research Park outside of London is currently home to 110 
tenant companies that help to support the technology transfer from the 
University of Surrey and wider knowledge economy into the international 
business world. The Research Park, developed by local and county 
planning authorities and the University, continues to contribute 
significantly to the regional economy, even during the recession, and 
is therefore an important source of income and employment for Surrey 
and the entire South East region.
    In Daejeon, South Korea, the national government began construction 
of Daedeok Science Town in 1973, an immense science park that has 
evolved today into Daedeok Innopolis, a research and development 
district made up of more than 20 major research institutions and more 
than 40 corporate research centers. Over the last few years, a number 
of IT venture companies have sprung up in this region, which has a high 
concentration of Ph.Ds in the applied sciences and is famous for 
registering around 30,000 patents in Korea and abroad.
EDA Funded Projects
    There are many examples of successful science parks across the 
nation, and EDA is proud to have played a role in their development.

   The Sandia Science and Technology Park in New Mexico, in 
        which EDA has invested nearly $3 million, is an entire 
        community dedicated to linking public sector research with 
        private sector business opportunities. The park has 30 
        companies employing over 2,100 people in higher-skill, higher-
        wage jobs.

   EDA also invested $4.7 million in Recovery Act funds to 
        support the development of the Arizona Bioscience Park in 
        Tucson. The new biosciences park will provide a separate 
        facility designed especially for companies working in 
        biosciences, biotechnology, life sciences and pharmaceuticals. 
        Its sophisticated, high-technology biosciences facilities will 
        be integrated into a multi-use development, including a hotel 
        and conference center, retail and residential development.

   Another example is the Virginia Tech University Institute 
        for Advanced Learning and Research in Danville. Virginia Tech 
        established a branch of the University in this very rural area 
        near the North Carolina border. The regional economic impact of 
        this science park may be felt well beyond the state line. EDA's 
        University Center, Planning, and Public Works grants have 
        supported this effort for its entire history. Most recently, 
        EDA awarded $1.8 million for technology commercialization 
        activities (focused on nanotechnology, polymer science, etc.).

    The United States has made great progress in park creation and the 
generation of high-tech clusters, but we must continue to pursue public 
policies that encourage innovation and the commercialization of new 
technologies if we wish to remain a leader in high-tech industries.
    As you know, the President's Fiscal Year 2010 Budget requests $50 
million for EDA regional planning and matching grants to support the 
creation of regional innovation clusters that leverage regions' 
existing competitive strengths to boost job creation and economic 
growth. Science parks play an important role in this equation. The 
request would enable EDA to provide greater support for science and 
technology parks so that the United States can seed future science park 
successes similar to the past successes I have just discussed.
Conclusion
    Chairman Rockefeller, Ranking Member, Hutchison, and members of the 
Committee, thank you for your time today and for inviting me to discuss 
what I consider to be a critical component of our Nation's economic 
recovery. Please note that this testimony does not address S. 583, 
which is pending before the Committee. Before the Committee considers 
that bill, I would appreciate the opportunity to share the 
Administration's views on it. Thank you. I look forward to answering 
any questions you may have.

    Senator Pryor. Thank you.
    And what I'm going to do for my colleagues--I'm going to 
split my time here, I'm just going to ask one question, and 
then go around the horn here with my colleagues, and allow them 
to have their allotted time to ask questions.
    But, the first question I have, just to lead us off here, 
is, How do you envision universities, research parks, business 
incubators, regional clusters all working together to make the 
U.S. more competitive and to stimulate the jobs that we need in 
this country?
    Mr. Fernandez. Well, thank you. I think the--you know, the 
question sort of frames the answer in a way that, hopefully, is 
understandable. But, you know, they have to work together. 
Investing in research parks or science parks--it's not the 
notion of a ``field of dreams,'' that you just build a facility 
and everyone comes. It's really just part of that entire 
ecosystem that has to be created to support entrepreneurship 
and support innovative-led economic development.
    In most instances, there is a strong public-private 
organization that brings together all those--the leadership 
from those key stakeholders, to ensure that there is a shared 
strategy, that every one is moving in the right direction, that 
we're leveraging the key competitive advantages of that region. 
But, it's through that kind of public-private partnership that 
develops the regional strategy that enables all of the 
stakeholders to work together in a very smart way.
    Senator Pryor. Thank you. And we may have some follow-ups 
on that.
    Senator Johanns.
    Senator Johanns. You mentioned, in your testimony, that 
you'd have some examples. I would like to hear about some of 
those examples. I'm especially interested in your opinion as to 
what they were doing right. What is the combination of things 
that make it work, if you will?
    Mr. Fernandez. Sure. You know, in Sandia Science and Tech 
Park in New Mexico, that's a park that has really supported a 
broad public research institution and integrated it well into 
the private-sector companies. There are 30 companies there now, 
that employ over 2,100 people in very high-wage high-skilled 
jobs. Senator Warner mentioned the Virginia Tech example, in 
Danville. You know, there are others, but I think the key 
element--and that's why I say that, you know, the--this is an 
important part of the infrastructure, when it's embedded in a 
sound regional innovation strategy. And that way you bring into 
it not just the physical component, whether it's the real 
estate or a building, but you're pulling together venture 
capital, seed capital, you're building in technical assistance 
from serial entrepreneurs that can help creative people figure 
out the best way to move an idea into an actual business. It's 
the support of shared facilities, when appropriate, 
particularly in biotech. It's a combination of all these 
different elements that create the entire ecosystem that 
supports innovation economy.
    Senator Johanns. From your perspective, give us some 
advice, in terms of what role we might play, here at the 
national level. You know, these are going to be driven at the 
State level, local level. They will be the main partner, if you 
will, the--kind of, the controlling-interest partner. But, what 
can we do? If you were to give us some advice, what are some 
key elements we should be focused on as we think about our role 
here?
    Mr. Fernandez. Well, I guess I would just go back to what 
was included in our current budget proposal, which--and so, my 
comments will be fairly limited to at least the EDA perspective 
on this.
    I think what we have to do is introduce into the Federal 
discussion a strong sense of commitment to the notion of 
regional strategies. Many folks referred to the work in the EU 
and other parts of the world, and it's very focused on regional 
advantages. If you're a small business in--you know, pick your 
town--and you're trying to compete in a global marketplace, 
independently, that's a much steeper hill to climb than if 
you're embedded into a regional strategy where there are 
strength in numbers. So, I think keeping a focus on this idea 
of regional strategies is very important.
    At the EDA, we're trying to, you know, focus the 
investments we have by using the regional strategies as a 
organizing principle for where our limited resources go into 
specific grant requests, because we know if it's tied to that 
regional strategy, there are so many more opportunities to 
leverage other State and local support, but also private-sector 
support, and really build on the competitive advantages of that 
area. So, I think the regional component is very important.
    Senator Johanns. OK.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Nelson.
    Senator Nelson. Mr. Chairman, thank you again for your 
zeroing in on this subject of the research parks and EDA. And 
we're blessed to have quite a few research parks; right now, 
ten and another two that are coming online in Florida.
    But, I want to confine my question to you about the EDA's 
role in helping out the folks that are going to be dislocated 
at the Kennedy Space Center, and the fact that we do have the 
beginning of this research park there that also augments the 
very significant research park over at the University of 
Central Florida, in Orlando, this new research park at the 
Kennedy Space Center, called ``Exploration Park.'' And given 
the fact that the new rocket is not going to be ready for 
another 6 years after the Space Shuttle is shut down, a 
decision that occurred as a result of budgetary decisions that 
occurred over the last decade, and now this dislocation of 
highly-talented, highly-skilled people, what are some of the 
things that you think that EDA might be able to do to help?
    Mr. Fernandez. Well, you know, I guess, fortunately and 
unfortunately, depending on how you look at it, EDA has, you 
know, a lot of experience in dealing with plant closings and 
BRAC changes. So, there's a wealth of experience, in terms of 
how to pull together some of the key institutions and develop 
renewed strategic plans.
    You know, as recent as October, I know the people in our 
Atlanta regional office were having discussions with the 
Technological Research and Development Authority to look at 
potential proposal to expand the original incubator, which EDA 
actually helped fund, back in 2005. The Brevard Workforce 
Development Board, along with the TRDA, in June 2009, began a 
major study of some of the workforce issues around the NASA 
facility, and that was an EDA-funded study. So, that work has 
already begun, in terms of assessing some of the human capital 
and how to develop a longer-range strategy to, kind of, create 
the businesses and accelerate some of the job opportunities for 
the existing workforce.
    You know, and it's kind of a--one of the points I wanted to 
mention, that I did not get out very clearly, in the context of 
the previous question, is that, you know, when we look at what 
makes a science or research park successful, another very 
critical piece of it is the workforce and building into the 
strategies, you know, the traction of the right kinds of 
entrepreneurial activities that feed into the existing 
workforce. So, that's clearly a very important ingredient, 
among these others, that make a successful research park 
environment.
    Senator Nelson. Well, are there any particular things that 
come to mind, in the Kennedy Space Center's assets that could 
be leveraged to increase the private-sector jobs and to attract 
jobs?
    Mr. Fernandez. Well, clearly, there's an incredible amount 
of research talent and engineers and scientists. I won't 
pretend that I know the best roadmap today, in terms of how to 
connect all the dots that are part of that industry, but there 
have been, like I said, the--they are working together at the 
local level, already, to start identifying the most strategic 
way to leverage those assets.
    Senator Nelson. If we just leave it up to those local 
institutions--and I've been involved in getting appropriations, 
in order to carry out what you said, with the TRDA and the 
Brevard Economic Workforce Board--but those are studies. And 
studies are one thing. Moving jobs is another thing entirely.
    Mr. Fernandez. Yes.
    Senator Nelson. So, how do we get from a study over to the 
next thing?
    Mr. Fernandez. Well, I mean, the truth of the matter is, a 
lot of it really does depend on those local stakeholders. We 
can provide technical assistance. We can help identify and 
build strategies. But, ultimately, it is the private sector and 
the local players that have to implement it. And so, hopefully, 
we can provide the--some of the resources to help build the 
plans. We can seed some of the investments, whether it's in 
additional workforce investments, whether it's in support of 
the research, or even into the infrastructure. But, you know, 
they have to fit into that local strategy if it's going to have 
traction that's sustained over the long haul. And we're--you 
know, I think we can build a toolkit that can help folks 
rebuild their, you know, new future, but the local actors 
ultimately have to be highly motivated and engaged to build 
that future.
    Senator Nelson. And that seeding of the investment, seeding 
of the infrastructure; that would apply as well to the research 
parks.
    Mr. Fernandez. Absolutely. And, you know, we--at EDA, we 
certainly have funded quite a bit of infrastructure as part of 
research and science parks--incubators, graduation facilities, 
et cetera. And, you know, if we embed that into a well-
developed regional strategy, it can be a great way to 
accelerate immediate job growth while also building the right 
foundation for more sustained effort.
    Senator Nelson. Thanks.
    Senator Pryor. Senator Begich.
    Senator Begich. Thank you very much.
    I want to kind of stick on the bill, for a second, if I 
can, just, kind of, some technical comment or questions.
    First, obviously you've read the legislation, gone through 
it, to some degree. What do you believe--do you think, first, 
that your department, with the current resources you have and 
the ones that may be allocated through this legislation, will 
be enough for you to have the expertise and be able to move 
requests through in a timely manner, and also set up the 
program?
    Mr. Fernandez. Yes----
    Senator Begich. What do you think some of the challenges 
might be that we need to be aware of?
    Mr. Fernandez. Well, you know, to--I mean, candidly, the 
bill has not been fully vetted through the DOC and OMB 
structure, so it's a little difficult to get too technical at 
this point, but we certainly are prepared to do that as the 
bill moves forward.
    I think the--in terms of the personnel, I'm confident that 
we have the expertise and the capacity to implement a program 
like this. And if the bill moved forward, we would certainly 
want to work with committee staff and others to develop the 
right kind of application mechanisms and metrics to make it a 
very strong program.
    Senator Begich. Do you--in recognizing your statement that 
it hasn't gone through its whole process on your end of it, do 
you have any red flags that have popped up, just from the 
cursory review or discussion within your area? I understand 
there's more vetting to continue.
    Mr. Fernandez. Well, in a general way. The initial 
conversations I've had with Chairman Pryor have revolved around 
just ensuring that the--as part of the process--and I think 
it's something that can be dealt with in the context of 
developing the applications--it's to ensure that you really 
have that kind of strong public-private governance structure--
--
    Senator Begich. Right.
    Mr. Fernandez.--so that if--you know, I mean, the private 
sector and the public sector are going to have slightly 
different objectives, in terms of how to look at investments in 
the science part. If it's a fully--if it's strictly a private-
sector investment, their motivations might be a little 
different than if it's a broader regional public-private 
partnership. And I'm not saying that's a--you know, it's a 
better motivation, or a worse; it's just different.
    Senator Begich. Just have different criteria, potentially, 
in the decision.
    Mr. Fernandez. Yes, in terms of----
    Senator Begich. Yes.
    Mr. Fernandez.--timelines and motivations, in terms of how 
they define success. And--but, I think the important thing is 
to ensure that you have that broad governance structure of a 
public-private partnership that's looking at the entire 
regional strategy for innovation-led economic development, so 
that you've got the workforce folks involved, the research 
folks involved, the business community involved, so it's not 
just entirely focused on the real estate component, but the 
much broader regional strategy.
    Senator Begich. Very good.
    And if I can follow up, because the Chairman pointed out, 
and I appreciate that it--you know, I love mayors, and I think 
they know exactly what they're doing, and so, I appreciate--I 
had to do that for my Governor friend, next to me.
    [Laughter.].
    Senator Begich. But, knowing that--one of the things you 
mentioned to Senator Nelson's commentary and concern that he 
has, how does EDA engage in local community when they're trying 
to figure it all out, in the sense of a situation as he laid 
out. How--where does EDA play a role? When do they play a 
role?--I guess is the first point. And then, how do you see 
their role?
    Mr. Fernandez. Well, you know, EDA is administered through 
six regional offices, and we have economic development 
representatives assigned to various regions within regions. And 
so, their daily activities involve maintaining a strong network 
and ongoing communications with many of the people on the 
ground throughout the region, so that they--like in the case 
of--that Senator Nelson mentioned, I mean, those conversations 
about what to do when the program slows down, they start well 
before the program slows down, because they have that kind of 
on-the-ground intelligence. And in that context, there are lots 
of opportunities to provide consultation, to point folks in 
directions, not just in terms of the programs that EDA is 
engaged in, but the entire Federal Government. You know, we're 
pressing very hard--and I'm sure you've heard this before, but 
the Obama Administration is absolutely committed to blowing up 
silos and looking at these things much more from a place-based 
solution, not individual programmatic solutions, but how do we 
marshal the resources of all the relevant Federal agencies to 
come in and engage. And, you know, the people at EDA, in the 
regions, are professionals, understand the wide array of 
Federal programs that can be helpful.
    So, we do that. We do some, you know, networking, 
matchmaking, seeding of strategic thinking, and try and support 
those projects on an ongoing basis. And in many cases, as was 
mentioned with the incubator near the Kennedy Center, you know, 
we did the initial investment 5 years ago, but once an 
investment's made, we don't--usually that relationship doesn't 
stop. There's ongoing communication, and we look for other 
opportunities to leverage investments.
    Senator Begich. Very good. Thank you. My time has expired, 
but thank you very much.
    Mr. Fernandez. Thank you.
    Senator Pryor. Thank you.
    Senator Warner.
    Senator Warner. Thank you, Mr. Chairman.
    I just want to make one comment and one very brief 
question.
    The comment is just that I'm very supportive of your 
effort, in terms of these innovation centers and research 
capabilities, and commend, again, Administrator Fernandez for 
some of the efforts that EDA has taken in my State, in 
Virginia.
    But, you know, one question I'd love us to think about--I'm 
not sure this is the right forum, and I'm not going to put the 
Administrator on--but, you know, I used to be in the venture 
capital business for years, and be one of those folks who tried 
to help fund those innovations as they came out of those 
research parks, through that valley of challenge or death, 'til 
they get to the point where they're sustainable and, you know, 
one thing, as an overall system, we've seen in the last decade, 
I believe, is an enormous migration that is already in the tax 
code, but it seems to have been expanded, of debt over equity. 
And, you know, why would anybody go innovate anymore? Why would 
anybody go and be an entrepreneur and--if you can go create 
some financial engineering instrument on Wall Street? And I've 
nothing against Wall Street, but--you know, but if--you can 
supposedly get much better guaranteed returns, supposedly with 
no risk--and how we rebalance our financial system to give a 
little more--to take away some of the preference of 
overleveraged debt to equity. We're going to need more equity. 
As much as EDA can do, we're going to still need people that 
will then be willing to go be innovators, go be entrepreneurs. 
And then having a path to success that existed in the 1970s, 
1980s, and 1990s, and, I think, unfortunately has--if we look 
around our country, in the last decade, has not been as 
prevalent as--and in--both from the kind of quality of talent 
becoming entrepreneurs and, kind of, the system and where the 
financing has gone. I--just a comment.
    And my quick question is, I would love for you to take a 
moment--and I know this is more about the Chairman's bill and 
innovation centers--but, if you wouldn't mind taking a moment 
and commenting on the initiative we've been working on, in 
terms of having this site location initiative, to try to 
support--particularly bring offshore jobs back into America, 
that can supplement local economic development efforts. I'd 
appreciate any comments on that.
    Mr. Fernandez. Thank you, Senator Warner.
    The offshoring concept, I think--you know, I guess one of 
the things that strikes me about it is that, not only is it a 
mechanism to potentially bring back that sector of employment 
to the United States, but bring it back into some of the most 
highly targeted areas, in terms of distress. So, it could be a 
very meaningful way to leverage the competitive advantages of 
some of these rural areas while also supporting the broader 
national agenda, in terms of bringing those kinds of jobs back 
to the United States.
    We've not delved deeply into the vetting process on that 
particular bill, as well. So, I think I probably need to leave 
my comments there. But, we certainly look forward to continuing 
the conversation.
    Senator Warner. Look forward to working with you.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator LeMieux.

             STATEMENT OF HON. GEORGE S. LeMIEUX, 
                   U.S. SENATOR FROM FLORIDA

    Senator LeMieux. Thank you, Mr. Chairman, and thank you for 
holding this meeting today and focusing on this important 
issue.
    Administrator, I want to follow up on something that 
Senator Warner just mentioned, this death valley issue, where 
entrepreneurs--you have scientists at the bench coming up with 
a good idea, but the venture capitalists want to see a 
prototype, and that middle section there, where good ideas go 
to die. We need funding for those matters. I just had, 
recently, some folks in my office affiliated with the life 
sciences industry--which I'll also throw a question to you 
about in a minute--and University of Florida, which does very 
good at tech transfer in Florida--and they tell us that, ``If 
we could just get some more funding in that middle area, that 
we could bring so many more inventions and so many more jobs to 
our State.'' And I wonder if the administration has a theory 
about that. Is that a ripe area for us to be focusing on?
    Mr. Fernandez. Yes, absolutely. You know, within the EDA, 
we don't directly engage in direct investment in private 
companies. We've supported revolving loan funds that have the 
potential to serve that purpose. There are certainly other 
parts of the Federal Government that are focused on this very 
clearly. I mean, the SBA has had a number of discussions about 
how to accelerate access to capital. Our Secretary of Commerce 
has, you know, launched his Office of Innovation and 
Entrepreneurship. These are all very front-burner issues for 
the administration, although it's outside the focus of the EDA.
    Senator LeMieux. Right. I am following up on your thread of 
eliminating silos and having everyone work together. I hope 
that that's something that you can bring back, because it is a 
frustration. We--folks are having a frustration with the SBA. 
I'm not casting aspersion as to which administration, but it 
just doesn't seem like it's working as quickly as it could 
have. And to the extent that you can bring that message back, I 
would appreciate it.
    Mr. Fernandez. Will do.
    Senator LeMieux. I also want to speak to you--Senator 
Nelson spoke a lot about the space industry and concerns 
there--I want to talk to you about the life sciences industry 
in Florida, and research parks. We are very fortunate that 
Florida is becoming an emergent life science power, a 
bioscience power. But, the challenge that we have--and this 
goes to your idea of a regional strategy, and maybe you could 
just give us some advice for Florida--is that these life 
science centers are spread out all through--across the state. 
And I've talked to venture capitalists--it's something I 
focused on even before my time in the Senate--and they're 
challenged, in Florida. They're challenged by trying to get 
around the state. We're a big state. We're geographically 
disparate. It's hard to get from one place to the other. We've 
got University of South Florida doing life science, we have 
University of Florida, we have Burnham in Orlando, we have 
Torrey Pines, we have Scripps, Max Planck, down in Palm Beach 
County, and the University of Miami. These are tough places to 
try to find your way around, as opposed to other places in the 
country, where you can do some one-stop shopping.
    What advice do you have for emerging industries in 
different states, trying to focus on particular areas of the 
market, about how they can work together to establish these 
clusters? Because I think our challenge down in Florida is that 
if you put all of these locations together, we'd be a super 
powerhouse. It'd be a life sciences Silicon Valley. But the 
fact that they're disparate makes it challenging.
    Mr. Fernandez. Yes, and I think--you know, part of that is 
developing this--if you will, a public-private partnership that 
serves as an umbrella organization that facilitates the 
cooperation and integration as strategy among those various 
regions or parts of your state. You know, we provide, and can 
provide, a lot of the technical assistance to facilitate those 
conversations. That's what we're seeing work elsewhere. And 
there's no magic bullet here. But, if you can get all the right 
people at the table to start addressing those issues and 
looking at how they can work in a collaborative way, they can 
identify who's doing what and where they can work together and 
not compete against each other in certain ways, I think you 
make tremendous progress.
    I mean, not all--you know, there's an opportunity to do 
some of these things virtually, as well, as we've seen with 
some other examples--the folks who are up in Cleveland, with 
JumpStart, very successful organization that's really designed 
to bring together venture capital as well as the innovators, to 
accelerate job creation. They've done a phenomenal job of 
bridging geography and using, you know, some virtual 
mechanisms, as well.
    But, I think, at the end of the day, the most important 
thing is to get people together and start building those 
strategies among the various stakeholders.
    Senator LeMieux. I appreciate your answers.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Udall.

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you, Chairman Pryor.
    And let me, at the beginning, just ask to put my statement 
in the record, and then get directly to----
    Senator Pryor. Without objection, thank you.
    Senator Udall.--questions--questioning, here.
    [The prepared statement of Senator Udall follows:]

   Prepared Statement of Hon. Tom Udall, U.S. Senator from New Mexico
    I want to thank Chairman Pryor for holding this hearing today and 
for his leadership in promoting innovation and job growth through 
stronger science parks.
    Senator Pryor's bill to promote science parks, the ``Building a 
Stronger America Act,'' would help research parks across America by 
providing grants and loan guarantees. These are appropriate investments 
to spur innovation and promote technology transfer.
    New Mexico is home to five science parks that employ more than 
4,200 people. I am proud that Sandia Science and Technology Park, 
located in Albuquerque, was recognized by the Association of University 
Research Parks (AURP) as the Nation's ``Outstanding Research Park of 
the Year'' in 2008.
    Sandia Science and Technology Park helps private firms 
commercialize technology developed at nearby Sandia National Lab. This 
science park helps almost 30 firms that employ over 2100 workers at the 
science park.
    In addition, the Sandia science park has indirectly created over 
5,000 jobs. These are very good jobs, too. The average wage at this 
science park is about $70,000 a year, which is almost twice the average 
wage for the surrounding region.
    This is just one example of how research parks in New Mexico and 
across the country help create good jobs and fuel American economic 
growth.
    However, there are many challenges to building successful 
``innovation clusters'' or regional hubs for high technology or other 
strategic sectors. Not every science park has been as successful as 
those hubs at Stanford in Silicon Valley or the Research Triangle in 
North Carolina. America also faces stiff competition from other 
countries that are eager to create innovation clusters of their own.
    So, I look forward to hearing from Assistant Secretary John 
Fernandez and all our witnesses today about what policies will best 
assist science parks and spur economic growth in all areas of the 
country.

    Senator Udall. And thank you for holding this hearing. A 
very important subject, science parks, and I'm glad you've 
focused in on this. And I also think, Mr. Chairman, you have a 
very good bill--S. 583, Building a Stronger America Act--and 
I'd like to be included as a co-sponsor on your bill, because I 
think----
    Senator Pryor. OK. We'll take care of that.
    Senator Udall.--it's a fine piece of work.
    Senator Pryor. Thank you.
    Senator Udall. The--your testimony, Assistant Secretary 
Fernandez, on science parks, talked about the Sandia Science 
and Technology Park. And you're probably aware, they just 
received an outstanding award, called the ``Outstanding 
Research Park of the Year,'' which I'm very proud of. Sandia is 
in Albuquerque, New Mexico. And it's one of these quality 
institutions that's always out there on the cutting edge.
    And I'm wondering--you know, your testimony cites that the 
EDA has invested $3 million to support this leading science 
park, which, last year, this award was given to--and I'm 
wondering how that compares. You know, when we talk about 
Europeans and other countries investing, how much are they 
investing? What are the comparative numbers there, and what do 
they tell us?
    Mr. Fernandez. Well, you know, I can't tell you that. But, 
I know that there are several gentlemen, behind me, who are 
coming up here, who have some very detailed numbers on that, 
from what I would suspect.
    But, the interesting thing about what--at least in part 
what I'm hearing, is that while there's a very--I guess--I 
can't talk about the numbers, specifically, but I can talk 
about the policy framework. And relative to the United States, 
at least in the European community, I mean, you have, you know, 
Cabinet-level, regional policymakers. And they look at things 
in that kind of regional notion, which is a big difference from 
the way we are organized here. So, there's a focus that's 
different.
    In terms of the specific investments, again I'd have to get 
back to you on that, Senator. But, I suspect that one of the 
folks behind me has got that in their testimony.
    Senator Udall. OK. Well, the--and I'm sure they do. I--and 
the comparison, I think, is that China and Hong Kong and France 
and others--and we're going to probably hear from them--are 
investing a lot more. And I think that says a lot about where 
we should be heading.
    One of the important things that we try to do in New 
Mexico, and push Sandia National Laboratory in this area, is 
the area of technology transfer. So, you're taking research 
institutions and trying to--such as the national labs, and then 
trying to get that technology out in the community. And I'm 
wondering what else the EDA can do to promote science parks as 
incubators and engines for economic growth and job creation in 
regions across the country, and especially promoting technology 
transfer and commercialization.
    Mr. Fernandez. Well, again, Senator, I think we're--the 
role we try and play is to, at the front end, ensure that--
either through a process that we fund or just in recognition of 
processes that have already happened, ensure that there's a 
really well-grounded strategy in place to leverage the 
investment. And, as I had mentioned before, it's not a ``field 
of dreams'' kind of approach to economic development; you have 
to have the other complementary activities and investments in 
place so that those facilities really do produce the kind of 
job creation that you need.
    So, I mean, if the strategy's there, we can build on it. If 
it's not, we can help provide technical assistance to build a 
strategy. And then, where necessary, get in and actually invest 
specifically in the facility.
    I'll just make one other comment, if I could. And, you 
know, the--Senator Warner was talking about, sort of, the 
differences, in terms of how our economy is changing, and one 
of the big differences is that many of our large companies, you 
know, aren't building the massive R&D labs within their own 
facilities anymore. And they're relying heavily on small 
entrepreneurial scientists who are developing some of the base 
research and early commercialization activities. And then, as 
those products or those ideas move forward, they acquire and 
bring them into the fold for, you know, further development and 
distribution. In the context of that kind of business model, 
investing in science parks, investing in wetlabs, investing in 
incubators, graduation facilities, that's all very critical 
infrastructure for the 21st century economy. And that's why I 
think the science parks and other kind of work we're doing with 
incubators and graduation facilities is absolutely essential.
    Senator Udall. Thank you very much.
    Thank you, Mr. Chairman. I yield back.
    Senator Pryor. Thank you.
    Senator Klobuchar.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much. And thank you, 
Senator Pryor, for holding this important hearing. I know 
you've been long advocating for this important subject, and 
trying to get more research parks out there.
    As Chair of the Competitive Innovation and Export Promotion 
Subcommittee, I've traveled all around my State to try to 
figure out how can we increase jobs and, particularly, high-end 
jobs. And one of the things I've really settled upon is this 
export market, and with the weak dollar and the possibilities 
there. But, the only way we're going to get that export market 
going is not just to have the available resources so small and 
medium-sized businesses can access these, but it is also to 
have the products and the development and the things that we 
need to get there. And I come from a State that produced 
everything from the Post-it note to the pacemaker. So, we truly 
believe in science and research and technology, with 
Medtronic's pacemaker starting out in a garage and growing into 
a worldwide global company. And a lot of that was, you know, 
risks and taking the risk of doing research and putting the 
money into it. So, I want to thank you for this.
    I guess my question here, Mr. Fernandez, is, first of all, 
To what extent do you think that, when you look back--and we 
used to have those AT&T, General Electric, IBM labs, during the 
heyday of the beginnings of research in this country--to what 
extent can research parks or other regional tech collaborations 
pick up where those industrial labs left off?
    Mr. Fernandez. Well, as I mentioned, I think that's a very 
important part of the new, kind of, business model, is to 
provide those facilities, to invest in those facilities where 
there's some shared risk up front, and bring down the cost, in 
some cases, for entrepreneurs. You know, particularly with the 
wetlabs and some of those kinds of facilities, it's very 
difficult to go out and get financing, to--if you wanted to 
build those new ideas within your own, you know, facility, as 
an entrepreneur, it can be extremely difficult to get financing 
to do.
    Senator Klobuchar. Right. You know----
    Mr. Fernandez. And so----
    Senator Klobuchar.--so I heard some of my colleagues 
mention, obviously, other countries--China and Japan and what 
they've done. Do you think that they're doing better than we 
do, in terms of developing research capabilities? What can we 
learn from them? Are we falling behind?
    Mr. Fernandez. I think that, you know, America's position 
to continue to be a strong leader in innovation--we--you know, 
many of the investments that are made abroad are built on the 
models we created. And we've not lost the leadership, but it's 
threatened. And it's important that we ramp up our commitment 
and investment now, to maintain that leadership.
    Senator Klobuchar. A recent National Research Council 
Report found that soft infrastructure, the human capital that 
encourages networking and entrepreneurship, is often as 
important as physical facilities in ensuring success, 
especially in today's economy. How do we encourage and maintain 
those important relationships as we look at these research 
parks?
    Mr. Fernandez. I'm glad you raised that question, Senator, 
because that's often underappreciated, and that's clearly a 
place where EDA can play very effectively, in terms of 
investing in that soft infrastructure. And that's--you know, 
part of my job, I think, is to try and help broaden the 
definition of ``infrastructure,'' particularly infrastructure 
in the context of an innovation economy. And that soft 
infrastructure--you know, seeding those public-private 
partnerships, helping to build that structure in place that 
ensures effective collaboration and cooperation and 
networking--that's very important infrastructure. And in many 
cases, especially with the regional strategies, you start 
bridging across all kinds of various jurisdictional lines 
within a State, across State borders. It's very difficult to 
find folks willing to finance those kinds of soft 
infrastructure investments. And that's certainly an area where 
EDA can play a very important role. And that's why we're trying 
to organize our entire framework for sustained economic 
development around these regional strategies for innovation.
    Senator Klobuchar. Now, one last question. A Minnesota 
private developer is working to launch a biomedical-oriented 
research park outside of Rochester--obviously, the home of the 
Mayo Clinic--it's in Pine Island, Minnesota--with the goal of 
recruiting researchers from the University of Minnesota, as 
well as Mayo Clinic and other Minnesota biotech companies and 
medical device manufacturers. What role do you see private 
developers would have in the construction and promotion of 
research parks? In other words, if private developers build 
these parks, will they come?
    Mr. Fernandez. I guess, depending on--well, I--I guess it 
depends. You know, if they have a big enough balance sheet and 
they're going to seed research and VC-type activities to other 
companies, I think they would come. But, I think, again, any--
whether it's a publicly-funded research park or a private 
research park, if it's going to have sustained success, there 
needs to be a network of other kinds of stakeholders that are 
integrated into their strategy, from workforce, especially, to 
higher ed, to community colleges, the business community, the 
VC community, and others.
    So, I think a private research park definitely can be very 
successful, but I think it still has to have all those 
essential ingredients that bring the stakeholders from the 
region into play.
    Senator Klobuchar. Thank you very much.
    Senator Pryor. Thank you.
    I want--Secretary Fernandez, thank you for being here.
    Mr. Fernandez. Thank you.
    Senator Pryor. You've been great. I really appreciate your 
time and your willingness to be here and change your schedule 
for us. Thank you very, very much.
    I'm going to go ahead and introduce the second panel now. 
And what I thought I would do is go ahead and do the 
introductions of the individuals on the second panel, as we--as 
I do the introductions so that--I mean, as they take their 
seats, so that we can do both at once, and save everyone a 
little time here.
    Let me start by saying that I would very much appreciate 
everyone keeping their opening statements to 5 minutes, if 
possible. That helps speed things along.
    The first witness we have on the panel is going to be Dr. 
Charles Wessner. He's Director of the Program in Technology 
Innovation and Entrepreneurship at the National Research 
Council of the National Academies. He is recognized nationally 
and internationally for his expertise on innovation policy, 
including public-private partnerships, entrepreneurships, early 
stage financing for new firms, and the special needs and 
benefits of high-technology industry.
    Second, we have Mr. Brian Darmody. He is the Associate Vice 
President of Research and Economic Development at the 
University of Maryland and President of the Association of 
University Research Parks. He's the principal author of ``The 
Power of Place,'' a national policy document focused on 
technology-led economic development, and serves as co-principal 
investigator on the $3.5-million Proof of Concept Alliances, a 
Department of Defense-funded commercialization project.
    Next, we have Mr. Jonathan Sallet. He's the Managing 
Director of The Glover Park Group, but is testifying in his 
capacity as coauthor of ``The Geography of Innovation: The 
Federal Government and the Growth of Regional Innovation 
Clusters,'' published by Science Progress at the Center for 
American Progress. And as I understand it, he also used to be a 
big celebrity on the Brown campus radio station.
    Mr. Sallet. It's a long time ago.
    Senator Pryor. And last, but certainly not least, we have 
Dr. Anthony Townsend. He's a Research Director for the 
Institute of the Future. His work focuses on several 
interrelated topics: mobility and urbanization, innovation, 
science and technology parks, and economic development.
    So, I want to thank everyone for being here. And I would 
ask you to keep your opening statements to 5 minutes, if 
possible.
    Dr. Wessner, would you start for us? Thank you.

       STATEMENT OF CHARLES W. WESSNER, Ph.D., DIRECTOR,

         TECHNOLOGY, INNOVATION, AND ENTREPRENEURSHIP,

       BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY,

       NATIONAL RESEARCH COUNCIL, THE NATIONAL ACADEMIES

    Dr. Wessner. Thank you very much.
    Please let me know if the audio is not what you need.
    The--I thank you for the honor of being able to speak 
before you today. As mentioned, I direct a program on 
technology, innovation, and entrepreneurship.
    At the National Academies, we've recognized the importance 
of targeted government promotional policies for innovation 
around the world. And, consequently, we have been studying 
foreign innovation programs, and comparing them to U.S. 
programs.
    Only too often in this town, strangely enough, we talk 
about the global economy, and then we reason, in completely 
local, often inside-the-Beltway, terms. And I think it's 
important, as a last resort, to do what we would do with any 
good football team, and that is, look at what the opposition is 
doing. And that is, in essence, what we've been focused on in 
our program on comparative national innovation policies.
    One of the basic findings we have is that there is an 
enormous growth in locational competition. We have jobs, we 
have technologies, we have industries, and the rest of the 
world--our friends and competitors--are willing to take them 
from us. And if we don't work to avoid that, that is exactly 
what will happen.
    Countries as diverse as China, Singapore, France, and 
Mexico are undertaking very substantial national efforts to 
develop research parks of significant scale and significant 
scientific and innovative potential. One of the Senators, 
Senator Udall, just a few minutes ago, asked about the levels 
of investment, and was there more overseas. I think the short 
answer would be that where we invest millions, our colleagues 
are investing billions. We'll have to decide how that comes out 
in--over time.
    But, the--China, in particular, is a leading practitioner 
of research-park strategy for economic and regional 
development. They have made enormous investments in order to 
grow and become internationally competitive.
    If possible, I'd just like to bring to your attention--the 
scale there is really significant. On the green side, that's 
one park; that's 54 parks. We, on the other hand, have one park 
that approaches that size. So, I just assume that we're 50 
times smarter than our Chinese friends, or we're being out-
invested very substantially. The park, where you can barely see 
it, is the average size of most American parks.
    Now, that doesn't mean--I don't mean to imply that we 
should invest exactly the way our Chinese colleagues are 
investing. But, when you take, for example, the Zhong Guan Cun 
science park outside of Beijing, there are some 20,000 
enterprises, with nearly a million employees. The park has 
attracted almost 10,000 ``sea turtles.'' These are people who 
have worked in the United States or elsewhere in the world, who 
are first-quality researchers, administrators and managers.
    The contribution of parks, I think you understand. Whether 
it's Dr. Dan Mote, the President of the University of Maryland, 
who emphasizes the key role that it helps the university to 
reach beyond its walls and help develop the region, or 
President Barker of Clemson University, came to see us, as part 
of this conference that is captured in this volume here, where 
the Clemson University ICAR technology park has been 
instrumental in attracting--in helping to keep technologically 
advanced manufacturing in the United States.
    Interesting enough, the National Cancer Institute has been 
working on a park in Fredericksburg. We provided guidance, 
early on, for this very successful Sandia park. Also, for a 
park that hasn't been mentioned yet today, the NASA Ames park, 
where there were wide-scale predictions that that would never 
work. It has been a massive success.
    I'm always amused when people say that only losers place 
themselves in science parks. I'm not sure that Google and HP 
would be included in that category. They're both there.
    The U.S., in short, has led the way in park creation and 
generation of high-tech clusters. As is often the case, we have 
not followed up on that success. But, a message of hope that I 
would bring you is that, in the past when we got things wrong, 
we redoubled our efforts, as in the semiconductor industry, 
where we set up SEMATECH to emulate the effects of the koretsus 
in the 1980s. Others have imitated us since then, on a massive 
scale.
    And I want to stress that we don't need to do exactly what 
our competitors are doing, but we do need to recognize the 
scale, the focus, the commitment, and the massive investments 
that are being made. And the question is, What can we do? And 
I'd be happy to discuss more about that in the discussion.
    But, just in closing, I would like to commend this volume, 
which captures what much of the rest of the world is doing, and 
I would also like to extend a small thanks to my colleagues--
who is here today, Dr. Sujai Shivakumar, behind me, who also 
played an instrumental role in developing this volume.
    Thank you, sir.
    [The prepared statement of Dr. Wessner follows:]

Prepared Statement of Charles W. Wessner, Ph.D., Director, Technology, 
  Innovation, and Entrepreneurship, Board on Science, Technology, and 
   Economic Policy, National Research Council, The National Academies
    Good afternoon, Mr. Chairman and members of the Committee. My name 
is Charles Wessner. I direct the program on Technology, Innovation, and 
Entrepreneurship at the National Research Council's Board on Science, 
Technology, and Economic Policy. The Research Council is the operating 
arm of the National Academy of Sciences, National Academy of 
Engineering, and the Institute of Medicine of the National Academies, 
chartered by Congress in 1863 to advise the government on matters of 
science and technology.
    Recognizing the importance of targeted government promotional 
polices relative to innovation, the National Academies Board on 
Science, Technology, and Economic Policy is studying selected foreign 
innovation programs and comparing them with major U.S. programs. My 
statement today captures the insights and observations made by leading 
national and international experts during a high-level conference at 
the National Academies that focused on best practices among science and 
technology research parks around the world.
The Growth of Locational Competition
    There is an intense and growing competition among nations and 
regions of the world for economic activity that creates high-value jobs 
and improves living standards

   Research parks are seen increasingly as a means to create 
        dynamic clusters that accelerate economic growth and 
        international competitiveness.

   Today, countries as diverse as China, Singapore, France, and 
        Mexico are among those undertaking substantial national efforts 
        to develop research parks of significant scale and scientific 
        and innovative potential.

    China is a leading practitioner of the research parks strategy for 
economic and regional development.

   China's large science and technology industrial parks 
        symbolize that nation's strong determination to grow and become 
        internationally competitive through significant national and 
        regional investments in science-based economic development.

    Both the absolute number and scale of Chinese research parks are 
remarkable.

   China's 54 state-level science and technology industrial 
        parks are designed to help develop the industrial base for 
        advanced, high-growth industries in electronics and information 
        technology, new materials, renewable energy, and bio-medicine.

   The average major science park in China is over 10 million 
        acres. By comparison, the average American research park is 358 
        thousand acres. Research Triangle Park, one of our largest, is 
        7 million acres in size.
        
        
    Figure 1: Research Parks in Comparative Perspective--an Issue of 
Scale \1\
---------------------------------------------------------------------------
    \1\ ``Average North American Research Park'' data are from 
``Characteristics and Trends in North American Research Parks: 21st 
Century Directions,'' commissioned by AURP and prepared by Battelle, 
October 2007; ``Average IASP Member Park'' data are from the 
International Association of Science Parks annual survey, published in 
the 2005-2006 International Association of Science Parks directory.

    The growth of Zhang Jiang High Tech Park (ZHT) near Shanghai is 
---------------------------------------------------------------------------
illustrative.

   Beginning almost from a clean slate, Chinese authorities 
        encouraged more than 30 research institutions to team up with 
        R&D centers of multinationals to anchor the park site. Some 200 
        small and medium sized Chinese high-tech companies have joined 
        these large research centers.

   Outside the park, the Shanghai Jiao Tang University and 
        Fudan University contribute to the park's 8,600 strong 
        workforce of scientists and researchers

   The park also benefits from national polices to attract 
        Chinese overseas scientists back home with low rent, tax 
        breaks, and assistance with living needs. There were over 250 
        such ``sea turtles'' in 2004 alone.

   The Chinese government is also a major financial supporter 
        for biotechnology companies in ZHT Tech Park. This includes:

     Grants from the National Technology Innovation Fund for 
            SMEs.

     The establishment of the Shanghai Pudong New Area Venture 
            Fund to attract additional venture capital. In 2006, this 
            amounted to more than $2.5 billion in venture funding for 
            the ZHT Tech Park.

    The Zhong Guan Cun Science Park in Beijing is another example of 
the scale of Chinese efforts.

   The park hosts over 20,000 enterprises and 950,000 
        employees, receiving total income of 850 billion Yuan (about 
        US$ 124 billion). More than 800 enterprises among these each 
        earn $15 million or more in revenue.

   The park has attracted almost 10,000 ``sea turtles,'' who 
        have set up 4,200 companies in Zhong-guan-cun Science Park.

    To the extent that they are effective in achieving their goals, 
these large-scale, well-funded research parks have the potential to 
enhance China's capabilities in leading technological sectors
The Contribution of Research Parks
    Research parks are widely seen, both in the United States and 
abroad, as an effective pubic-private partnership tool to increase the 
return on a nation's investment in research and development.

   According to Dr. Dan Mote, President of the University of 
        Maryland, research parks can play a key role in helping the 
        university reach beyond its walls and help develop regional 
        innovation clusters.

   Similarly, President Barker of Clemson University sees 
        research parks as playing a key role in promoting university-
        industry collaborations. He cites the Clemson University-
        International Center for Automotive Research (CU-ICAR) as a 
        positive example of how such collaborations can help support 
        technologically advanced manufacturing in the United States.

   Interestingly, leaders of national laboratories, such as 
        Sandia, NASA-Ames and the National Cancer Institute, have all 
        found that research parks are an important tool for advancing 
        their missions by building and maintaining ties to the private 
        sector, generating greater returns on existing Federal 
        facilities and capabilities, and helping to grow the local 
        economy with well-paid jobs.

    By advancing the research and commercialization missions of 
universities and national laboratories, research parks often serve as 
catalysts for the development of innovative clusters.

   The co-location of creative activity within the concentrated 
        geographical area of a research park can help transfer of new 
        ideas from universities and national laboratories to the 
        marketplace.
Research Parks in the United States
    The United States has led the way in park creation and the 
generation of high-tech clusters.

   In the United States, innovative clusters and parks have 
        developed as a result of government action and private 
        initiatives, and in some cases around government-funded 
        laboratories.

   One example is the high-technology industries that emerged 
        and grew around the government laboratories and major 
        universities in the Boston area.

   In the case of Silicon Valley, multiple private industries 
        interacting with a major university, and irrigated with 
        substantial and sustained Federal funding, created powerful 
        developmental synergies.

   A third approach to the development of innovation clusters 
        is through the deliberate creation of research parks, such as 
        North Carolina's Research Triangle Park, begun nearly sixty 
        years ago, or the Sandia Research Park created in 1999.

    Despite our early leadership, the United States is not making 
comparable efforts, nor are Federal programs supporting regional and 
state efforts to the same degree.

   Investments by the world's leading nations in research parks 
        reflect an appreciation of their capacity to spur knowledge-
        based growth and a national commitment to enhance technological 
        competitiveness through innovation.

   While research parks such as those at NASA Ames and Sandia 
        have recorded significant progress, and new Federal initiatives 
        such as that of the National Cancer Institute are underway, the 
        potential of research parks appears to be less appreciated by 
        policymakers and the public in the United States.

    In the United States, support for research parks is principally 
undertaken by state and local governments with limited support by the 
Federal Government.

   Given the limited scale of these efforts, some believe that 
        the U.S. Government should pursue a more comprehensive strategy 
        to support the growth of research parks and the benefits of 
        economic growth and national competitiveness that they bring.

    Senator Pryor. Thank you.
    Mr. Darmody.

       STATEMENT OF BRIAN DARMODY, PRESIDENT, ASSOCIATION

        OF UNIVERSITY RESEARCH PARKS AND ASSOCIATE VICE

        PRESIDENT FOR RESEARCH AND ECONOMIC DEVELOPMENT,

                     UNIVERSITY OF MARYLAND

    Mr. Darmody. I'm Brian Darmody, President of the 
Association of University Research Parks, and Associate Vice 
President of Research and Economic Development at the 
University of Maryland. And thank you for inviting me to the 
Committee.
    AURP represents over 300 research parks and communities of 
innovation in the United States and the world, and works 
closely with other organizations representing technology, 
commercialization, seed, and angel investing, incubator 
development, and State economic development. And I think some 
of these topics have already been discussed in the questions by 
the Senators.
    Research parks account for over 750,000 jobs in North 
America, according to a recent study. This year, AURP held its 
annual conference in Vancouver, British Columbia, and I learned 
that, in 1927, Charles Lindberg wouldn't fly to Vancouver, 
because the airport was too small. Well, the Vancouver 
government immediately bought land and built a larger airport 
for the fledgling air industry, and that today serves as a 
major hub for international trade to the Pacific Rim and 
major--as a major job generator for British Columbia.
    We view--at AURP, we view research parks as the Nation's 
21st-century innovation infrastructure, just as airports and 
railroads did in earlier centuries. Innovation is the key to 
job creation, and support for innovation is an important global 
competitiveness issue for the United States.
    The United States invented the research park model at 
Stanford in 1951. But, as Dr. Wessner has pointed out, other 
countries have copied this model, building large research 
parks, and attracting U.S. corporate research and development. 
So, we no longer lead the world in research parks.
    And, just to bring this--this is a atlas of innovation 
from--and the United States section in here is about 10 
percent. I've clipped its pages. You can see how heavy this 
thing is. This is a worldwide atlas of innovation centers, and 
the United States comprises maybe 10 percent of that.
    The--but, also importantly, the United States also invented 
university technology transfer, with the 1980 Bayh-Dole Act, 
linking our best-in-the-world research university system with 
technology commercialization. But, we no longer lead in this, 
either, as research universities in the United Kingdom now 
outperform U.S. universities on a proportionate basis, in terms 
of technology commercialization.
    We recognize, at AURP, that the U.S. Government is facing 
severe budget constraints, but we have a five-point plan to 
help harness more innovation and help build our research parks. 
Here are our five points:
    Number one, we support Senator Pryor's bill on Building a 
Stronger America Act, to establish a loan guarantee program for 
research parks and park development.
    Two, taxes and financing of research facilities. We need to 
encourage development of privately financed facilities and 
support corporations to keep research and development in the 
U.S. Current IRS regulations on tax-exempt bonds need to be 
reformed to remove tests on technology licensing, to give 
greater flexibility to universities to negotiate with 
corporations on intellectual property. And in my testimony, I 
have the IRS regulation regarding limitations on tax-exempt 
bond and corporations.
    Three, the Federal lab system. There has been some 
discussion about NASA and other Federal labs. Twenty-five 
billion dollars is annually spent in research and development 
activity internally within Federal labs. We're suggesting that 
Congress create a new intermediary organization, modeled on 
best practices at States and at universities, such as the WARF 
Institute at Wisconsin, to more efficiently commercialize 
Federal intramural technology.
    When we--when the Congress wanted to help build--rebuild 
Pennsylvania Avenue, they set up the Pennsylvania Avenue 
Development Corporation. If we want to develop technology at 
Federal labs, we need to think about setting up an intermediary 
organization to take on that task.
    And we also need to work on programs to allow Federal 
researchers work more closely with the private sector. And I 
cite--we cite, in my testimony, an article I wrote regarding 
that.
    Fourth point, improving university technology 
commercialization. We have ``cash for clunkers,'' we need cash 
for commercialization. There are many ``valleys of death'' 
confronting university technology commercialization, but the 
first valley of death takes place when universities elect to 
take title to federally sponsor research under the Bayh-Dole 
Act. That's at the very earliest stages. Often, unless an 
additional development work is done--and Senator Martinez 
mentioned that--these potential technologies lie fallow.
    So, developing a program to provide flexibility and 
recognize the cost of technology commercialization, and to 
develop proof-of-concept evaluations in Federal overhead rates 
or as a direct charge to research grants and contracts, would 
improve the success rate of university-owned technology 
development. That's not an EDA issue, that's really an issue 
about funding research at our Federal labs that goes to 
colleges and universities. And OMB Circular A-21 is a 
reference; it's cited in my testimony.
    Finally, supporting science, technology, engineering and 
math--STEM programs--they traditionally focus on science and 
engineering skills. But, as has been mentioned, the key to 
employment growth in the U.S. is, we need to build careers and 
companies, not only jobs. Incubators and research parks are 
ideal places for new technology formation. Therefore, we want 
to suggest that, in the STEM idea, we also add the second `E', 
so these would be STEEM programs--move from STEM to STEEM--so 
that would be science, technology, engineering, 
entrepreneurship, and math. Because, that philosophy is really 
what is embedded in the idea of research parks and research 
clusters.
    The Obama Administration singled--signaled its strong 
willingness to work on innovation, entrepreneurship, and we 
support what the EDA and others within the Administration are 
considering. And we also support, very strongly, Senator 
Pryor's bill.
    I want to thank the Committee.
    [The prepared statement of Mr. Darmody follows:]

    Prepared Statement of Brian Darmody, President, Association of 
University Research Parks and Associate Vice President for Research and 
              Economic Development, University of Maryland
    I am Brian Darmody, President of the Association of University 
Research Parks (AURP), and Associate Vice President for Research and 
Economic Development at the University of Maryland.
    AURP represents over 300 research parks and communities of 
innovation in the U.S. and world, and works closely with other 
organizations representing technology commercialization, seed and angel 
investing, incubator development and state economic development 
policies. Research parks account for over 750,000 jobs in North 
America, according to a recent study.
    This year AURP held its annual conference in Vancouver, British 
Columbia. On his 1927 tour to celebrate his solo flight across the 
Atlantic, Charles Lindbergh wouldn't fly to Vancouver because the 
airport was too small. The Vancouver government immediately bought land 
and built a larger airport for the fledgli ng air industry, which today 
serves as a major hub for international trade to the Pacific Rim and 
major jobs generator for British Columbia.
    We view research parks as part of a nation's 21st century 
innovation infrastructure, just as airports and railroads did in 
earlier centuries, and high bandwidth Internet backbone serves today. 
Innovation is key to job creation, and support for innovation an 
important Federal mission.
    The United States invented the research park model at Stanford 
University in 1951. However, other countries copied this model, 
building large research parks with investments from national 
governments, and attracting U.S. corporate research and development 
facilities. The U.S. no longer leads the world in research parks; See 
Wainova Atlas of Innovation (2009), and National Research Council, 
Understanding Research, Science and Technology Parks: Global Best 
Practices (2009).
    The United States also invented university technology transfer with 
the 1980 Bayh-Dole Act, linking our ``best in the world'' research 
university system with technology commercialization. However, we no 
longer lead in university technology commercialization as research 
universities in the United Kingdom now outperform U.S. universities on 
a proportionate basis in terms of technology commercialization.
    AURP recognizes the U.S. Government is facing severe budget 
constraints, but we believe we can harness our existing research and 
development infrastructure to create new jobs, new opportunities, and 
new companies with administrative reforms and relatively modest Federal 
direct investments. See, Power of Place , A National Innovation 
Strategy AURP (2008).
    Here are our five points:

        1. Infrastructure for Innovation: Research Parks: We strongly 
        support Senator Pryor's Building A Stronger America Act to 
        establish a loan guarantee program to develop research parks, 
        and grant program for new park development.

        2. Tax-exempt financing of research facilities: We need to 
        encourage development of privately financed facilities and 
        support corporations to keep research and development in the 
        U.S., instead of at research parks in other countries. Current 
        IRS regulations on tax-exempt bonds should be reformed to 
        remove tests on technology licensing to give greater 
        flexibility to universities to negotiate with corporations on 
        intellectual property issues. See, IRS Rev. Pro. 97-14 
        regarding limitations on university technology licensing in 
        facilities financed with tax-exempt bonds.

        3. Federal Laboratory System: $25 billion annually in research 
        and development activity takes place internally in Federal 
        labs. Congress should: (i) create a new intermediary 
        organization, modeled on what universities (such as WARF at U. 
        of Wisconsin) and states (such as TEDCO in Maryland) use to 
        more efficiently commercialize Federal intramural technology; 
        (ii) develop programs to allow Federal researchers to work more 
        closely with private sector, and (iii) create more Federal 
        research parks. See Washington Business Journal, Unleashing 
        Federal R and D, B. Darmody, Oct 30-Nov. 5, 2009.

        4. Improving University Technology Commercialization: There are 
        many ``Valleys of Death'' confronting university technology 
        commercialization, but the first potential valley takes place 
        when universities elect to take title to federally sponsored 
        research under the Bayh-Dole Act. Often unless additional 
        development work is done, these potential technologies lie 
        fallow. Developing a program to provide flexibility and 
        recognize the cost of technology commercialization and the need 
        to develop `proof of concept' tests or evaluation of these 
        technologies in Federal overhead rates would improve success 
        rates of university-owned technology developed with Federal 
        funds and create more companies to fill our incubators and 
        research parks. See, OMB Circular A-21.

        5. Supporting Entrepreneurship: From STEM to STEEM: Science, 
        Technology, Engineering, and Math (STEM) programs traditionally 
        focus on science and engineering skills. The key to employment 
        growth in the U.S. needs to include building careers and new 
        companies, not only jobs. Incubators and research parks are 
        ideal places for new technology company formation. Therefore we 
        call for Entrepreneurship to be imbedded in STEM programs and 
        ideas, so the acronym would be STEEM: Science, Technology, 
        Engineering, Entrepreneurship and Math.

    The Obama Administration has signaled its strong willingness to 
work on innovation and entrepreneurship, such as by creating the Office 
of Innovation and Entrepreneurship. We look forward to working with the 
Administration and Congress to efficiently and effectively build 
Communities of Innovation in the U.S. in a comprehensive fashion and 
maintain U.S. technological competitiveness.
    I want to thank the Commerce Committee and Senator Pryor for 
inviting AURP to the Committee.

    Senator Pryor. Thank you.
    Mr. Sallet.

  STATEMENT OF JONATHAN SALLET, MANAGING DIRECTOR, THE GLOVER 
                           PARK GROUP

    Mr. Sallet. Mr. Chairman, members of the Committee, thank 
you very much for the chance to testify today and to apply some 
of the ideas that came out of our paper for the Center for 
American Progress to your legislation.
    You know, Mr. Chairman, if we were to look at an aerial 
view of an area with a science park, if we were up in an 
airplane, the landmass of a science park might be very small. 
It might not be a big part of the county or city in which it 
resides. But, the small mass of land is a very big idea. It's a 
big idea because the notion that's in your legislation is that 
there are areas that can act as innovation catalysts and 
therefore have economic effects, creating jobs much bigger than 
merely the area that they occupy. They do that because we 
understand how clusters work. And I commend you, Senator Pryor, 
for specifically saying, in your legislation, that the goal of 
the science parks is to promote the clustering of innovation.
    What we've learned about regional economic competitiveness 
over the last several decades is that the competitive 
advantages of a place, of a region, stand apart from the 
Nation, stand apart from the next area. They are unique, but 
that they have to be taken advantage of; that they are taken 
advantage of with real competition, but also, with very 
important collaboration; collaboration, particularly with 
universities, with local governments, with community colleges, 
and with nonprofits.
    This is something that we know. We know they help create 
jobs, they help spawn new businesses, and they help spur 
economic growth. And yet, as your bill recognizes, for far too 
long the Federal Government has administered economic 
development programs as if they didn't have to be connected to 
regional economic strategies. But, that doesn't make sense.
    The key point here is that leadership comes from the local 
people, the local businesses, but that there is an important 
role the Federal Government can play. It can help frame big 
national challenges that ought to be met, that would benefit 
the Nation as a whole. Clean energy is a good example. I know, 
recently in Arkansas, I think you were at the announcement of a 
new wind turbine factory that's being constructed. That will 
have a positive impact, not just for Arkansas, but for the 
Nation, as we go to renewable energy.
    The second thing the Federal Government can do is to help 
facilitate success at the local level, particularly through 
information exchanges between data that the Federal Government 
has, and the local areas need, as well as best practices from 
among different clusters.
    And the third thing it can do is, in an appropriate way, as 
your legislation suggests, is fund activities.
    Now, what you call for in the legislation is for 
cooperation within a cluster, particularly with institutions of 
higher learning, in order to promote technology transfer; and 
you would award these funds through a competitive process. 
Those are very important goals, because those are the lessons 
we've seen in the last two decades.
    You also emphasize the importance of ensuring that 
innovation comes to every part of America, including rural 
America. And that is also a lesson we've seen as innovative 
state programs have led to greater development of economic 
possibilities in rural areas of America that we might not think 
of, at first glance, when we think about innovation.
    That's why I believe that this is a very important piece of 
legislation, and one that I think can be put into the framework 
of a larger national strategy. The Administrator talked, in the 
first panel, quite rightly about having regional strategies. We 
need to do this at the Federal level. We need the kind of 
efforts that he is leading in EDA. We need to make sure all 
Federal programs are aligned with the strengths of their 
cluster. Export promotion, for example, ought to be promoting 
in an area the kind of exports that that area can best create.
    And third, there are a series of programs in the Federal 
Government, from the Department of Commerce to SBA, including 
programs like SBAIR, in the Department of Energy and Labor, in 
the Department of Agriculture, where the Secretary has talked 
about rural economic development, in the National Science 
Foundation, and the Department of Labor. These need to work 
together. The Federal Government needs to speak with a single 
voice to local leaders to make it as easy as possible to move 
forward.
    Senator, you were kind enough in your introduction to note 
that I was, at Brown, a college disc jockey, and one of the 
songs I used to play was the song called, ``Won't get Fooled 
Again.'' And, I think a lot about your legislation is that we 
won't be fooled again. We won't be fooled again into forgetting 
one lesson, that ``Made in America,'' as an economic strategy, 
means we have to apply those lessons in America. That's what 
your legislation would do, and I hope it's speedily enacted.
    Thank you.
    [The prepared statement of Mr. Sallet follows:]

 Prepared Statement of Jonathan Sallet,\1\ Co-Author, The Geography of 
     Innovation: The Federal Government and the Growth of Regional 
 Innovation Clusters, Published by Science Progress, a project of the 
                      Center for American Progress
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    \1\ Jonathan Sallet served as Assistant to the Secretary of the 
Department of Commerce and Director of the Office of Policy and 
Strategic Planning from 1993-96. He is employed by The Glover Park 
Group, a private consulting firm. This testimony reflects Mr. Sallet's 
personal views.
---------------------------------------------------------------------------
Summary
    I believe that the Federal Government can maximize the benefits of 
science and research parks, an integral part of sparking innovation and 
creating jobs in the U.S., by supporting regional innovation clusters 
to promote a comprehensive, long-term economic growth and development 
plans across regions in the United States.
    My recommendation is that regional innovation clusters should 
become the centerpiece of a reauthorized Economic Development 
Administration (EDA), empowering the agency to work with businesses, 
universities, community colleges, state and local governments and 
community leaders to foster regional competitiveness strategies. This 
will help boost job creation and business growth by spurring the 
creation and growth of successful regional ecosystems, striking exactly 
the right balance between Federal leadership and local responsibility 
and between the private and public sectors. Science parks and regional 
innovation clusters are two vital parts to a long-term solution--
science parks will drive the clusters forward while the regional 
innovation cluster will strengthen and support the local framework in 
which the park can thrive. This broader effort will be the most 
effective and sustainable.
Testimony
Introduction
    Chairman Rockefeller, Ranking Member Bailey Hutchison, and members 
of the Committee on Commerce, Science, and Transportation, thank you 
for the opportunity to testify today on innovation through 
collaboration and cooperation--particularly in the realm of regional 
and innovation ``clusters.''
    Innovation is central to economic prosperity--driving productivity, 
ensuring sustainable broad-based economic growth, creating quality jobs 
and shared prosperity, and increasing national competitiveness. 
Innovation will aid economic recovery by: creating new jobs in high-
tech and traditional sectors; creating higher returns to workers and 
increase living standards from better, more quality jobs; and making 
the economy more resilient and dynamic in the long-run, adapting to 
future challenges.
    With the current economic crisis and increasing unemployment 
throughout the nation, state budgets are tighter than ever, reducing 
education spending and R&D efforts, making this the best time to 
consider how the Federal Government can work with state and local 
entities, business, universities, community colleges and communities to 
restore long-term economic health to our Nation.
    Your focus today on the manner in which research, science, and 
technology parks can serve as a model for economic growth is welcome--
and important. For too long, the Federal Government has administered 
programs for economic growth disconnected from regional strategies for 
growth and development. That is an omission that, in this economy and 
in a very literal sense, we can no longer afford.
    In September, Science Progress, of the Center for American 
Progress, released a paper that I coauthored with Ed Paisley and Justin 
Masterman.\2\ In that paper, we set forth the reasons why, we believe, 
the Federal Government should take an active role in supporting 
regional economic strategies. I should emphasize that when we talk 
about ``regional innovation clusters'', we do not mean that regional 
growth is necessarily focused on high-technology businesses. Rather, we 
mean that local leadership has the resources necessary to promote 
innovative strategies for economic growth--from any sector, from any 
kind of business, in any kind of region--urban, rural or suburban.
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    \2\ http://www.scienceprogress.org/wp-content/uploads/2009/09/
eda_paper.pdf.
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    Science Progress, led by Ed Paisley, is now engaged in a new 
project to extend those lessons to the Pittsburgh region. That 
geography includes Western Pennsylvania, Northern West Virginia and 
Eastern Ohio. The specific goal of our work is to identify the manner 
in which Federal efforts currently contribute to economic growth in 
that region, and to recommend specific ways in which the Federal 
Government could do an even better job in the future.
    We aim to advance the understanding of two important questions:

   What is the current impact of Federal efforts on regional 
        growth and job creation, and

   How could the Federal Government be more effective in 
        supporting local leadership?

    In this manner, the study of the Pittsburgh region will, we hope, 
yield national lessons of general application.
    The Pittsburgh region offers specific advantages to our work. It 
crosses state lines, which is characteristic of America's regional 
economies but which poses obvious challenges in terms of state 
coordination and even the deployment of Federal efforts. It mixes the 
old and the new, from hard-hit automobile manufacturing in Ohio, to 
web-based start-ups in Pittsburgh and, of course, the National Energy 
Technology Laboratory in Morgantown, West Virginia. It spans urban and 
rural economies. It includes institutions, including foundations, 
universities and nongovernmental organizations that have carefully 
considered and implemented strategies of growth. Finally, and like the 
rest of America, the people and businesses of the Pittsburgh region are 
searching for better, more effective, means of creating jobs and 
growing their economy.
    In this work, we are building on much that is already known about 
the impact of regional economic units.
The Geography of Innovation
    We know that ``clusters''--geographically concentrated areas of 
specialization--form the foundation of regional, and the basis for 
national, competitiveness.\3\ Clusters are geographic concentrations of 
firms, suppliers, support services, specialized infrastructure, 
producers of related products, and specialized institutions (such as 
training programs) whose expertise reinforces one another's. So, for 
example, a successful cluster can connect firms with academic 
institutions, research labs, and other nonprofit organizations in order 
to create the kind of virtuous cycle of competitiveness that creates 
jobs, stimulates business formation, and improves productivity. 
Examples of U.S. clusters include metal manufacturing in the upper 
Midwest, entertainment in Los Angeles, information technology in 
Silicon Valley, and furniture in Mississippi. Clusters are common to 
every advanced economy.
---------------------------------------------------------------------------
    \3\ Among Professor Porter's extensive writings on the importance 
and nature of ``clusters'' is a recent paper summarizing both his 
academic work and his public-policy recommendations. ``Clusters and 
Economic Policy: Aligning Public Policy with the New Economics of 
Competition'' (Revised December 17, 2008). His analysis is based on 
extensive research into the sources of competitive advantage, which he 
first discussed in The Competitive Advantage of Nations, (New York: 
Free Press, 1990) and explained in, for example, ``Clusters and the New 
Economics of Competition'' (Harvard Business Review, 1998).
---------------------------------------------------------------------------
    What are the kinds of advantages that are shared by the 
participants in clusters? They could be a set of workers who have honed 
particular skills, like building boats in Maine. Or community colleges 
that offer training to advanced manufacturing workers in places where 
advanced manufacturers have located. Or research centers that conduct 
basic research in biotechnology close to biotechnology firms. Anything, 
really, that creates what an economist would call a ``positive 
externality''--a benefit that is captured not just by a single firm, 
but that enriches the community as a whole. Positive externalities are 
nothing new--the externalities produced by K-12 education is the basis 
for our public school system--but what is new is this: The notion that 
regions can consciously focus on the creation of shared advantages 
within clusters to create jobs, help businesses be created and, of 
course, stimulate long-term economic growth.
    Regional clusters enhance collaboration and value-creation, drive 
productivity, and play a fundamental role in knowledge creation, 
innovation, the accumulation of skills, and the development of pools of 
employees with specialized skills. They effectively lower the cost of 
capital, increase accessibility to specialized labor, create positive 
learning effects and decrease the cost of finding talented workers. 
They create an ecosystem that is helpful to the creation of new firms 
in which specialized advantages reinforce each other to the benefit of 
firms, workers and communities. Their operating principles could be 
phrased as ``Innovation, Collaboration, Value Creation.''
    Scholarship from leading scholars \4\ has established the real 
advantages of ``clusters'' for a growing economy, including strong 
correlations between:
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    \4\ Important additional research on this topic includes Karen G. 
Mills, Elisabeth B. Reynolds and Andrew Reamer, ``Clusters and 
Competitiveness: A New Federal Role for Stimulating Regional 
Economies,'' (Washington, Brookings, 2008) and Robert Atkinson and 
Howard Wial, ``Boosting Productivity, Innovation, and Growth through a 
National Innovation Foundation,'' (Washington, Brookings, 2008).

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   Per-capita GDP and cluster concentration,

   Cluster strength and wage levels, and

   Cluster strength and higher wages.\5\
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    \5\ Mills, Reynolds and Reamer, ``Clusters and Competitiveness.''

    In other words, clusters are good homes for the high-growth, high-
wage companies that move quickly to take advantage of competitive 
opportunity and create jobs as a result. And that means, of course, 
that successful clusters are important to the creation and application 
of successful innovation policy. Innovation--the use of emerging and 
old information to create new forms of value--is absolutely critical to 
the future economic success of the United States. Indeed, in a 
globalized economy, our ability to be a smart economy is basically our 
ability to be growing economy. Innovation not only boosts the creation 
of value, but it also helps ensure that economic growth is 
sustainable--from the perspectives of both economic and environmental 
concerns. For example, increased advanced manufacturing correlates 
highly with increases in energy-efficient manufacturing--the more 
process technologies evolve, the more that they can do more with less. 
From this perspective, cluster policy is innovation policy.
    If clusters work on their own, what can be done to help them work 
even better? Specifically, what kinds of efforts can speed regional 
economic growth? In our paper, we identify four ``lessons'' that we 
believe are very important for policymakers to understand:

        First, Place Matters. It is important for regional economies to 
        emphasize what they can do best, capitalizing on existing 
        strengths or new strengths that spring naturally from existing 
        advantages. Solar power is a good strategy for New Mexico, 
        hydroelectric power is not. Existence of institutions of 
        knowledge-creation, availability of capital and the presence of 
        high-skill labor with programs to spur talent generation will 
        all be parts of a region's assessment of its competitive 
        strengths.

        Second, Networks Are Key. The economic theory of a cluster 
        recognizes the importance of both competition, which makes 
        businesses more successful and increases consumer welfare, and 
        cooperation, to create an environment of mutual advantage. 
        Universities and community colleges, for example, can add to 
        the store of knowledge and help educate workers in a manner 
        that advantages multiple, even competing, local businesses. But 
        that is best done with explicit networks of collaboration and 
        knowledge-sharing of the kind found, for example, connected to 
        the Albany nanotechnology cluster.

        Third, Practice Makes Perfect. As demonstrated by North 
        Carolina's Research Triangle and the Greater Phoenix cluster, 
        it can take a long time, even decades, to build a new cluster 
        from scratch. The observation re-emphasizes our belief that 
        short-term gains will come mainly from existing advantages that 
        have yet to be fully realized. For example, in our paper, we 
        describe an analysis of Tennessee's furniture cluster that both 
        identifies existing strengths, as in office furniture, but only 
        areas in which the region can be potentially competitive, such 
        as mattress manufacturing. Areas of potential strength are 
        likely to be areas that will result in quicker results.

        Fourth, Success Depends on Local Leadership. There is no 
        substitute for the ability of local businesses, governments, 
        non-profits, universities and colleges to all work together. 
        That has been demonstrated in areas and industries as diverse 
        as San Diego's CONNECT program, Toledo's photovoltaic cluster, 
        and Minneapolis's medical devices cluster. Toledo is a 
        particularly good example. University of Toledo (UT), 
        recognizing its strong engineering and manufacturing science 
        programs and the city's highly skilled workforce and economic 
        infrastructure, led a 20-year effort to create a new 
        photovoltaics and clean-energy cluster. UT has assembled a team 
        of world-class faculty in photovoltaics and has built 
        laboratories and support centers that have spun off dozens of 
        businesses and reinvigorated the city. In partnership, the 
        state of Ohio committed $18.6 million to UT in 2007 to spur the 
        continued development of the photovoltaics cluster, generate 
        new high-tech jobs, and to increase industry revenue. From this 
        university and government leadership, the Wright Center for 
        Photovoltaics Innovation and commercializiation is now an 
        internationally recognized photovoltaics research and 
        development center with infrastructure attractive to companies 
        incubating the future generations of photovoltaic technologies.
Federal Support for Regional Economic Strategies
    Against, this backdrop what can the Federal Government accomplish? 
And how?
    Let me begin with the specific proposal, S. 583, introduced by 
Senator Pryor to provide support for the development of science parks. 
The legislation begins quite specifically, and quite rightly, by 
emphasizing the creation of science parks ``to promote the clustering 
of innovation. . . .'' That is quite wise, and in complete accord with 
the experience of regional innovation that I have described above.
    In carrying out its goals, the legislation specifically calls for 
cooperation, including with institutions of higher learning, for the 
exchange of knowledge, through, for example, technology transfer and 
for the award of Federal funds through a competitive process.
    In other words, S.583 is an embodiment of the lessons we have 
learned for the stimulation of regional economic growth.
    Analysis of successful clusters has shown that they succeed with 
local leadership from industry, non-governmental organizations, 
including universities and community colleges, and the public sector. 
Regional leaders have the best grasp of their own competitive 
advantages and prospects and they are in the best position to execute 
the kind of collaborative, bottom-up strategies that enhance cluster 
success.
    There is, however, a problem--and one only exacerbated by our 
current economic crisis. Cluster initiatives are ``too few'' and they 
are ``thin and uneven in levels of geographic and industry coverage, 
level and consistency of effort, and organizational capacity.'' \6\ 
Moreover, traditional clusters are under terrible stress as state 
governments, under tight budget constraints, are cutting their own 
support for regional economic development.
---------------------------------------------------------------------------
    \6\ Mills, Reynolds and Reamer, ``Clusters and Competitiveness.''
---------------------------------------------------------------------------
    Now is the time for the Federal Government to play a critical role 
in supporting regional efforts by framing, facilitating and funding 
cluster strategies. By that I mean that the Federal Government can 
identify the critical national goals, like energy independence, that 
serve the national interests--an approach endorsed by Congress in the 
America Competes Act of 2007. The Federal Government can improve the 
efficiency of cluster strategies by improving the delivery of various 
forms of Federal expertise to the clusters that need them and by 
increasing the ability of clusters to learn from each other. And, of 
course, in difficult fiscal times for states, the Federal Government 
can provide additional resources that can smartly leverage existing 
local and private funds.
    Thus, in my judgment, S.583 should be supported by a broader 
effort. Rather, an emphasis on any particular means of regional 
economic growth, such as science parks or business incubators, should 
be incorporated into a broader Federal strategy that supports the full 
range of tools that can support regional economies.
    First, we need an explicit Federal focus on regional economic 
growth. The starting point should be the establishment of the 
President's regional innovation cluster initiative at the Economic 
Development Administration of the Department of Commerce.
    The President's FY2010 budget provides ``$50 million for regional 
planning and matching grants within the EDA to support the creation of 
regional innovation clusters . . . and $50 million to create a 
nationwide network of public-private business incubators to encourage 
entrepreneurial activity in economically distressed areas.'' \7\
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    \7\ Office of Management and Budget, ``A New Era of 
Responsibility.''
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    My recommendation is that this proposal--the conscious Federal 
adoption for the very first time of a plan to work with state and local 
governments to foster regional competitiveness strategies--becomes the 
centerpiece of a re-authorized EDA. In my view, it strikes exactly the 
right balance between Federal leadership and local responsibility and 
between the private and public sectors.
    For example, the EDA could ask regions, to compete for Federal 
matching funds by offering proposals created in collaboration with 
their companies, universities, research facilities and nonprofits. 
Funding would be provided for implementation of the best strategies. 
The EDA should establish a set of criteria that allow the plans with 
the biggest impact and best prospects for success to be funded quickly. 
Such criteria could include identifying the proposals that:

   Move fast, with significant impact,

   Use public-private partnerships and other forms of regional 
        collaboration,

   Have a proven track record,

   Integrate distressed areas into larger regional economies, 
        and

   Further the goals of national ``challenges'' in areas such 
        as energy, healthcare, manufacturing and life sciences.

    The Federal program should be flexible, of course, in order to 
respond to the best ideas that come from the regions. The cluster 
initiative could provide Federal matching funds for targeted, high-
leveraged activities, such as university research consortia, business 
incubators, for community-college training programs and technology-
transfer efforts focused on small and medium-sized firms.
    At the same time, small planning grants would be made available for 
those regions that have yet to formulate a cluster strategy. An 
advantage of the cluster approach, especially as we move into an era of 
budget-deficit reduction, is that the Federal funding need not be 
enormous--indeed, the President's proposal of $50 million for regional 
innovation cluster and another $50 million for associated business 
incubators will get these efforts off to a strong start.
    The establishment of this EDA effort would not, of course, be 
enough. That is why the second key ingredient for effective Federal 
involvement is this: Agencies that already support regional economies 
should tie their efforts specifically to locally-led regional economic 
strategies.
    Right now, the Federal Government spends roughly $150 billion 
annually on R&D. But, by our calculation, none of that money goes 
specifically to support regional economic strategies and only about 
$650 million goes to efforts that indirectly support regional 
innovation clusters. Nonetheless, important current efforts could be 
better harnessed to this goal, including additional programs from the 
Department of Commerce, the Small Business Administration (including 
the SBIR and STTR programs), the Department of Energy, the Department 
of Labor, the National Science Foundation and the Department of 
Agriculture. That should be encouraged.
    Third, Federal efforts can work better together and the Federal 
Government can work better in support of local leadership.
    The implications are larger, of course, than the EDA alone. One of 
the advantages of the regional cluster initiative is that it provides 
the Executive Branch as a whole with a good way of ensuring that micro-
economic initiatives are effective and efficient. I would like to see 
the EDA become an evangelist for high-performance government, tailoring 
Federal efforts to best meet regional needs, fostering collaboration 
among Federal programs that are too often operated in ``stovepipe'' 
isolation, and ensuring that Federal funds are well-spent.
    For example, the Department of Commerce is the agency that, more 
than any other, focuses on economic competitiveness. Its programs range 
from assisting exporters to working with minority businesses and the 
telecommunications sector, to protecting our seas and coastlines, to 
gathering data on our nation, to working with small and medium-sized 
manufacturers, to creating industry standards, which are a critical 
infrastructure innovation. The National Institute of Standards and 
Technology, for example, has a highly successful manufacturing 
extension program and has worked with regional economic clusters 
through its Partnerships for Regional Innovation. As the EDA implements 
its ``clusters'' initiative, the Department more generally can align 
its efforts with the specific needs of regional economies. In this way, 
for example, the creation of business incubators, as proposed in the 
President's FY2010 budget, should be constructed to dovetail 
immediately with regional clusters.
    The Federal Government also offers many forms of economic 
assistance to boost business creation and help communities grow 
economies that could be better aligned with regional competitiveness 
strategies. Federal efforts in the Department of Labor, the National 
Science Foundation, the Department of Energy and the Small Business 
Administration could all focus on clusters.
    In this way, the Federal emphasis on clusters can act as the 
``mortar'' to bind together the ``bricks'' of economic recovery, 
providing, in essence, a multiplier effect that makes thriving 
initiatives even more successful.
    In sum, a huge opportunity beckons when the Nation needs economic 
renewal the most. Science and innovation are critical to the overall 
renewal of the American economy and to the restoration of the American 
job market. We know that clusters represent an increasingly important 
economic unit, but unfortunately it is one that has been virtually 
ignored in policymaking at the Federal level in the United States. By 
including regional competitiveness as a key mandate, a cluster approach 
can allow Federal policies to be implemented more effectively by better 
connecting them to regional leadership. In addition, Federal policy 
based on cluster principles will reinforce economic specialization 
across states and regions, increasing productivity in the economy as a 
whole. Ultimately, we can create the launching pads for what America 
needs the most right now--jobs and long-term, sustainable economic 
growth.
Conclusion
    Some of our strongest international competitors, including Japan, 
South Korea, and many European countries, have invested in significant 
national cluster initiatives, directing great amounts of money and 
resources toward making innovation clusters the main focus of their 
economic and innovation policies. The irony is obvious--foreign 
innovation policymakers have come to the United States to study our 
successes and consult with our experts and yet the United States has 
conspicuously failed to embrace cluster initiatives as an explicit part 
of its own innovation policy.
    France, for example, has a 1.5 billion program called 
Poles de Competitivite that is focused entirely on creating, 
supporting, and encouraging the growth of innovation clusters 
throughout the country. In fact, 26 of 31 European Union countries have 
cluster initiative programs in place. Japan has made similarly large 
investments in two cluster programs called the Knowledge Cluster 
Initiative and the Industrial Cluster Program, while South Korea has 
made innovation clusters the central organizing concept of its 
industrial policy. Numerous other countries in Europe and Asia, 
especially China, boast nation programs dedicated explicitly to 
promoting the development of specific regional innovation clusters.
    The lesson is clear. Economic strategies that have been ``Made in 
America'' must be ``Applied in America'' by the Federal Government and 
local leaders in order to employ more Americans and restore long-term 
economic growth. S.583 would be an important step toward implementing 
the lessons of clusters by promoting regional recovery and growth.

    Senator Pryor. Thank you.
    Dr. Townsend.

 STATEMENT OF ANTHONY TOWNSEND, RESEARCH DIRECTOR, TECHNOLOGY, 
           HORIZONS PROGRAM, INSTITUTE FOR THE FUTURE

    Dr. Townsend. Thank you, Mr. Chairman, and members of the 
Committee, for the opportunity to share my expertise.
    I agree that America's research parks are essential 
infrastructure for the Nation's future competitiveness. 
Currently, I work as a technology forecaster for the Institute 
for the Future, which is an independent think tank established 
in Silicon Valley in 1968.
    I've spent the last 3 years working with research park 
managers and developers in the U.S., in Europe, Asia, and the 
Middle East. Today, I want to discuss this research park model, 
some of its advantages and disadvantages, but, most 
importantly, its future prospects.
    It's an appropriate time to consider the research park 
model, because this year is the 50th anniversary of North 
Carolina's Research Triangle Park. This is one of the largest 
and oldest and most successful parks in the Nation--in the 
world. But, like many parks today, RTP is also facing some 
potential threats to its success in the future. Put simply, the 
business model that was developed in 1959 isn't going to work 
for parks created in 2009. And even established parks are going 
to need to evolve, as well.
    Three years ago, when RTP looked to the future, it 
established a partnership with our organization, to develop a 
broad and long-range forecast of the future of research parks, 
which you have attached as written testimony. We looked 20 
years out, we engaged over 50 experts from over a dozen 
nations. We detailed 14 global trends that will shape the 
future for research parks, and we developed three scenarios to 
explore how parks might navigate a volatile and uncertain 
future.
    In the best-case scenario we developed, the research park 
model gets an upgrade, if you will, in part by building 
stronger ties to universities and new online science 
communities.
    In the worst-case scenario, the traditional business model, 
which depends very heavily upon big companies as anchor 
tenants, simply disappears as companies cut back on R&D and 
then virtualize or offshore whatever is left.
    The third scenario, a more decentralized research park 
model emerges and starts to challenge the traditional model. 
And this model uses digital networks to connect together lots 
of small spaces into clusters that function like today's big 
research parks, and we call those ``research clouds.'' And 
these might form around universities and actually directly 
compete with research parks, particularly for smaller 
companies.
    But, the most important result from these scenarios is that 
none of them forecast a world where lots of new research parks 
succeed, based on this traditional real-estate-driven model 
that we've known for the last 50 years.
    And so, I know that you're concerned about creating jobs 
quickly, as well as creating this long-term capacity for 
innovation and growth that we've discussed this afternoon. But, 
I think, rather than solely focusing on encouraging development 
of new research parks, we should also consider focusing 
investment on reinventing the parks that we already have. And 
there ares three key priorities to consider there:
    First, you can create jobs immediately by investing in 
upgrading the hardware of our research parks. It's a great time 
to convert vacant buildings from single-tenant to multi-tenant, 
to support startups and younger companies. You can retrofit 
buildings with green technologies, create green-collar jobs, 
turn our research parks into living labs for a low-carbon 
economy. And you can fund shared infrastructure, like large 
scientific instruments, that create unique value to research 
parks.
    Second, you can invest in upgrading research park software. 
Research parks need to evolve from a model based on managing 
dirt--or land--to managing activities that support innovation.
    The best chance we have for rapid job creation, over the 
next year or two, is tapping this goundswell of 
entrepreneurship happening right now in the country. But, parks 
need to beef up their capacity to engage and nurture small 
companies, which is very different than attracting and 
retaining large ones. Grants that support expanded missions for 
research park managers, could greatly enhance their 
effectiveness as economic developers.
    And finally, as we've heard all afternoon, we should 
recognize that research parks are part of knowledge ecosystems; 
networks of people, organizations, and ideas that operate at a 
regional scale. We can't just build parks in isolation and 
expect them to succeed. One reason why Research Triangle has 
been so successful is that it has had a strong regional 
partnership at its core from the very beginning. CEO Rick 
Weddle, of the Research Triangle Foundation, calls this the 
``grand vision.'' And it was that vision, that was handed down 
from generation to generation, that allowed the project to stay 
on track during transitions in political leadership.
    Research park funding, such as was proposed in S. 583, 
should be tied to regional economic programs, such as what 
we've heard about from EDA as well as some other bills that are 
in the Senate right now.
    Thank you, Mr. Chairman, members of the Committee, again, 
for this opportunity. I welcome any questions, and comments you 
may have.
    [The prepared statement of Dr. Townsend follows:]

                      Future Knowledge Ecosystems
The Next Twenty Years of Technology-Led Economic Development
Anthony Townsend, Institute for the Future; Alex Soojung-Kim Pang, 
        Institute for the Future; Rick Weddle, Research Triangle 
        Foundation
IFTF Report Number SR-1236 \1\
---------------------------------------------------------------------------
    \1\ This work is licensed under the Creative Commons Attribution-
Noncommercial-Share Alike 3.0 United States License. To view a copy of 
this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/
us/ or send a letter to Creative Commons, 171 Second Street, Suite 300, 
San Francisco, California, 94105, USA.
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Abstract
    The model of self-contained research parks and incubators that 
dominated the last fifty years of technology-based economic development 
is being challenged by deep shifts in the global economy, science and 
technology, and models of innovation . This paper describes fourteen 
emerging trends that will set the context for technology-based economic 
development in the coming decades. These trends are used to develop 
three scenarios for the future of technology-based economic development 
over the next two decades. In the first scenario, an incremental 
evolution of the research parks model takes place in a world of rapid, 
but steady and predictable change. In the second scenario, entirely new 
networks of R&D space emerge in a ``research cloud'' that challenges 
current models to adapt, sometimes dramatically. The third scenario, 
the research park models is in rapid decline as R&D becomes highly 
virtualized and parks' legacy cost structure makes them obsolete for 
young firms. We conclude by highlighting the strategic implications of 
these scenarios for existing and future parks and economic development.
Forecasting Workshop Participants
    Forecasting and scenario development workshops were held during 
2008-9. Organized by Research Triangle Foundation and facilitated by 
the Institute for the Future, these workshops were designed to engage a 
broad group of experts from different countries and different 
professions in brainstorming important trends and scenario elements. 
The results of these workshops are reflected throughout this report. 
The authors wish to thank Tina Valdecanas of the Research Triangle 
Foundation for organizing these workshops.
  
IASP 2008
Johannesburg, South
 AfricaSue Bell
La Trobe University R&D
 ParkJoan Bellavista
Parc Cientific de
 BarcelonaNeville Comins
The Innovation HubJeff Finkle
IEDCEsteban Cassin
Fundacion Parque
 Tecnologico
Misiones ArgentinaHerbert Chen
Tsinghua University
 Science ParkDouwe Dijk
Zernike Science ParkMauricio Guedes
Rio de Janeiro
 Technology ParkDennis Kekas
NCSU Centennial CampusLex de Lange
Zernike Science ParkMalcolm Parry
The Surrey Research
 ParkJosep Miguel Pique
22@BarcelonaLuis Sanz
Paulo C. De Miranda
IASP
                         AURP 2008
Rick Weddle              St. Petersburg,
Research Triangle Park    Florida, USA                                                         IEDC 2009         

Online Expert Panel
    To complement our face-to-face workshops, the Institute for the 
Future convened an online panel of experts in March 2009 to map trends 
in areas that will shape the future of technology-led economic 
development and research parks: real estate, architecture, economic 
geography, public policy, entrepreneurship, history of science, and 
incubation.

    Thomas Campanella
    University of North Carolina

    Kamau Gachigi
    University of Nairobi

    Michael Joroff
    MIT

    Ilkka Kakko
    Karostech Ltd.

    Steve King
    Emergent Research

    Mitchell Moss
    New York University

    Fergus Murphy
    SRI International

    Margaret O'Mara
    University of Washington

    Hugh O'Neill
    Appleseed, Inc.

    Rachel Park
    CUH2A

    Matthew Zook
    University of Kentucky
Part I--Where We Are Today
Introduction: A Postcard from 2030
    Fast forward to 2030, and imagine a late afternoon in Soweto, once 
a stronghold of resistance to apartheid, now a hotbed of small 
technology firms bridging Western technology and African ingenuity and 
markets. Scattered across the community's 65 square kilometers, some 
150 small factories and wet labs are engaged in short-run, small-batch 
manufacturing of lightweight infrastructure technologies of all kinds--
solar-powered ovens, nanomesh water filtration, genetically modified 
seed lines specifically designed for micro-climates across the sub-
Saharan region. Collaborative R&D is mostly done in community-funded 
pop-up labs, cheap facilities built out of shipping containers and 
governed by open patent agreements--whatever goes in or comes out of 
them is common property for the whole community.
    For many, the future described here may be difficult to imagine, 
but it is a plausible one. It illustrates the degree of change that can 
happen in twenty years. In fact, the investment decisions we make today 
are likely to have impacts for at least this long.
    Thus, ask yourself, would I recognize this as a research cluster? 
Would I call it a research park? \2\ What does this possibility mean 
for how research parks are likely to evolve, in the developing and 
developed economies alike? In this world, what is the role of research 
park developers, managers and economic development officials?
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    \2\ Throughout this report, we use the terms research park, science 
park and technology park interchangeably. All refer to specific, 
contiguous development sites targeted to attracting and developing 
technology-intensive economic activity.
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    The purpose of this white paper is, firstly, to explore the future 
economic, technological and geographical trends that might converge to 
make this vision a reality. Second, this is only one of many possible 
futures for technology-led economic development. Therefore, we present 
a set of three broad scenarios for the future of research parks and 
technology-led economic development.
Building on Success: A Brief History of Technology-Led Economic 
        Development
    2009 marks an important moment in the history of technology -led 
development. The Research Triangle Park of North Carolina turns fifty, 
and over 40 parks are twenty-five years old or more.\3\ As we begin 
thinking about the next twenty years of change and innovation in this 
field, it makes sense to review how the movement has evolved and the 
source of its past successes.
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    \3\ 2009 survey of IASP members by Research Triangle Foundation.
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    The concept of the science city--a city built from the ground up to 
house scientific and technical research--emerged during World War II. 
The speed of technological development demanded by the war effort 
vastly exceeded any existing industrial R&D capability, and the 
concentration of existing research centers in cities was a security 
risk. As a result, both Allied and Axis powers created massive R&D 
facilities, isolated far from population centers. The British 
concentrated cryptography researchers in Bletchley Park; German rocket 
developers were centered at Peenemunde; and most spectacularly, 
America's Manhattan Project built remote complexes dedicated to atomic 
bomb research and production in Tennessee, Washington and New 
Mexico.\4\
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    \4\ ``Science: Innovation in the City'' Ten Year Forecast: 2006. 
(Institute for the Future: Palo Alto, California)
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    While the science city model was certainly effective at massive 
breakthroughs in both basic science and its technological applications, 
it was frighteningly expensive, and their geographic isolation meant 
that there were few opportunities for spin-off economic growth. The 
science city model was later used both successfully and unsuccessful in 
economies as different as Japan and the Soviet Union. Over time, the 
notion of science cities as a specific site gave way to ``technopoles'' 
as regional concentrations of public and private technological, 
financial and human capital.\5\
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    \5\ Manuel Castells and Peter Hall, Technopoles of the World: The 
Making of 21st Century Industrial Complexes, NY: Routledge, 1994.
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    In the early 1950s, first at Stanford University and later in North 
Carolina, the science city model was adapted to a more manageable 
scale. Dubbed ``industrial parks'', ``research parks'' and ``science 
parks'' these projects were land-driven strategies primarily aimed at 
attracting the regional branch plants of large manufacturing companies. 
Over time, these places saw a growing share of their tenants engaging 
in research and development functions. In many countries such as Japan, 
France and the Netherlands, central governments played a major role in 
the creation of research parks. In the United States, research parks 
more often were the result of sub-national governments.\6\ Over time, 
parks have tended to become more specialized, targeting specific 
industries or sectors.
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    \6\ M. I. Luger and H. A. Goldstein. 1991. Technology in the 
Garden: Research Parks & Regional Economic Development. (University of 
North Carolina Press: Chapel Hill, NC)
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    By the 1980s, the strategic focus of technology-led development 
shifted from the attract-and-retain model of industrial parks to a 
model based on business incubation. While technology transfer was an 
element of the business model behind industrial parks, in incubators it 
moved to the forefront. The thinking was two-fold: dating companies was 
a zero-sum game playing regions off against each other, and growing 
firms locally would be more ``sticky'' and likely to produce secondary 
benefits. Beginning with the first known business incubator, 
established in Batavia, New York in 1959, thousands of incubators 
opened throughout the world. Today, some 3,000 business incubators 
exist worldwide, along with thousands of other facilities that perform 
similar functions under different monikers.\7\ The incubator model also 
marked a shift away from lowering real estate costs as the primary 
strategy (though rents are still typically subsidized), to providing 
seed capital, management expertise and intellectual property management 
needed to grow small companies into big ones. Almost universally, 
incubators have been positioned around universities, in the hope of 
leveraging their research and talent.
---------------------------------------------------------------------------
    \7\ National Business Incubator Association.
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    Today, both the industrial park and business incubator model are 
widely used. However, in advanced industrial economies these models are 
less effective as the needs of startups evolve. In their 1991 study of 
U.S. research parks, Luger and Goldstein found that more than half of 
all research parks fail or shift their focus. Furthermore they found 
that ``many research parks are unlikely to be appropriate for new 
start-up businesses, because minimum lots size requirements and high 
land prices make the cost of entry into parks high.'' \8\ Yet, existing 
parks still create great value for tenants, surrounding properties and 
regions--not because of the business model--but because they have 
become key nodes in larger knowledge ecosystems. This accrued value is 
being reflected in the market. For instance, land values at the 
Research Triangle Park have more than tripled in the last 5 years.
---------------------------------------------------------------------------
    \8\ Luger and Goldstein, p. 181.
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    But, as we illustrate through one of our future scenarios, the next 
few years may very well be a period in which no significant new 
research park projects are launched, and some parks fail. Any number of 
factors could drive this scenari o to the forefront--a protracted 
global recession, aggressive corporate cost-cutting and 
dematerialization of R&D or a return to high energy costs that put 
``legacy'' parks at a carbon disadvantage. Signals of this future are 
already around us, from the endless delays of Russia's ambitious 
national technopark project to bubble-era university-based efforts like 
the Harry Reid Technology Park at the University of Nevada Las Vegas. 
Even current success stories such as Singapore's Biopolis have been 
called into question by the World Bank.\9\
---------------------------------------------------------------------------
    \9\ Yusuf S. 2006. Postindustrial Asian Cities: Innovation for 
Growth. (World Bank: Washington, D.C.)
---------------------------------------------------------------------------
    On the other hand, the threat to existing parks could also come not 
from external economic shifts but from the emergence of entirely new 
models for building and organizing spaces for R&D. In our second 
scenario, ``The Rise of Research Clouds''--digitally connected networks 
of small spaces challenge existing parks and by providing more 
collaborative, more flexible and less costly homes for invention. 
Again, signals of this future abound if we raise our heads and look at 
innovative communities outside our own circle of peers.
    A third possibility, a very real future for many parks, is 
incrementalism--evolving and upgrading infrastructure and services to 
the next version, `` Science and Technology Parks 3.0''. Indeed, an 
upgrade is desperately needed. Cities and metropolitan regions are 
increasingly seen as the drivers of national economic growth, making it 
likely that we will see renewed interest in the research park model as 
an economic development tool. Yet, while this scenario may involve 
survival and a limited degree of prosperity for some, it does not 
realize the full potential for innovation and socioeconomic gains that 
future scientific breakthroughs may hold. It is a likely scenario for 
many parks in the absence of external threats, but not necessarily the 
most desirable one.
Toward Regional Knowledge Ecosystems
    Despite their stark differences, in all of these scenarios, we find 
one common element--regions will play a more important role than at any 
time in the last century. In fact, there will almost certainly be 
regions in which all three of these scenarios play out simultaneously 
over the next twenty years, with upgraded research parks, research 
clouds, and vacant tracts of research parks that never were, all exist 
ing side-by-side. The simple fact is that the complexity of science and 
technology today is too big for any one campus, firm or research park 
to tackle in isolation.
    The literature on knowledge ecosystems, developed in organizational 
studies over the last few years, provides robust framework upon which 
to develop a new understanding of how innovation happens in regions. A 
knowledge ecosystem refers to the events that occur as codified 
knowledge is transformed into tacit knowledge over time through 
learning and experience. Studies of knowledge ecosystems focus on how 
communities of practice interact with established bodies of knowledge 
and the tools and practices for upgrading that knowledge over time.
    At least one study has explicitly applied the knowledge ecosystem 
framework to understand a technology region.\10\ We believe that this 
framework can be used by the research parks and economic development 
community to better understand the processes by which communities of 
practice, embedded in metropolitan areas, generate ``sticky know--how'' 
that has real, unique economic value that is difficult to copy.
---------------------------------------------------------------------------
    \10\ Bahrami, Homa; Evans, Stuart. 2005. Super-flexibility for 
Knowledge Enterprises. Ch. 3.
---------------------------------------------------------------------------
    The regional knowledge ecosystem framework has several advantages. 
First, it focuses our attention not on the existing institutions of 
economic development--universities, research parks, large companies, 
venture funds, etc--but on the dynamics of how they interact with each 
other and new non-institutional elements (talent, bodies of knowledge, 
virtual communities). While the economic development field is awash in 
talk of ``networks'', the concept has lost all meaning. A rigorous 
application of knowledge ecosystem theory will allow us to begin 
specifying the kinds of networks and how they ought to operate. Second, 
it brings a holistic approach to how we think of innovation in 
regions--not as an isolated activity that happens within specific firms 
or clusters, but as a cohesive system. Dysfunctional knowledge 
ecologies are costly to organizations, but in a regional context, they 
also impose costs on everyone else (if only opportunity costs). 
Finally, the knowledge ecosystems approach is particularly attuned to 
understanding how organizations perform in ``hyper-turbulent'' chaotic 
environments, which certainly describes the global technological and 
economic landscape.
    Applying a knowledge ecosystem frame to regions immediately yields 
several insights that may dictate strategic shifts in the way we 
approach technology-based economic development. First, while land and 
leased space will continue to underpin the economics of creating 
research spaces of all kinds, the real added value will increasingly 
come not just from providing services (as many parks already do), but 
from actively managing activities and knowledge creation. Second, as 
scientific knowledge and tools become available anywhere on-demand, 
focusing on global domination of any particular industry will lose 
effectiveness. Growing the regional ecosystem elements that provide the 
capacity for repeatedly reinventing the cluster will become paramount. 
Third, all of these dictate a reduced emphasis on real estate 
development and infrastructure, and more emphasis on creating 
mechanisms that link local assets to global markets in ways that 
generate value.
    Our understanding of this tool is in its earliest stages, and will 
require further development. However, our forecasting and scenario-
building exercise points toward a crucial need in every technology 
region, for new governance structures that are broader than a single 
industry. Acting as a custodian of the regional ecosystem frame, this 
body could perform several functions. In the short term, new tools are 
needed for measuring and mapping networks and flows of knowledge, money 
and ideas. In the medium term, new business models for managing 
regional assets and creating something that is great than the sum of 
its parts. In the long-term, the challenge will be leveraging this 
ecosystem and its many networks to help firms and clusters compete 
globally--by collectively figuring out where a region fits into global 
R&D ``supply chain''. Their goals will be to encourage knowledge 
creation at the cutting edge and develop the organizational, human and 
social capital to compete in the global economy. It would build 
networks that would stretch far beyond the major regional institutions 
of today to include informal networks of entrepreneurs, investors, 
professionals and hackers and other communities of mentoring and 
learning.
    This is where the Institute for the Future and the Research 
Triangle Foundation find ourselves at the end of this study. This is 
merely a beginning, however. We will continue to examine the findings 
of this forecast with our partners and the global network of science 
parks and technology regions.
    We also will be working to develop realistic and implementable 
execution strategies that respond to the challenges of this forecast. 
These strategies will be shared in a ``field manual'' for existing 
research park and technology-oriented economic development managers--
but also a framework for those considering the development of new parks 
or innovation-focused development programs.
    We believe the only way to invent the future will be through 
systematic futures thinking, risk-taking and experimentation. If the 
research parks and economic development community does not do it, they 
will leave it to others to lead.
Part II--Trends Shaping the Future of Technology-led Development
    Our forecast research identified fourteen trends that will broadly 
set the context for technology regions and research parks over the next 
5-20 years. They summarize keys global shifts in three domains: economy 
and society, science and technology, and the models and places for R&D.
    Each trend identifies a direction of change and consists of four 
main elements:

        Headline--a title that describes the overall direction of 
        change

        Description--what is happening in this trend? What are the key 
        drivers and enablers?

        Signals--what early indications of this trend are visible in 
        the world today?

        Impacts--how will this trend shape the context for research 
        parks and technology-based economic development?
Economy and Society
    The first set of trends examines major global social and economic 
forces that will set the context for enterprises of every kind.
    First, the current global economic crisis will echo for a decade or 
more, putting governments at the forefront of funding basic science and 
technology research and constraining big new development projects. 
Second, new technologies of cooperation will elevate the economic 
importance of small groups in elation to corporations and individual 
consumers. This will transform entire industries and reshape the need 
for collaborative space. Third, as governments and industries work to 
address global warming through carbon markets and taxes, the 
measurement of the economic value of ecological processes will be 
increasingly important.
From Free Markets to Stimulus Capitalism
    The economic crisis of 2009 will turn the tables on markets, 
putting governments at the helm of the global economy for many years to 
co me. Public investments in basic science and research infrastructure 
will be used as a primary tool to stimulate both short-term and long-
term growth. In the United States, this shift is well underway, and in 
rising science powers such as the Gulf states and China, recent large 
public investments in research capacity will at least be are sustained 
and potentially will expand.
Signals
    Harvard University will house Stem Cell Institute in renovated 
building instead of new science campus [http://tr.im/l8Wx]
    2009 U.S. economic stimulus provides $100b for science and 
technology [http://tr.im/l8Vx]
    Corporate R&D spending holding steady, but real risk of decline in 
2009 [http://tr.im/ilMz . http://tr.im/ilMH . 
http://tr.im/ilMQ]
    China and Gulf States continue state-led development of R&D 
capacity and science cities [http://tr.im/lZOh . http://
tr.im/mqC1]
Impacts
    The economic crisis, and governments' massive response through new 
science funding, will have both short-term and longterm impacts.
    An ``innovation bottleneck'' will form over the next 3-5 years, as 
companies trim R&D spending and focus on short-term, quick-to-market 
innovation during the crisis, and before the results of government-
funded research projects can be commercialized.
    While companies will expand engagement with universities to 
accelerate technology transfer, there are few short-term solutions.
    The supply of venture capital will be constrained, as new funds and 
less experienced angels who entered the industry in recent years 
retrench to safer wealth preservation strategies.\11\ In global regions 
where venture capital markets are lacking or under-developed, the 
economic situation will slow the development of new funds and investor 
networks.
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    \11\ National Venture Capital Assocation and 
PricewaterhouseCoopers. MoneyTree Report [https://www.pwcmoneytree.com]
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    The real estate industry will continue to struggle financing new 
projects and will avoid taking big risks. Real-estate investment trusts 
that focus on research parks and lab space have been especially hard 
hit. Even universities acting as developers are not immune to the 
slowdown, as endowments have suffered in proportion to overall market 
declines of 30 percent or more. Public universities will face large 
reductions in government aid, severely limiting their ability to 
develop new labs and research parks.
    Research clusters in developing economies are likely to make 
significant gains in market share for global R&D spending as they 
provide lower-cost alternatives to cost-cutting companies.
    Finally, existing research parks are likely to see increased tenant 
demands for flexible lease arrangements, as they plan for greater 
resilience to future economic shocks.
The Group Economy
    New tools for cooperation will drive down the cost of forming 
groups around any shared interest, identity or activity. New models for 
creating wealth will emerge at the intersection of the social web and 
grassroots movements. Existing organizations will be transformed 
through the adoption of these tools and processes, becoming less 
hierarchical, more agile and more collaborative.
Signals
    Companies adopt of social software as a knowledge management tool--
Lotus Connections [http://tr.im/l972]
    Meetup.com's rapid growth as a platform for organized ad hoc 
interest groups for face-to-face meetings [http://www.meetup.com]
    Obama campaign financed largely by small donations made online 
[http://tr.im/l97d]
    Science bloggers convention at Research Triangle Park [http://
tr.im/l989]
    Academic studies mapping scientific collaborations [http://tr.im/
l998]
Impacts
    As it spurs the creation of new kinds of ad hoc organizations, and 
transforms existing ones, the group economy will have major impacts for 
the kinds of places and spaces that are needed for collaborative 
innovation.
    New kinds of organizations will seek ``landing spots'' for meetings 
of various kinds--scheduled daily, weekly or monthly meetups, and ad 
hoc gatherings around interests, ideas and current events. The space 
and infrastructure demands for these kinds of activities are 
dramatically different from those supplied traditional research park--
less permanently occupied, private spaces and more think-tank type 
collaborative spaces. The need for temporary, flexible and even mobile 
spaces will grow dramatically.
    The group economy will change the needs of existing organizations' 
space as well. Existing tenants will require more meeting and 
collaboration spaces, and less space for ``warehoused'' workers. The 
goal will be to put collaborative activities in spaces that can amplify 
group economies, and provide opportunities for discovery. As open 
innovation strategies spread, there will be greater need for co-
locating company employees and outsiders within shared spaces.
    Finally, the group economy will place new demands on the 
measurement techniques traditionally applied in economic development 
and research management. Today, most econometric data looks at outputs 
and uses existing organizations as its units of analysis--the firm, the 
research park, the region. However, in the group economy, there is are 
new needs to measure both the flows between organizations--the ``in-
between stuff''--as well as the dynamics of small groups forming 
outside institutional boundaries. How do we measure the substantial 
impact of organizations without organizations? \12\
---------------------------------------------------------------------------
    \12\ C. Shirky. 2008. Here Comes Everybody: The Power of Organizing 
Without Organizations. (Penguin Press: New York)
---------------------------------------------------------------------------
Ecological Economics Comes of Age
    As governments and industries work to address global warming by 
developing environmental trading markets, carbon taxes, and other 
mechanisms, the measurement of the economic value of ecological 
processes will be increasingly important.
    The first major efforts in this area are around carbon. Today, 
carbon trading is based on estimation more than on the measurement of 
real systems. Evolving carbon markets from estimation to measurement 
will generate complex scientific and technical problems requiring 
transdisciplinary solutions. Figuring out precisely how much carbon is 
sequestered in a parti cular preserve in Indonesia or Brazil, and how 
to turn that scientific knowledge into financial instruments will 
require basic research in botany, ecology, climate science, geology, 
remote sensing, and even accounting. As a scientific endeavor and 
information service industry, this will draw upon technological 
advances in sensing and measurement, simulation and supercomputing.
Signals
    Carbon trading markets are growing rapidly, estimated to trade 
hundreds of billions of dollars of credits worldwide. [http://tr.im/
lZOB]
    Efforts to construct valuation of environmental services (beyond 
environmental impact studies) [http://www.iftf.org/node/2789]
    Growth of bilateral trading regimes (e.g., between Northern 
companies and Southern forest preserves), supporting specific 
investments or environmental initiatives. [http://tr.im/mqEt]
    Commercialization of carbon offsets and their widespread adoption 
by travel agents and travel sites.
    Growing availability of personal carbon tracking estimators for 
travelers. [http://tr.im/lM3l]
Impacts
    The next decade will see the introduction of a new generation of 
sustainability-related practices, technologies and services, built less 
around estimations of the environmental impact of manufacturing, 
transportation, and resource/energy use, and more on the measurement of 
actual resource use and pollution.
    In this new industry research parks can serve as test-beds for 
innovative environmental management practices and services. For 
companies developing these services, fellow research organizations are 
likely to be valuable beta-testers and early adopters. Research parks 
located near economically valuable and productive ecosystems could be 
attractive locations for both researchers developing tools for 
measuring ecological activity, and entrepreneurs developing instruments 
for monetizing that activity.
    Developing countries seeking to leverage natural resources could 
turn carbon offsets into a mechanism for technology transfer. By 
linking investment in science and technology infrastructure to carbon 
mitigation instruments, they could boost their own capacity for 
ecoscience at the same time they provide a valuable ecological service 
to carbon-hungry developed economies.
Science and Technology
    Evolving in parallel to trends that will transform the economy and 
society over the coming decades, the subjects, methods, talent and 
institutions of scientific research and technological innovation will 
shift as well.
    Five trends will have the greatest impact on technology-based 
economic development and research parks:
    Biology by design will supplant physics as the most scientifically 
vibrant and economically important field, letting us read and write 
nature's ``source code'' at will.
    The spread of ubiquitous computing will create massive new streams 
of research data, while simultaneously providing new tools for 
scientific collaboration in the lab.
    Social networks where people and computers work together to make 
sense of data will enable a shift from artificial intelligence to 
hybrid sensemaking.
    New scientists will transform the practice of science by forging 
transdisciplinary fields, multi-sector careers and bringing new 
cultural influences to bear.
    Science institutions will be transformed as collaborative, open and 
online models for collaboration and knowledge sharing break through 
obsolete barriers.
Biology By Design: Nature as Source and Code
    From synthetic genomics (which seeks to design micro-organisms that 
perform useful functions) to stem cell therapy (which seeks to harness 
the body's own ability to heal itself), biology will become a central 
source of scientific and technological breakthroughs. Key drivers 
include global ecological challenges, the health needs of a richer, 
aging global population and advances in informatics that help decipher 
the code of life. Biological concepts about how to organize systems and 
structures will also inspire designs for everything from buildings to 
organizations to algorithms. Yet many experts believe the biotech 
industry is structurally unsound--without change it won't be able to 
fully realize the commercial potential of these new technologies.
Signals
    First synthetic genome created by J. Craig Venter Institute [http:/
/tr.im/lfHL]
    Scripps Florida biomedical research center opens in Jupiter, 
Florida, home of the largest chronically diseased population in the 
world [http://www.scripps.edu/florida/]
    Massive public investment in biotech at the sub-national level 
[http://tr.im/lfMW]
    Transdisciplinary and translational biomedical research centers at 
Stanford, MIT and UCSF
    Google launches venture fund, which will make some investments in 
biotech ``to keep an eye out for disruptive ideas to its core search 
business that might come from unexpected fields, such as biotech.'' 
[http://tr.im/lZDi]
Impacts
    Biotechnology has not lived up to its economic promises--as Harvard 
professor Gary Pisano notes, while biotech has attracted more than 
$300B in capital over the last 30 years, it has produced profitless 
growth. Synthetic biology may change that, and increase the demand for 
research space over the coming decades. So-called ``white'' 
biotechnology--industrial biotech for producing fuel and materials may 
just be mundane and scalable enough to produce sustainable profits, 
unlike earlier generations of ``red'' (biomedical) and ``green'' 
(agricultural) biotechnology.
    In the meantime, however, the sector will continue to require 
massive public investment in basic science to jumpstart economic 
activity. In the United States, state governments have invested heavily 
($500M for California's Institute for Regenerative Medicine, $1B for 
the Massachusetts Life Sciences Initiative, and $1.2B in North Carolina 
over the last decade). None of this will change the fundamental 
structural issues in the industry, which is largely borrowed from 
Silicon Valley's information technology (IT) industry, and which Pisano 
argues are stifling innovation. Larger efforts, involving public, 
private and NGO stakeholders will have to address these on a broader 
scope.
    Biotech will also diverge from the IT industry in the ways and 
places in which it clusters. First, the translational nature of 
biomedicine means that researchers are often moving from lab to bedside 
frequently, requiring them to be located near research hospitals in 
large population centers, often in the center of large cities (versus a 
suburban research park). Second, it often involves specimens that 
cannot be removed from the lab--distributed work is less important 
since much of the ``code'' is not portable as in the software world. 
Third, while IT infrastructure is becoming highly distributed, many of 
the most advanced biomedical research tools are becoming highly 
centralized. For instance, the next generation of high resolution MRIs 
used in brain imaging research weigh dozens of tons and take up an 
entire building.\13\ Finally, biological research will always entail a 
certain level of public health risk--while many factors cited above 
point toward centralization, the need to isolate hazardous materials 
may push in the other direction--some bioresearch will need to be 
located far from population centers.
---------------------------------------------------------------------------
    \13\ Siemens AG. Fall 2008. ``Magnetic Mission'' Pictures of the 
Future. p.88.
---------------------------------------------------------------------------
    The sheer complexity of bioscience will require radically new 
approaches to designing research organizations. Research at the 
intersection of biology and informatics, and biology and 
nanotechnology, for instance, requires bringing together different 
disciplinary skillsets in the same place or even the same person. Parks 
and regions that can tap multiple disciplinary centers of excellence, 
or partner with transdisciplinary organizations and research 
communities will be well-positioned for biomedical innovation.
Ubiquitous Computing
    The spread of ubiquitous computing (ubicomp)--the diffusion of 
unobtrusive digital sensing, computation and communications 
technologies into ever-larger parts of man-made and natural 
environments--will create vast new datasets for scientific research in 
fields from public health to civil engineering to marine biology. 
Mobilizing this computational infrastructures will require intensive 
collaborations between IT specialists, scientists, and engineers. But 
once in place, ubiquitous computing technologies will also generate 
very large quantities of information from everyday activities like 
travel, shopping, and communications. This will have substantial 
commercial value to companies that can manage and analyze it quickly 
enough. More importantly , it will enable new research in social 
science, public health, and field sciences that will contribute to the 
further quantification of these fields.
Signals
    The growth of environmental sensing research in ubiquitous 
computing, such as the Living Environments Lab at Carnegie-Mellon 
[http://www.livingenvironments
.net/]
    Research in ``smart dust,'' cubic millimeter-scale computers that 
within a few years will allow us to place computing and reactive 
capabilities in a wide variety of built objects and environments 
[http://tr.im/mqIz]
    The growth of low-cost displays, and their diffusion into a variety 
of use contexts and devices, ranging from cellphones and iPhones to 
wall-sized digital billboards.
Impacts
    Ubiquitous computing will collapse many of the distinctions we take 
for granted when doing everything from designing scientific research 
projects to designing research spaces. The distinction between online 
and offline environments, digital and physical worlds, even between 
natural and artificial, break down. This does not mean that physical 
places will become irrelevant: instead, the smart deployment of well-
designed digital resources, and the early adoption of new digital 
technologies, will set smart places ahead of the pack.
    On the research front, ubiquitous computing creates opportunities 
and demands for new forms of cross-disciplinary research. Because 
ubicomp creates the potential to blend digital resources with a wide 
variety of materials and environments, research parks could create 
value by bringing computer scientists and engineers together with 
sculptors, textile designers, architects, and anthropologists--or with 
craftsmen and workers from established, mature local industries. It 
will also create a need for hyper-wired, digitally-mapped, configurable 
spaces that can be used as test-beds for new technologies.
    Ubicomp will also create a need for ``living labs'' like Seoul 
Digital Media City or Singapore's Fusionpolis that combine vibrant 
real-world communities with research and prototyping. Ubicomp is as 
much about the use of technologies as their deployment; having spaces 
in which users can realistically interact with prototypes or enhanced 
spaces can generate valuable experiences and insights for researchers, 
retailers, and designers.
From Artificial Intelligence to Hybrid Sensemaking
    For decades, computer science sought to create artificial systems 
capable of duplicating and even replacing human reasoning and 
communications. In the last few years, the excitement around collective 
intelligence experiments on the Web has established the value of a 
different approach: the creation of hybrid structures that combine 
social networks and more limited forms of machine intelligence, to 
collaboratively filter and extract meaning from data about our 
environments and ourselves. Such systems allow computers and humans to 
each do what they're good at, and mix together formal and tacit and 
social knowledge. More broadly, the growth of these tools reflects a 
more nuanced view of intelligence as an inherently social and 
contextual thing, not something reducible to computer cycles or logical 
statements.
Signals
    MIT and NYU trials of workplace infrastructures that mine social 
interaction data [http://tr.im/lM8Z]
    Experiments with ``artificial artificial intelligence", like 
Google's Image Search Game and Mechanical Turk, platforms for small 
tasks are trivial for humans but extremely difficult for computers.
    A San Francisco-based startup seeks make scientific distributed 
computing (made famous by SETI@Home) more accessible by combining a 
simple computing infrastructure with social networking tools to reach 
small, rich pools of talent or expertise.
    The Network Oasis in Joensuu, Finland's GLOW system helps managers 
of an incubator space ``manage serendipity'' by understanding who is 
present and their skills and interests [http://www.globaloasis.fi/glow/
]
Impacts
    Artificial intelligence sought to make humans obsolete--as a 
corollary, it would have made place less relevant. But hybrid 
intelligence relies on a mix of unique places, strong algorithms, and 
vibrant human networks. Hybrid intelligences require interesting or 
unique working spaces, workplaces or other infrastructures that 
facilitate nonverbal communication.
    Not only are there opportunities for research parks to provide rich 
physical spaces supporting hybrid intelligences. Hybrid intelligence 
could become a distinguishing feature of highly effective collaborative 
research spaces. By providing infrastructure and ``reality mining'' 
services, parks could distinguish themselves and move up the value 
chain.
    Hybrid intelligences often mobilize around very large, uncertain 
bodies of information. These are too complex and specialized to be 
usefully analyzed using commercial-grade Internet connections and 
servers; the grid computing architecture developed for high-energy 
physics is likely to be replicated in other fields. Research parks that 
can provide very fast access to grid-scale computational resources, 
often in support of groups of scientists or social networks, will have 
an advantage over less-connected competitors.
    The growing popularity of publications like the Journal of 
Visualized Experiments (JoVE) suggest that a new generation of 
experimental scientists will see the value of systems that allow them 
to communicate tacit knowledge at a distance. By employing hybrid 
approaches to map what people are actually doing in research 
environments, labs can help codify some of the things that were 
previously craft and technique.
The New Scientists
    The next generation of scientists will transform scientific 
practice, the way scientific careers are constructed and managed, and 
the sources of knowledge they draw upon and develop in their work. As 
options outside academia grow, publishing becomes more open, 
collaborative and real-time, and entrepreneurship gains more 
legitimacy, the means by which scientists create professional 
reputation will be transformed. These new scientists will be both 
transdisciplinary and ultra-specialized, drawing on various disciplines 
to answer complex, focused questions. The role of amateurs will expand, 
as both independent researchers and partners of professional science. 
Scientists from emerging economies will introduce non-Western cultural, 
ethical and intellectual traditions into the practice of modern 
science. Science will also provide a pat h for women to achieve gender 
equality in nations with a high degree of gender segregation.
Signals
    Increased competition for academic jobs, as PhD production 
increases and tenured faculty stay on staff is driving many doctoral 
graduates into private sector jobs. [http://tr.im/m20o]
    The Princeton Review and Fortune Small Business now produce annual 
ratings of the best schools for entrepreneurs--institutions are 
beginning to see these students as a significant segment of their 
market.
    Reward for entrepreneurship in tenure review is encouraging more 
young scientists to develop academic-industrial ``bricolage'' careers, 
moving back and forth between universities and business.
    Universities are responding to student desires for more 
transdisciplinary education especially around design: Finland's Aalto 
University (created through the merger of 3 pre-existing universities), 
Stanford's D.School, and Design London (a joint program of Imperial 
College and the Royal College of Arts) [http://tr.im/lmvl]
    ``Scientists of the self'' are using ubicomp technologies to 
monitor their own bodies and lives, generating volumes of data and 
unorthodox research questions. [http://www.quantifiedself.com/]
    Science is actively engaging many more amateurs, who may go on to 
science careers or make significant contributions to formal research 
projects (SETI@Home, Birdsource).
Impacts
    New scientists will have dramatically different expectations about 
career mobility and the ability to pursue independent intellectual 
interests outside of employment contracts. They will have greater 
demand for continuing education and learning experiences, and will want 
work environments where they can maintain connections to their social 
networks and outside sources of knowledge.
    The role of social networks will be extended in other ways that 
impact econmic development. One of the most important assets being 
cultivated by large companies are their corporate alumni networks. As 
research parks and technology regions are increasingly selling 
community as a highly valuable aspect of location, creating membership-
type organizations for ``park alumni'' might make sense.
    Research parks and regions have long marketed themselves as 
attractive places for companies. As Richard Florida argues, places now 
need to be attractive to workers as well, if not primarily.\14\ 
However, in between these two layers, parks also need to think about 
how they appeal to small groups of new scientists--the clubs, mailing 
lists, and other rich networks that really connect and define 
innovative communities.
---------------------------------------------------------------------------
    \14\ R. Florida. 2002. ``The Rise of the Creative Class: And How 
It's Transforming Work, Leisure, Community and Everyday Life'' (Basic 
Books: New York)
---------------------------------------------------------------------------
    Finally, many of the new scientists will not be professionals, but 
amateurs. Parks have historically done a terrible job connecting to 
educational institutions and youth, if they have bothered at all. 
Connecting to amateurs will entail some of the same challenges, but 
also reap potentially larger rewards. As volunteer champions of 
science, amateurs represent a vastly under-utilized resource for parks 
and their tenants. And the failure to engage them in real world R&D is 
a lost opportunity to upgrade the region's human capital through 
experiential learning and training.
Science Institutions Transformed
    Experiments with new organizational forms, incentive structures, 
and rewards will shake the foundations of centuries-old scientific 
institutions. Scientific publishing is already under full-scale attack, 
its economics and social conventions completely undermined by cheaper, 
faster, or more democratic online alternatives and by entirely new 
forms of publishing like video. Privately funded research centers like 
the Perimeter Institute, Kavli Institutes, and Jenalia Farms are 
experimenting new ways of funding and organizing research, and 
measuring the output of scientists. Scientific challenges like the X 
Prizes are coalescing into a parallel and competing incentive structure 
for innovation. Finally, the sheer complexity of the scientific 
challenges of the 21st century will require massive new global 
partnerships that cross political and organizational boundaries.
Signals
    Prizes and challenges are emerging as a substantial incentive for 
innovation in sustainability and other global problems. (http://
www.signtific.org/en/signals/technology-prizes-and-challenges-
innovations-sustainability-and-global-problems, http://
www.signtific.org/en/signals/using-prizes-not-patents-support-drug-
development-developing-world)
    Hedge funds are partnering with academic mathematicians and 
physicists to develop new tools of interest to financial engineering 
and science; others are supporting research in high-energy physics. 
(http://www.signtific.org/en/signals/hedgefund-university-partnerships; 
http://www.signtific.org/en/signals/hedgefunds-new-cool-places-basic-
science ; http://www.signtific.org/en/signals/private-funding-high-
energy-physics)
    A wide range of institutions and entrepreneurs are developing 
alternatives to traditional scientific publishing, which has helped 
shape professional practices and rewards for decades.
Impacts
    The growth of new kinds of scientific institutions may create new 
clients for research parks: private equity-funded laboratories, 
institutes created to solve specific high-profile problems. However, 
while some will be working at a scale and pace similar to companies and 
academic institutions, others may not, and may be designed to operate 
for only a few months or a year.
    Research parks need to be sites in which virtual networks can 
coalesce into meetups, conferences, etc. They also need to be places 
that can support virtual work and new forms of publication. Research 
parks might also attract new institutions by developing their own 
science or technology prizes, or partnering with organizations offering 
prizes.
    In some parks and regions, critical science institutions may need 
new sources of external support, or risk failing entirely. The crisis 
facing the newspaper industry today may be a particularly illustrative 
one. Once unthinkable, the failure of a crucial institution that could 
have massive impacts on local politics and economies, is now a reality 
in every city. Should parks and institutions struggle to save dying 
institutions, or help fledgling alternatives grow stronger to take 
their place?
Models and Places for Research and Development
    The final set of trends looks at how organizational structures and 
business models for research and development are changing, and emerging 
ideas about how to configure these activities at various scales--the 
lab, the building, the campus, the region and the globe.
    Six trends are shaping the future of R&D:
    A new global map of science is emerging, in which smaller countries 
are playing an increasingly important role, challenging the Western 
superpowers' centuries-long dominance.
    New models of lightweight innovation seek to do more, faster with 
less, and cast a broader net for ideas.
    Universities will continue their transformation from ivory tower to 
economic engine and play a greatly expanded role in economic 
development--in time, it could become their primary function, trumping 
education.
    Economic development practice will shift from trying to copy the 
success of others to building sticky know-how--tacit knowledge that 
builds on local cultural and industrial resources, and isn't mobile.
    Greater attention to the social life of small research spaces will 
create dynamic, transdisciplinary places that bring virtual networks to 
ground.
    Regional knowledge ecosystems will emerge as a new strategic frame, 
providing scale, efficiency and global platforms for economic 
development.
New Global Map of Science
    If science in the 20th century was a pyramid, with the United 
States, the United Kingdom, Germany, Russia, and Japan at the apex, 
science in the 21st century will be more like a network, with multiple, 
linked centers of excellence. Successful countries and sub-national 
regions will pursue strategies to blend targeted investments in basic 
science with local industrial or cultural resources, to create unique 
and hard-to-reproduce centers of excellence. These centers will be 
designed to capture critical niches in complex global R&D ``supply 
chains''. Meanwhile, the shift from brain drain to brain circulation; 
the rising capability of moderate Islamic states to support scientific 
communities; and the growth of new ``South-South'' collaborative 
networks mean that these centers of global excellence can develop in a 
wider range of countries than in the 20th century.
Signals
    Growth of South-South research cooperation [http://tr.im/la34]
    Chinese universities hiring top global talent [http://tr.im/la6S]
    R&D partnership between The Hamner Institutes for Health Sciences 
and China Medical City [http://tr.im/lLZd]
    Fewer doctoral students staying in the U.S. after graduation 
[http://tr.im/la6q]
    Globally mobile universities--NYU in Abu Dhabi, JHU in Nanjing, 
Georgetown in Qatar
    ``Bamboo ceiling'' for Asians in U.S. firms \15\
---------------------------------------------------------------------------
    \15\ J. Tang. 1997. ``The Model Minority Thesis Revisited: 
(Counter)Evidence from the Science and Engineering Fields ``The Journal 
of Applied Behavioral Science, Vol. 33, No. 3, 291-315
---------------------------------------------------------------------------
Impacts
    New research clusters in developing countries will capture an 
increasing share of global R&D investment, and increase the volume and 
value-added in technology innovations. Some of this will certainly come 
at the expense of existing industries in developed economies, through 
offshoring of ``routine'' R&D functions.
    Globally networked science will necessitate a shift from zero-sum 
competition and efforts to replicate Silicon Valley's broad knowledge 
ecosystem, in favor of highly focused efforts to develop niches in 
global technology supply chains. This strategic shift will be pioneered 
by new clusters in emerging economies, seeking to be globally 
competitive at the cutting edge in narrow areas of opportunity.
    Global science also means greater mobility of talent. As wage 
differentials shrink, returning home will be more attractive to foreign 
students--developed countries will need to offer additional value, such 
as a better business environment or easier access to startup funding. 
U.S. universities are responding by exporting their ``brands'' to 
developed and less-developed countries. We will also see scientists 
with global mobility that is more complex than simply moving between 
two countries--they may migrate multiple times to emerging centers of 
excellence.
    Finally, global science will create more demand for ``soft 
landing'' zones for foreign companies expanding into new markets and 
joint ventures, which could provide an additional source of science 
park tenants, as ``soft landing'' companies outgrow their incubator 
space. Innovative regions will need to provide a broad variety of these 
spaces and market them through existing business networks.
Lightweight Innovation
    Over the next decade, new economic realities will increase the 
pressure to innovate faster and cheaper. New ideas about how to 
organize the innovation process, combined with dramatically cheaper 
tools for invention that put advanced research technology in the hands 
of small firms, will enable new lightweight models fo r commercializing 
knowledge. More and more of new product and service development will 
happen outside of existing pipelines. Lightweight innovation will 
reinforce the strategic shift of innovation activities out of large 
firms into broadly defined ``open innovation'' networks.
Signals
    Innovations in early-stage investment: BetaWorks,Y! Combinator and 
AngelSoft
    Falling costs of tools of invention--cloud computing, 3-D 
prototyping and desktop genomics
    Crowd-sourcing innovation: Kluster [http://www.kluster.com]
    Innovation clubs and Fab Labs in Kenya [http://www.fablab.co.ke/]
Impacts
    Lightweight innovation points toward a growing role for startups in 
innovation systems at every scale--local, regional, national and by 
industry. Yet few research parks and economic development agencies are 
well-equipped to assess and address the needs of startups.
    The most important shortcoming is in the area of startup financing. 
A growing array of smaller startups will seriously challenge 
traditional venture investing models, which simply cannot produce a 
profit on small deals. In some areas like biotech, this early-stage 
funding gap is being filled by corporate strategic venture funds. There 
will be an increased need for deep local networks of angel investors 
and small-scale seed funds--but these need to be run by seasoned 
entrepreneurs. ``Dumb money'' from investors without expertise or 
connections, has far less value than ``smart money'' that does.
    The growth of startups, especially very small ones will create a 
``long tail'' market for R&D Space. Instead of a handful of anchor 
tenants, a long tail is a large collection of very small firms that add 
up to significant demand. Since existing parks are mostly designed 
long-term leasing to large companies, a mismatch may emerge.
    Incubation of lightweight startups will be a fundamentally new 
proposition. Just a few years ago, it took millions of dollars of 
venture capital, dozens of programmers, and a year or more to bring a 
new software product to market. Today, agile web startups move from 
idea to implementation without traditional incubation.
    Access to ``heavy'' R&D tools will never disappear completely, 
except in a very few areas of technology. Research parks can play an 
important role in aggregating demand and subsidizing costly equipment. 
Especially in the developing world, where access to equipment is often 
the greatest obstacle to innovation for micro-financed inventors, this 
will be critical.
    New innovation models are driving new approaches to intellectual 
property management, which will require managers of research spaces and 
communities to rethink how they support companies. The traditional 
focus on helping companies protect their IP, may need to shift to 
helping them open their IP to potential partners or new communities of 
innovation.
Universities: From Ivory Tower to Economic Engine
    Several interacting forces will expand the modernization of 
universities' role in the economy. First, increased public investment 
in basic research will raise public expectations about the social and 
economic impacts produced by universities. Second, companies will 
continue to outsource research to university partners, amplifying the 
need for efficient technology transfer. Third, global competition 
between universities will foster more entrepreneurial initiatives to 
secure talent and find new sources of financial support. Finally, 
developing countries will rely heavily upon universities to jump-start 
new technology-based clusters.
    There is a great degree of uncertainty about this shift. There is 
still considerable debate about whether `'universities should 
deliberately do more to encourage the development of products or 
companies.'' \16\ And while the .Edu Impact portal (http://www.edu-
impact.com/) has cataloged over 90 economic impact studies of 
universities in the U.S. and worldwide, this is largely a defensive 
exercise by universities seeking to avoid taxation by local 
authorities, not a demonstration of university vision or public policy.
---------------------------------------------------------------------------
    \16\ The Future of the Research University: Meeting the Global 
Challenges of the 21st Century. 2009. (Ewing Marion Kauffman 
Foundation: Kansas City, MO)
---------------------------------------------------------------------------
Signals
    Texas--state officials requested that the words ``technology 
commercialization'' and ``economic development'' be added to university 
and college mission statements.
    UK 2015 Research Assessment Exercise will ``for the first time 
examine factors like citation rates and the economic impacts of the 
research in question.'' \17\
---------------------------------------------------------------------------
    \17\ ``Peer pressure'' SEED, April 2009, p. 20.
---------------------------------------------------------------------------
    The number of people employed in the technology transfer offices of 
U.S. universities more than doubled between 1998 and 2007. [signtific 
URL TBD]
    Harvard University's Technology Accelerator Fund--$1.5m in annual 
grants for faculty to refine research to attract private capital.
    Growth of university-based angel networks in the United States, 
Canada and Spain.
    New technology transfer mechanisms like the Alfred E. Mann 
Institutes, ``proof of concept centers'' [http://tr.im/lZPB]
    Innovation zones, like the Greater Oakland Keystone Innovation 
Zone, a partnership of Carnegie-Mellon, the University of Pittsburgh, 
the stat e of Pennsylvania and several non-profit organizations.
Impacts
    The most aggressive universities will completely transform their 
promotion systems, deeply integrating incentives for entrepreneurship. 
Some universities (such as the University of Iowa and Texas A&M) now 
identify patents, patent applications and involvement in tech transfer 
as evidence in tenure review. Some universities are even willing to 
reward faculty who have proven their effectiveness in economic 
development as highly as academic stars.\18\
---------------------------------------------------------------------------
    \18\ For example, Alain Kaloyeros, who attracted more than $2.4 
billion in Federal, state and corporate funding to make the University 
at Albany a center of nanotechnology and semiconductor research, was 
paid a salary of $696,000 in 2008.
---------------------------------------------------------------------------
    As the share and volume of basic research done at universities 
rises, technology transfer will either exceed or fail to meet public 
and corporate expectations. Flaws in prevailing models for managing 
technology transfer will become more apparent, such as the preference 
for patents that produce short-term profits over more challenging 
longterm commercialization projects. The backlog of research generated 
by stimulus funding may skew incentives even further in the wrong 
direction, and leave many promising technologies languishing in the 
lab.
    On the other hand, greater competition between universities will 
encourage more experimentation by universities in technology transfer 
and IP management. More universities will develop strategies and 
resources for supporting other means of promoting commercialization and 
entrepreneurship than only patent licensing.\19\ Others will create 
internal competition--putting outside agents on equal footing to 
compete with their own technology licensing office. Still others will 
partner to create multi-university offices that can achieve a more 
efficient and effective scale.
---------------------------------------------------------------------------
    \19\ R. E. Litan, L. Mitchell, and E. J. Reedy, ``The University As 
Innovator: Bumps In The Road'', Issues in Science and Technology, 
Summer 2007.
---------------------------------------------------------------------------
    The role of research parks, incubators and other facilities for 
technology transfer will change rapidly. As expectations for technology 
transfer grow, universities will diversify their strategies for spin-
off spaces. This will mean shifting from a single research park model 
to investing in entire ``innovation zones''. In this model, rather than 
merely developing an urban research campus, universities act as long-
term participants in the ongoing revitalization of urban neighborhoods 
or districts. These districts are mixed-use, combining both academic 
and commercial research activities with residential, office, retail, 
and cultural uses. The goal is to create an en vironment that helps 
attract, nurture and retain talent, and to encourage innovation across 
a wide range of other enterprises as well. Extending this strategy, 
more incubation spaces may be inserted directly into campuses and 
university buildings.
    Entrepreneurial universities are not without their critics. Gary 
Pisano argues that aggressive commercialization of university 
bioscience research is actually limiting the industry's development by 
reducing the pool of shared scientific knowledge. His solution: 
``[t]hey should focus primarily on maximizing their contributions to 
the scientific community, not maximizing their licensing revenues and 
equity returns.'' \20\ And there is a clear impact on the academic 
environment in entrepreneurial universities--when research parks are 
close by, the curriculum tends to shift from basic to applied 
research.\21\
---------------------------------------------------------------------------
    \20\ Pisano G. 2006. ``Can science be a business? Lessons from 
biotech'' Harvard Business Review.
    \21\ A. N. Link, J. T. Scott. ``U.S. science parks: the diffusion 
of an innovation and its effects on the academic missions of 
universities'' International Journal of Industrial Organization.
---------------------------------------------------------------------------
    Some universities will be unwilling or unable adopt a new model, 
and will produce limited economic benefits. We are also likely to see 
the emergence of new universities where economic development, not 
education, is the primary mission. Most will fall in the middle. As one 
study summarized the future: ``In our view, universities . . . 
increasingly have no choice whether to be entrepreneurial, although 
like for-profit firms, they do have a choice about how they go about 
doing so.'' \22\
---------------------------------------------------------------------------
    \22\ (Kauffman p. 124).
---------------------------------------------------------------------------
From Knowledge Diffusion to Sticky Know-How
    Advocates of innovation economies often see knowledge as both 
infinitely mobile and disconnected from its origins. Knowledge can be 
produced anywhere, this thinking goes, and high value-added, knowledge-
intensive activities can be decoupled entirely from manufacturing. Both 
are wrong.
    Many bench scientists can't take their work home, and some can't 
work outside one-ofa-kind facilities. Innovation often has a 
geographical or social ``stickiness'' to it because it can draw on 
combinations of scientific knowledge, technical skill and tacit 
knowledge that are place-specific. Nor is innovation so easily 
distinguished from manufacturing: many high-tech innovations have 
emerged while solving manufacturing problems, and contrary to popular 
perception, making things--especially innovative new products--is a 
highly complex, creative activity. Indeed, future industries, like the 
translational research paradigm emerging in the biomedical world, are 
likely to place a higher value on the tacit knowledge required to move 
new scientific discoveries from the laboratory to store shelves, 
doctors' offices, and living rooms.
Signals
    Zaha Hadid's Central Building for BM's Leipzig plant deliberately 
seeks to mix white-collar and blue-collar workforce as a spur to 
innovation [http://tr.im/lZT5]
    Rise of ``guild'' workspaces, such as Pixar in Emeryville, Calif. 
where large freelance contractor work forces are co-located with 
corporate customers during production.\23\
---------------------------------------------------------------------------
    \23\ Myerson J. 2006. Radical Office Design. (Abbeville: New York)
---------------------------------------------------------------------------
    Venture capitalists are being recognized as tacit knowledge brokers 
who acquire and create intelligence about industries, market 
conditions, entrepreneurs and companies through a constant process of 
interaction and observation. This knowledge is then used to select 
promising industries, find good firms, and assist portfolio 
companies.\24\
---------------------------------------------------------------------------
    \24\ Zook, M. A. 2005. The Geography of the Internet Industry: 
Venture Capital, Dot-coms and Local Knowledge. (Blackwell: New York)
---------------------------------------------------------------------------
    Venture capitalists' are the center of a tacit knowledge exchange 
system that gives them lots of exclusive know-how. They are also able 
to speed this process to provide their portfolio companies an 
advantage.
    Trade fairs are ``temporary clusters'' that provide mechanisms to 
share tacit knowledge exchange over long distances.\25\
---------------------------------------------------------------------------
    \25\ Bathelt, H. and Schuldt, N. A. 2008. ``Between Luminaires and 
Meat Grinders: International Trade Fairs as Temporary Clusters''. 
Regional Studies. 42:853-868.
---------------------------------------------------------------------------
    Intel ``Copy Exactly'' in which Intel copies successful factories, 
right dow n to the paint colors, on the theory that they don't always 
know what makes a factory successful, so just copy everything. [http://
tr.im/lZXh]
Impacts
    Partnering or providing space for groups that have skills very 
different from conventional R&D, but can contribute to the development 
of innovative products or services--arts or cultural groups, human 
factors or ethnographic researchers, even financial engineering firms--
may encourage unique cross-fertilizations that forms the basis of 
competitive advantage.
    Some research parks will be able to maintain their viability if 
they can both attract interesting people, and co-locate near useful 
industries or important markets.
    Boutique parks designed to bring together highly specialized 
clusters of existing tacit knowledge could incubate new technologies 
and innovations. For example, these could support creative work 
combining older industrial knowledge with new high-tech expertise.
    For innovations in ``brownfield'' industries, critical challenges 
aren't just technological, but also regulatory, legal and financial. 
Research parks specializing in areas like cleantech, environmental 
remediation, alternative energy, and sustainable development would be 
smart to attract experts in finance, law, and technology policy.
    Manufacturers who want to move up the value chain could be a target 
for new R&D parks.
The Social Life of Small Research Spaces \26\
---------------------------------------------------------------------------
    \26\ The title of this section is a reference to Willam ``Holly'' 
White's pioneering videographic studies of how people use public 
spaces, conducted in New York City in the late 1970s, and presented in 
a film and book titled The Social Life of Small Urban Spaces. [http://
www.pps.org/info/products/Books_Videos/social_life]
---------------------------------------------------------------------------
    Traditional business incubators will fade away, replaced by new 
kinds of spaces for entrepreneurship and collaborative research. Pop-up 
labs, co-working hubs, mobile incubators and disposable research parks 
will provide flexible physical spaces for R&D. Rather than warehousing 
workers, they will meet a need for communal collaborative meeting space 
in a world of increased mobility within and between workplaces. They 
will be neutral places where networks of investors, entrepreneurs, 
hackers and customers converge for collaborative knowledge creation and 
trust-building, cementing relationships initiated and cultivated 
online. Overlaid grids of social software will enhance serendipitous 
discovery inside these spaces and knit them together in local, regional 
and global networks of collaboration.
Signals
    The rise of coworking and communal rent-a-desk and drop-in 
offices--[http://tr.im/lkjQ]
    Kitchen Budapest, a ``pop-up'' media lab [http://www.kibu.hu/en]
    Angel network in residence at Cambridge Innovation Center [http://
tr.im/lkke]
    Throw-away research parks--Phase Z.Ro in Singapore [http://tr.im/
lkkt]
    Oklahoma City's mobile biotech incubator--relocate the incubator 
instead of the growing company [http://tr.im/lklf]
    The Hub's global network of social enterprise incubators [http://
the-hub.net]
    Charge-by-the-hour incubator space [http://www.globaloasis.fi/]
Impacts
    The collaborative magic of small research places depends heavily 
upon the ability of managers to ``produce'' and ``direct'' the space 
like a ``show'' on a daily basis. This involves coordinating events, 
both formal and informal, ensuring a steady flow of new people and 
ideas through the space, and making connections between participants. 
This is a very different set of skills than the typical research park 
manager or economic developer today. The shift from managing land use 
and real estate to managing activity (or both) will require a 
fundamental shift in perspective.
    Small research spaces are the physical side of lightweight 
innovation, allowing big companies and their smaller partners to come 
into direct contact. As architect Frank Duffy writes, ``Conventional 
office developments exclude or marginalize workspace at lower rental 
levels and thus diminish the possibility of mutually beneficial 
interactions between large, mature businesses and smaller, growing 
enterprises.'' Simply moving small bits of the company out of the main 
campus (like Corning, Yahoo! and Intel have done in recent years) will 
not be enough. Corporations and startups will need to co-locate within 
the same buildings, forming ``coalitions of interest''.\27\
---------------------------------------------------------------------------
    \27\ F. Duffy. 2009. Work and the City. (Black Dog: London)
---------------------------------------------------------------------------
    Small research spaces, because they lack the scale of research 
parks, are heavily dependent upon social networks to extend their reach 
and connect to external resources. Social networks are the demand 
generators for these spaces, as online communities develop needs for ad 
hoc, temporary or on-demand meetings, these spaces will need to develop 
business models to meet those needs.
    The new leasing arrangements of small research spaces--monthly, 
weekly, daily, and even hourly rate structures--will overturn the 
supply chain for commercial real estate, which evolved around long-term 
leases of 10 years or more. As Duffy points out, conventional leases 
block feedback from users in the design and construction business. By 
providing direct daily feedback to property managers, research 
``hotels'' might introduce end-user innovation to architecture for the 
first time in a century.
    Many of these small spaces are driven by more than just business 
objectives. A growing number seek to further social goals by incubating 
social ventures (Front Seat Software in Seattle, The Hub in London) or 
by gathering disparate firms and communities in just-emerging sectors 
like sustainable design (Treehouse Brooklyn).
    Finally, small research spaces present an opportunity to make R&D 
more transparent--engaging not only partners, customers and suppliers, 
but also a broader public as well. Already, we see many firms engaging 
lead users through beta tests and iterative design processes--it is 
only a matter of time before the physical organization of research 
adapts to support these activities.
From Research Parks to Regional Knowledge Ecosystems
    Translational research--science that transcends basic and applied 
research--and successful commercialization of the resulting technology, 
will grow increasingly complex. To succeed, these efforts will require 
coordinated investments at the regional level, because no single 
organization will have the capacity to perform all of many steps 
between lab and market. Because of this, we will see an expansion of 
new institutions and governance structures operating at the regional 
level whose goal will be to encourage knowledge creation at the cutting 
edge and develop the organizational, human and social capital at the 
scale needed to compete globally. These institutions will stretch far 
beyond the regional networks of today to include not just university 
and corporate leaders but also entrepreneurs, investors, professionals 
and amateurs. By their very nature, regional knowledge ecosystems will 
transcend traditional industry boundaries, seeking to create capacity 
to quickly re-invest resources and re-invent industries in response to 
global shifts.
Signals
    East Bay Green Corridor in California--coordinated regional 
approach to growing and attracting cleantech industries. [http://tr.im/
m250]
    North Carolina Research Parks Network pooling marketing and long-
term strategic planning resources.
    ;resund IT, a regional body in Denmark and Sweden, expansive 
mission includes identifying and initiating R&D projects. [http://
www.oresundit.com/?id=41]
    World Bank infoDev project global incubator network [http://
infodev.org/en/Publication.6.html]
Impacts
    The risk-spreading logic behind a regional approach to technology-
led development is parallel to the innovation zone strategy of 
universities. In their seminal study of U.S. research parks, Luger and 
Goldstein concluded ``one of the few generalizations we can make about 
the net benefits of research parks is that they are far from certain.'' 
By scattering investments across a number of real estate, 
infrastructure, venture and human capital investments regions have more 
chances of success, albeit on a smaller scale, than a single bet on a 
research park.
    Spreading risk may also improve resilience and agility in periods 
of economic turbulence or great technological change. The strength of 
regional knowledge ecosystems is that they can adapt faster than 
national systems, which are dictated by national politics, and they can 
scale up successful enterprises much more effectively that individual 
research parks or municipalities. In fact, one of the best models for 
future regional alliances may be the regional readiness partnerships 
pioneered by the disaster management community, which are wholly 
voluntary , but flexible and effective.\28\
---------------------------------------------------------------------------
    \28\ S. T. Ganyard. May 18, 2009. ``All Disasters Are Local'' New 
York Times. Opinion/editorial.
---------------------------------------------------------------------------
    For these reasons, it is likely that regions will become the new 
default starting point for formulating technology -based development 
strategies, with the pressure to do so coming both from the top-down 
and the bottom-up. National governments will increasingly delegate 
research funding decisions to regional networks, while a constellation 
of small, local players will require greater assistance in leveraging 
regional assets. Regional strategies that anticipate obsolescence and 
disruption will permit resources to support the continuous learning of 
the workforce and upgrading of research infrastructure.\29\
---------------------------------------------------------------------------
    \29\ M. Joroff, W. Porter, Feinberg, C. Kukla. Enabling Work 
Practice (Cambridge, MA. MIT School of Architecture and Planning, 2008)
---------------------------------------------------------------------------
    For firms, there are many potential gains from public stewardship 
at the regional level. The need to tap regional and global knowledge 
pools, research infrastructure and talent are at odds with economic 
development strategies that focus on particular parcels of land, 
campuses or local jurisdictions. Recent research on the dynamics of 
technology clusters points toward two important flows of knowledge that 
play different roles. ``Local buzz'' is the dialogue of rumors, 
knowledge and other information within a geographic cluster. ``Global 
pipelines'' are the flows of more codified kinds of knowledge that 
firms obtain through business relationships with distant firms. 
Regional knowledge ecosystems could become mechanisms that improve both 
functions--speeding the flow of knowledge in a regional cluster, but 
also making it easier for firms to import knowledge and amplify the 
spillover benefits to other firms in the region.\30\
---------------------------------------------------------------------------
    \30\ Bathelt, H., Mamlberg, A. and Maskell, P. 2002. ``Clusters and 
knowledge: Global buzz, local pipelines and the process of knowledge 
creation''. [http://ideas.repec.org/p/aal/abbswp/02-12.html]
---------------------------------------------------------------------------
    Regional approaches to technology-based economic development are 
not without their critics however. By spreading risk, regional 
approaches may spread government research support too thinly across 
many institutions, preventing the formation of a critical mass that can 
achieve breakthroughs. Some innovation economists also argue that 
regional approaches distract policymakers from the needs of firms--and 
that it is individual companies that are ``competitive'' not regions or 
clusters.\31\
---------------------------------------------------------------------------
    \31\ ``The fading lustre of clusters''. Oct. 1, 2007. The 
Economist.
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    As regional knowledge institutions develop, and innovation zones 
and small research spaces proliferate, it is entirely likely that the 
term ``research park'' or ``science park'' will gradually fade from the 
vocabulary of economic development. For existing parks, the rise of 
regional ecosystems will require a major reinvention. It means 
expanding the range of workplaces they connect to and manage--in fact 
this will be a major value proposition for them. Park managers can play 
a role in helping tenants build bridges between core centrally owned 
space and non-core spaces like homes, cafes and airports--all the other 
places where people actually work. Buildings need to transform into 
platforms that are resilient enough to enable disruptive 
reconfiguration.
Part III--Three Scenarios of the Future
    Trends are valuable for understanding directions of change in areas 
that will help shape the future. But the future is a complex and messy 
place, and will be shaped by many trends acting in combination. If we 
only look at individual trends in isolation, we will miss the big 
picture.
    Scenarios are a tool for thinking about the future in all its 
complexity. While it is highly unlikely that any scenario we envision 
in the present will come true in its entirety, parts of scenarios 
might, and the discipline of thinking systematically about the future 
allows us to prepare for better decision-making in the present and near 
future. Some places may confront one of these scenarios more than 
others. Some may confront all three and have to make choices about 
which direction they want to go. Others may find these irrelevant but 
the process of systematically thinking through how they would react to 
them develops future thinking literacy and skills.
    Four external trends were pivotal in shaping these scenarios, 
because of their broad importance in setting the background for 
technology-based economic development. They are also have a high degree 
of uncertainty, and may play out in a variety ways. These highly 
uncertain trends are:
    Universities. Some universities will embrace entrepreneurialism 
while others reject a larger role in the economy. But all will face 
challenges navigating the conflicting demands and increased strains of 
a shifting economic and intellectual role. (see ``Universities: From 
Ivory Tower to Economic Engine'', page 25).
    New science institutions. Professional societies, journals and 
other institutions that set the basic rules of who can call themselves 
a scientist, and how they should conduct research and share results, 
will come under tremendous strain. Something will replace these 
institutions, but how will it connect to existing and new places in the 
future? (see ``Institutional Transformation'', page 21)
    Sustainability. The cost of energy will drive business and policy 
decisions across the board. How will R&D ecosystems react to different 
energy frameworks, and the scientific and technological challenges of 
battling global warming? (see ``Ecological Economics Comes of Age'', 
page 13)
    The bio-industrial complex. Bioscience will supplant physics as the 
source of great breakthroughs, but will the fundamental flaws in 
systems for commercializing those discoveries be fixed, and what role 
will places play, if any? (see ``Biology: Nature As Source and Code'', 
page 15)
    By combining plausible hypotheses about how these factors might 
play out in combination, we developed three scenarios for the future of 
research parks set around the year 2025, that are intended not to be a 
prediction of what will happen, but what could happen, with the goal of 
provoking strategic thinking about what we can do today to get ready, 
build resilience, and develop the ability to think systematically about 
the future:
Scenario 1--Science and Technology Parks 3.0
Incremental Change Adds Up
    A time-traveler from 2009 would still recognize the research parks 
that are being built in this scenario, all over the world, at roughly 
the same level as today. But looking deeper inside them, he will see 
that these parks are upgraded versions of their predecessors--faster, 
more efficient and with more features. They are starting to bring 
conventional tenants together with new kinds of collaborative networks, 
and leveraging the intellectual resources of universities more 
effectively than today. Put simply, they are doing some things right, 
but some opportunities have been passed over due to the risk involved.
    Parks have developed deeper formal ties to universities and 
companies alike, but technology transfer is still a long, inefficient 
and uncertain process, and parks still play a limited role. Regional 
partnerships are helping to pool marketing resources and create global 
brands, but are not actively managing ecosystems of knowledge, talent 
and investment. New science networks overlap and occasionally connect 
to parks and campuses, but they still form and grow mostly outside the 
sphere of parks' influence. The most successful parks are almost 
exclusively housing or incubating biotechnology and biomedical R&D, and 
investing significant resources in bridging some of the industry's 
structural obstacles to innovation--though progress is incremental.
Universities as Catalysts
    Part of why parks haven't changed much is because universities have 
changed a lot. Many of the commercial and entrepreneurial functions of 
parks are now seamlessly integrated into campuses and curricula. Both 
faculty and students are supported and rewarded for entrepreneurial 
activity. The humanities shrink in relation to business and 
professional training. There has been a lot of innovation in how 
universities manage intellectual property and technology transfer. With 
private research institutions stealing away the best faculty, they 
really had no choice.
Parks as ``Living Labs'' for Sustainability
    One area that research parks have made a calculated gamble is in 
sustainability. The economy is still going through a managed transition 
new energy regime, but it has been expensive and difficult. Early on, 
research parks seized the opportunity to distinguish themselves as 
centers of experimentation in sensing, energy and resource management. 
A select group has pioneered its own performance standards that go far 
beyond LEED--they are carbon-negative and are now global centers for 
innovation in the booming business around managing carbon.
Bringing Biotech and Big Pharma Closer Together
    The Bio Economy hasn't truly blossomed yet, due to continuing 
structural deficiencies in the industry's structure. But one outcome of 
the Great Recession of 2009 was a vastly expanded role of big pharma's 
strategic venture funds in financing early-stage startups.\32\ In this 
scenario, parks have positioned themselves as strategic sites for big 
pharma and biotech startups to co-locate. Parks provide flexible space 
for both short- and long-term collaborative research projects. Parks 
that accommodate a wider range of R&D and manufacturing are attractive 
to more vertically-integrated biocompanies. The most successful parks 
are positioned as key nodes for translation between biology lab and the 
marketplace (and back). They have also diversified connections between 
science parks and universities, so that life sciences are more strongly 
linked than today.
---------------------------------------------------------------------------
    \32\ P. Mitchell. 2009. ``Corporate venture funds chase early-stage 
deals''. Nature Biotechnology. 27(5):403-404
---------------------------------------------------------------------------
A Spur on the Science 2.0 Highway
    New science networks and institutions are blossoming online, and 
research parks and their partners are listening to and participating in 
these activities. But parks are not the primary places where these 
networks are ``coming in for a landing'' in the real world but not 
leading. The main highways of Science 2.0 pass by parks, but not 
directly through them. The result is that its harder for tenants to 
really connect to these vital communities of innovation.
Scenario 2--The Rise of Research Clouds
Disruptive Competition from Outside
    On a sunny morning in 2015, ScienceSpaces.com went live. Targeted 
at everyone from angel investors to corporate real estate managers, 
ScienceSpaces provides a real-time global directory of available 
research space at small, independent incubators and pop-up labs around 
the world. These spaces are distributed, agile and lightweight. They 
pop--up overnight as needs change, and disappear when their usefulness 
has run out. Many are tenant-owned cooperatives.
    A year later, ScienceSpaces added a rich set of collaboration and 
innovation management tools, providing tenants with new ways to 
coordinate leasing and research projects across a ``research cloud'' of 
small facilities. This model combined the scale efficiencies of 
traditional research parks with the diversity and dynamism of small, 
social collaborative research spaces.
    Research parks everywhere scrambled to respond to this new 
competitive threat.
An Oort Cloud Around Universities
    Like the Oort cloud of comets that surrounds the solar system, 
invisible but carrying the chemical seeds of life, the research cloud 
is an almost invisible, but crucial mass orbiting research 
universities. Some universities find ways to leverage this, but many 
don't.
    The universities that don't get it fail to see that they are losing 
their dominance as hubs in regional knowledge ecosystems. Their stodgy 
IP frameworks and huge cost overhead make them very uncompetitive for 
anything other than teaching. Their research parks are trying to re-
invent themselves into the cloud, and are disconnecting from the 
university partners that now present more of a liability than an asset. 
Academic institutions remain useful as sources of labor.
    Ironically, it is universities with the smallest endowments that 
embrace the cloud most tightly, as they are priced out of large-scale 
expansion. They are aggressively shifting away from the ``research 
campus'' model, and toward an ``innovation zone'' model. By engaging 
with cloud players, they can spread the risk of spin-off activities 
among multiple participants. Development is more incremental, with less 
master planning and more evolution. Extensive reuse of existing 
buildings will also reduce costs of housing the cloud.
A Crucible for New Institutions and Networks
    The research cloud isn't just a hub for new science and technology 
institutions--it is a platform for creating them. Since the cost of 
forming groups is basically zero, new groups are forming all the time 
around emerging fields of research, particularly challenging problems 
and new business models.
    In the beginning, because it was outside the traditional system, 
the cloud had to invent new structures on the fly, and developed new 
platforms for reputation and rewards. These workplaces ar e peppered 
with sensors that ``mine reality'', helping the inhabitants be more 
effective and engineering meaningful chance encounters. But the sensors 
also help record people's contributions to the collaborative community. 
A sensor-rich environment could automagically note the 15 minutes you 
spent mentoring a young entrepreneur by the water cooler and credit 
your reputation account.
    A small but growing number of research parks are injecting pieces 
of the cloud into their campuses, sites and buildings. These spaces are 
playing the role of the coffee houses of the 17th century. They are a 
place of open discourse among people from business, academia, startups, 
craftsmen, policy people, users, amateurs, etc.
Parks Hobbled High-energy Infrastructure Puts Parks at a Disadvantage
    Parks and universities are at a competitive disadvantage to clouds, 
because they have lots of legacy infrastructure, underused real estate, 
and are big targets for regulation and citizen watchdogs. Bioteaming 
becomes a popular approach for managing clouds. Research parks that are 
connected to manufacturing are quickly adopting industrial ecology 
strategies or facing public scorn.
Lightweight Approaches Push Biotech R&D in Productive New Directions
    While many critics thought biotech needed vertical integration, 
fewer networks and longer investment horizons, research clouds are 
showing that going in the other direction, hard and fast, can actually 
produce new industry structures capable of major scientific and 
technical breakthroughs.
    Probably the biggest gain has come from the freedom clouds gain in 
how they manage intellectual property due to their lack of 
institutional legacy. Clouds make major contributions to knowledge 
commons like the Registry of Standard Biological Parts, and because so 
much of what they know is tacit, patents don't really matter that much. 
When knowledge leaves the cloud, it still has to be translated into 
something consumable by more traditional partners, but within the cloud 
many of those bottlenecks to knowledge circulation, that serve as 
barriers to innovation elsewhere, are gone.
Scenario 3--Dematerialized Innovation
Research Parks in Decline
    In 2011, the number of research parks worldwide peaks and then 
begins to decline. The beginning of the end was the Great Recession of 
2009, which devastated the commercial real estate industry and 
decimated university endowments, cutting off two of the main sources of 
funding for research parks. But what really spelled the end for 
capital-intensive parks was the Energy Shock of 2012, when a renewed 
global economy picked up where it left off in terms of resource demand. 
Virtual R&D networks made big gains during these crises, allowing 
companies to maintain an innovation pipeline in times of austerity, 
while gaining greater flexibility and lower fixed costs. During each 
successive crisis, this beachhead of dematerialization has expanded, 
and today half of all innovations come from research teams that are 
highly virtualized--only in the last few steps of development does any 
real face-to-face collaboration happen.
    There are many possible triggers acting alone or in concert--high 
energy costs, falling R&D productivity, or a protracted global 
recession. Since technology just isn't solving economic, social and 
environmental problems, the few remaining productive research 
enterprises become highly virtualized to cut costs. Existing parks fail 
to provide value to virtual networks, and don't create local and 
regional systems to create sticky know-how. Research parks are 
obsolete, mere office parks.
Universities Retreat to the Ivory Tower
    Universities have become nothing more than very expensive coffee 
shops. Much of what they provide can be replicated in other places, or 
online through new platforms. Distance learning, which took off during 
the years after the recession, is now serving a large swath of the 
student population. DIY and peer-produced education is easy to assemble 
from vast learning resources online. People create and share curricula 
as pages of hyperlinks to archived lectures, documents and simulated 
learning environments.
Parks as Event Spaces
    While demand for traditional, long-term leased private space is 
shrinking, the rise of distributed teams does not mean that teams never 
gather. On the contrary, there is a rapidly growing need for spaces 
that can house teams and other gatherings for a few hours, days or 
weeks. Some parks are reinventing themselves as event destinations, or 
extended-stay research ``hotels''.
Costly Energy Pushes R&D into Cyberspace
    Among the many benefits of dematerialization is its much lower 
measureable sustainability impact. While some argue that virtualized 
research networks merely shift energy consumption from offices to home 
and from organizations to their employees, rather than reduce it, it's 
very difficult to prove this. Parks are at a severe disadvantage, 
because they are geographically contained big targets for ecological 
audits.
Biotechnology Stagnates
    Parks and universities were probably the best possible sites for 
housing the kind of translational bench-to-bedside research that was 
needed to prime the biomedical industry for rapid innovation-based 
growth. The failure of both to compete effectively head-on with virtual 
R&D models means that few places exist that are well suited for 
translational research. Virtual networks are more suited to incremental 
innovation upon existing technologies. Too much dependence on virtual 
networks has also stifled cross-disciplinary conversations as 
communities of interest wall themselves off online, like radical 
political groups. It turns out that too much of a good thing can stifle 
innovation.
Part IV--Strategic Implications
    This forecast has sought to identify the trends that will shape the 
future for technology-based economic development generally, and 
research parks specifically. Throughout Part II we highlighted tactical 
impacts of each of fourteen emerging trends.
    In Part III, we brought these trends together to describe three 
scenarios for the future of research parks and technology regions. Here 
we highlight some broader strategic takeaways that arise from these 
scenarios.
Building Biomedical Places: From Silicon Valley to Biopolis
    Too many assumptions about how technology-led development works are 
based on lessons learned from the Silicon Valley experience. However, 
these successes have not only proven incredibly difficult to duplicate 
but are unlikely to be a good model for successfully growing biomedical 
and biotechnology industries.
    More and more we are beginning to understand the fundamentally 
different nature of biomedical R&D, the current and optimal industry 
structure, and the needs of growing firms. While a place like Biopolis 
in Singapore has literally reframed our thinking about how to build a 
``city of biology'', it has by no means perfected the model. Bio-
industrial regions will cluster along very different rules than IT 
hardware and software did. We have identified several driving forces in 
this study, but more focused research is needed to understand how 
location decisions happen in these future growth sectors.
Building Responsive Universities
    As universities become bigger players in R&D and economic 
development, their relationship with research parks and regions needs 
to be carefully rethought. On some level, the very notion of a 
university as solely a center of research and teaching needs to be re-
examined.
    In our scenarios, universities are among the least adaptive 
institutions. While universities do routinely respond to market and 
economic shifts, they do so over very long periods of time. Today, 
economic development often responds to the needs of universities. For 
regional knowledge ecosystems to become more resilient, they will need 
to encourage universities that are responsive to well-articulated 
regional needs. Structuring these engagements around mechanisms that 
produce tangible benefits for the universities will be crucial.
Future Business Models: from Products to Services
    Each of our scenarios point toward a need to develop new business 
models for technology-led economic development efforts. The first-
generation and second--generation models in use today are mainly driven 
by revenue from real estate development, sales and leasing and 
government subsidy. Potential new models are more likely to be built on 
venture investments, knowledge brokering and event management. The 
overall shift will continue to evolve rapidly from products (buildings, 
sites, infrastructure) to services (research ``hotels'', incubation, 
technology transfer, knowledge commons).
Rewards for Grand Visions
    While the Great Recession may mean the end of big real estate 
projects, it does not mean the end of grand visions. In fact, it is 
during the downtime of a recession that the window for long-term 
strategic planning opens most widely.
    Conflicts in large-scale efforts almost always arise from a failure 
to reach consensus or develop a shared vision early on. So, as a point 
of beginning, regions need to frame and embed a grand strategy in their 
thinking. For example, Research Triangle Park served as a primary 
mechanism for sustaining a m uch broader grand vision of re-inventing 
North Carolina's economy to stem the ``brain drain'' of young talent 
leaving for other parts of the country. The park's business model, and 
the grand strategy of developing the Triangle region worked together 
over a period of several decades.
Making Know-How Sticky
    That original grand strategy for the Research Triangle sought to 
address that generation's challenge of a mobile work force--the ``brain 
drain'' migration of educated workers out of the South. But regions and 
places today face a different kind of mobility--of talent, but also of 
knowledge.
    Figuring out how to create and maintain ``sticky know-how'' as an 
immobile asset will be a central challenge for technology regions and 
research parks. The first step is simply to assess what your ``know 
how'' assets are? What tacit knowledge is locked up in local 
manufacturing firms? How can strategic discussions be focused around 
core competence that can be upgraded and transformed rather than 
replaced?
Working at the Very Large and Very Small Scale Simultaneously
    As they develop grand visions, and align interests behind them, 
successful regions are going to need to work simultaneously at the very 
small scale--unlocking the secrets of small research spaces and finding 
new ways to scale them quickly and coherently. Understanding the 
research cloud requires understanding its overall mass and shape, but 
also the diversity of its many fine-grained parts.
    The first step in mapping this cloud will be engaging it. 
Identifying various elements and players in the cloud will be 
challenging, but we have identified many new players, groups and 
elements here--science bloggers, coworking spaces, angel investor 
networks. These can be the foundation upon which to begin discovery of 
the truly off-the-radar assets. The challenge will be creating venues 
and opportunities to bring the cloud out into the open so you can 
engage them.
Cultivating a Regional Knowledge Ecosystem
    Beyond visioning, there are also several possible drivers of new 
institutions that take on the role of knowledge ecosystem managers at a 
regional level. As we discussed earlier, in highly successful regions, 
this role is played by venture capitalists--the ultimate brokers of 
tacit knowledge in technology-based economies.
    In aspiring regions, future ecosystem managers might:

        --Support and coordinate research across a network of 
        ``boutique'' research facilities

        --Coordinate research among universities across a region, 
        acting as a broker for national research funding streams

        --Funding and making available major technology 
        commercialization infrastructure (e.g., wind tunnels, 
        supercomputing centers, etc)

        --Rather than operate venture funds, invest in capacity for 
        entrepreneurship broadly to develop the talent and high-quality 
        startups that will attract private capital as a natural 
        development.
Leadership for the ``Long Now''
    Regions need a leadership structure that can prepare for the ``long 
now''--an extended view of how today's actions connect to future 
outcomes. Just like the massive science projects it will support, 
building and supporting regional knowledge ecosystems will require 
sustained, coordinated effort over many years. This is not something 
that will be accomplished overnight or under the influence or control 
of any one leadership group. This structure will need to bring about 
trans-generational hand off of stewardship over the grand vision, to 
avoid the zigs and zags that kill most plans. It won't happen 
accidentally, so it needs to be ``designed in'' from the beginning.
From Managing Dirt to Managing Activity
    As research spaces become more collaborative, and the boundaries 
between firms, between institutions and between individuals will need 
to be re-designed. Places like the Network Oasis in Joensuu, Finland, 
are beginning to develop the tools and skills for ``serendipity 
management''. The notion of planning for chance encounters is counter 
intuitive, but that is exactly why it is important and why it works. 
Creating spaces where firms, individuals and small groups can develop 
new trusted relationships will be an enormous source of value creation.
Re-assessing Assessment Tools
    There is a pressing need across all aspects of the economic 
development profession to develop better ways of measuring assets and 
outcomes, and re-thinking just what it is that needs to be measured. As 
we shift toward more open innovation networks and regional knowledge 
ecosystems, the most important things to understand will be what 
happens between institutions. But most assessment tools measure what 
happens inside institutions. In addition to understanding the scope of 
institutional activity, we need to map the pipelines of people, ideas 
and money moving through regions. The goal is to develop a vocabulary 
for talking about networks in detailed and specific ways, rather than 
the vague ways we do today.
Developing Brands
    Because regional knowledge ecosystems will grow increasingly 
complex and multi-institutional, brands will become more important, not 
only in marketing to outsiders but in describing just what people and 
organizations are doing and inspiring them to new achievements.
    Today, not many regions do a good job at brand management. In the 
future, building a brand as an identity that can describe and 
communicate the unique value of a knowledge ecosystem will require 
active cultivation on an ongoing basis. The ``grand strategy'' 
discussed earlier can be a powerful tool in testing and maintaining 
consistent and effective brands.
    Brands will be crucially important in attracting globally mobile 
talent and earning reputation in new group economies.

    Senator Pryor. Thank you, Dr. Townsend.
    Let me go ahead and dive into some questions, here. And 
then I'm going to try to keep my question period short, if I 
can, and let Senator Begich ask questions. And I may have a few 
follow-ups.
    But, Dr. Wessner, let me start with you. You've shown this 
graphic, up here, about the--China's 54, I guess, state-level 
and technology parks and, you know, how they've been able to 
utilize those and help them invent, really, their industrial 
base in things like electronics, information technology, 
materials, biotechnology, et cetera, et cetera. You alluded to 
this in your opening statement, but if you could tell the 
Committee here, really, how the United States compares with 
China when it comes to this type of innovation and this type of 
commitment to innovation.
    Dr. Wessner. Well, thank you, Senator. And I can be very 
brief.
    We don't compare, sir. We don't compare at all. What we're 
good at is--we're very strong on the military side. We watch 
very carefully what goes on in the world. In the agricultural 
sector, we're very strong. We know what's happening in trade. 
But, if you're looking at the level of investment in parks, I 
think my colleagues here would--at least most of them--would 
agree with me that we don't begin to compare. We have small 
parks, some of which are highly effective, but we don't have 
the type of industrial-scale parks that they have.
    And we--I think Brian Darmody made an important point. In 
our efforts to make sure that the public and private sectors 
retain their respective roles appropriately, we have sometimes 
passed conflict of interest--and this is a personal opinion, I 
would stress; I'm not speaking on behalf of National 
Academies--but, the Chinese excel in very close and seamless 
cooperation between their public institutions and the private 
sector. And I think we need to weigh how we approach these 
things more carefully.
    I mentioned a note of optimism. Since we're being out-
invested, the question is, What tools would be appropriate to 
invest? And I think what you've identified is part of the path. 
I don't work on behalf of EDA. They do sponsor some of our 
work, along with about 12 other government agencies. But, I 
would stress that their budget, in my view, needs to be very 
substantially increased, both for grants, but particularly 
where we can get massive leverage through loan guarantees. 
Other agencies may have to provide loans.
    I'd like to stress the point that was made about leveraging 
other agencies' programs so that you get a more integrated 
approach.
    But, I would also caution that we not spend all our time 
trying to integrate everybody. You know, it's easy to say we're 
going to knock down the walls between agencies. Well, you and I 
are both old enough to remember how the Department of Energy 
smoothed out all the differences there, and, of course, 
Homeland Security's been complete success. I think we have to 
be cautious about how much time we spend on that, and spend 
more time--one of your colleagues, Senator Begich here 
mentioned, I think importantly, speed. All of us--or, not all 
of us; some exceptions--are beginning to get a little gray 
hair. And if we're going to give our children and grandchildren 
the type environment that they need to grow in and to prosper 
in, we need to move much more quickly than we have in the past. 
And we need to move on scale.
    I have a number of other points. The other point I'd just 
like--is tax tools that was mentioned; that's exceedingly 
important. We act like we're so good that the industry will 
just stay there, because there's no place to go. Well, that 
might have been true in the 1950s and 1960s, but that is sure 
as certain not true now. And I think Craig Barrett, the former 
CEO of Intel, has spoken eloquently, you know, ``How do I 
explain to my stockholders that I'm going to take a billion-
dollar less--or, a billion dollars higher in taxes in order to 
invest in New Jersey rather than outside of Shanghai or outside 
of Dresden?'' The equity investments made in Dresden for the 
AMD facility, the loan guarantees, the loans put together a 
package of 900 million Euros. And that's why Jerry Sanders put 
AMD's lab, Fab, there.
    Now, we just have to get in the game. And we also have to 
remember that our orthodox economists may have very good 
insights, certainly not in anticipating economic downturns or 
economic upturns. As John Kenneth Galbraith once said, ``The 
main purpose of economic forecasting is to make astrology look 
good.'' But, the issue is that the rest of the world is not 
playing by the same rules. They're playing a different game. 
It's not wrong, morally, it's just the way they're playing the 
game. And we need to have effective tools, and your bill is an 
important step forward.
    Senator Pryor. Thank you.
    Senator Begich?
    Senator Begich. Thank you, Mr. Chairman.
    I do have a 4 o'clock, but I want to, if I can, just do a 
couple questions. But, your statements--and all four of you 
have--I appreciate.
    I've been in small business since the age of 16, so I have 
had those great successes, and also those great failures that 
go along with them. I'm my own incubator and risk-taker.
    [Laughter.].
    Senator Begich. And my wife is an entrepreneur, owns four 
shops in Alaska, and a variety of businesses. And so, 
everything you're talking about rings true to what I'm--what 
I've been around most of my life.
    But, the last comment was very interesting. And it goes to 
my point, when the Assistant Secretary was here. My biggest 
worry with some of the work we do here--and I 100-percent 
support what the Chairman is doing, because I think it is good 
to get some more tools out there, and I'm going to ask you a 
second question, in a second, on, collectively, something--an 
idea I have, sitting here. But, the Federal Government is so 
slow. And that's why China is so successful. And I understood, 
when the Assistant Secretary made the comment that we're not--
we're kind of falling a little bit, but not behind. And I--you 
know, I would disagree with that. I agree with your statement. 
We are behind. Energy technology is one area we're falling 
quickly behind, because we spend more time talking about it--
talking about percentages of what we should have for climate 
change, and all these other things, which I'm a big supporter 
of--but, we're not doing anything. You know, there are little 
pockets, as mentioned in Senator Pryor's home State, of the 
wind energy--wind--the company making turbines. You know, 
great. One. You know? I could talk about one in Seattle that's 
doing some stuff, one in Michigan. But, it's not a collective. 
And I think we lack, in some ways, the capacity, from a Federal 
Government standpoint, to say, ``Get to it,'' because the 
majority of the Federal Government are not entrepreneurs. They 
never walked on the edge and understood risk, and understood 
that you have to take a calculated risk that may not be as 
calculated as you like. But, it might jump off and end up in a 
great opportunity. That, to me, is the biggest systematic 
problem we have.
    I mean, I'm going to support this bill, because I think 
it's the right thing to do. I like some of your ideas. I'm 
going to ask you, collectively, to think about this. As we move 
forward--Senator Pryor, myself and others--as we move into 
January, we're going to be very aggressive about more job 
opportunities in this country. More job opportunities. The 
largest and fastest growth area is small business. That's where 
we can create some opportunity.
    I'm not sure we're going to create the right tools, to be 
frank with you. We, marginally, did it in the stimulus bill. I 
say, ``marginally,'' with quotations around it. We have to be 
aggressive.
    And so, I would look to you on some ideas, especially as we 
move into the beginning of the first of the year, working, 
obviously, with the Chairman here--and I'd be happy to work 
with you on four or five very targeted collective ideas that we 
can do to help spur the entrepreneur capacity in this country. 
I just----
    So, I look to that. Your questions and your statements made 
me really just want to make a comment, and I'm happy to have 
you respond. But, I think our biggest challenge is, you know, 
doing what we should be doing, and that's leading, and not get 
in the way. We have a habit of leading and then getting in the 
way. And I can give you example after example, as you can with 
universities, where they are great incubators. You know, we 
have the Alaska Small Business Development Center. Fantastic. I 
just saw a letter from someone, that was given to me about a 
small business, who wants to start-up, but she's struggling to 
figure out how to do that.
    And so, if you can give me just some quick commentary, then 
I--I apologize, I have to leave. But, I'd be very interested in 
the second half--and I'm assuming Senator Pryor would, too--and 
that is, help us, as we move forward as the U.S. Senate--after 
healthcare, we're going to move forward on an America Works 
Project bill that's going to be about creating new jobs and 
looking to the future. And some of these ideas, the bonding 
issue--I know exactly what you're talking about. And I can list 
off some ideas there, and that's why I was very intrigued.
    So, let me, first, just end there, see if there's any 
commentary. My time is limited. But, please, anyone want to 
respond?
    Mr. Sallet. Could I offer one thought----
    Senator Begich. Sure.
    Mr. Sallet.--Senator?
    It's exactly right. The paradigm ought to be local 
leadership, businesses, educational institutions, governments, 
NGO's, working together. So, it has a business focus and 
immediately reflects the insights of the local business sector. 
And then, the Federal Government needs to align itself in 
support of strategies that are created at the regional level. 
That would take a lot of doing. There are something like 200 
Federal programs that have been identified.
    Senator Begich. Yes.
    Mr. Sallet. What they need to do is to think about 
themselves as supporting this kind of regionally-led 
strategies. Now, that will require coordination across 
agencies. It will require that some programs be changed some, 
in their emphasis, to make sure that they are always aligned 
tightly with regional economic strategies. But, if we do that, 
then we will know that the leadership is coming from where the 
leadership needs to come from, but that the support exists at 
the national level, because all of the Nation benefits from the 
total output of the regional economic strategies.
    Mr. Darmody. And, Senator, you know, earlier was mentioned 
Sandia Park, and Los Alamos, as well, in New Mexico. And those 
parks are Federal, but they're managed by the private sector. 
And so, they have a lot more flexibility; government is not in 
the way as much as it is for other Federal labs that are 
government-owned and government-operated. And we're not going 
to, you know, suddenly make all of our Federal labs privately 
managed. That, you know----
    Senator Begich. Right.
    Mr. Darmody.--that's more complicated than the healthcare 
bill.
    [Laughter.].
    Mr. Darmody. But, you could take--you know, reduce the 
friction by doing what universities have done. They've created 
foundations and other organizations to help the business of 
tech commercialization. Take that piece. I mean, we're 
investing $25 billion right now, every year, in Federal labs. 
And so, if you gave them more opportunities, through a sort of 
a foundation--I mean, the Henry Jackson Foundation that--
Congress created that; that's at the Uniform Health Services 
University--very effective in tech commercialization. But, it 
was a foundation created by Congress. But, it's not 
governmentwide; it's for one particular agency.
    So, some of those ideas--I think there are best practices 
out there. Making them more across the board for the Federal 
Government, as well as for universities--some of these ideas 
about, you know, helping build the commercialization funding 
strategy in our research and development funding programs, 
which currently doesn't exist--I mean, we passed Bayh-Dole, but 
then we thought, you know, the royalty checks were going to 
roll in. It doesn't happen that way. It's a much more 
complicated commercialization process. And we need that--OMB 
and others to recognize that there's cost in the initial stages 
of tech commercialization.
    So, there are a number of programs that could be done 
administratively, wouldn't even necessarily need significant 
legislation.
    Senator Begich. Thank you.
    I hate to do this. My time was exceeded, so I don't want to 
burn up the Chairman's time. But, I thank you for that. I 
would--and I will probably follow up with some of you in 
regards to some ideas. But, I just--it's frustrating. I set up 
a development corporation when I was a mayor, because I didn't 
want us messing it up. And, to be honest with you--and we took 
a hazardous wastesite, as one example, and turned it into a 
$70-million development, using a BEDI grant and a few other 
pieces. But, the private sector did the show. And we used a 
development corporation to really be the instrument, and kept 
us out of it. I still have, I think, local city council members 
mad at me because I got--cut them out of the process. But, we 
got it done in 14 months. So, it's all about how to do it, not 
just sit there and debate it all the time.
    But, again, thank you very much.
    Thank you, Mr. Chairman, for allowing me a little 
flexibility there.
    Senator Pryor. Thank you.
    Dr. Townsend, let me, if I may, ask you a question. I 
believe you used the term ``research clouds.'' Tell me what 
that means.
    Dr. Townsend. Well, I just want to start out by reminding 
everyone this is a forecast and not a prediction. It's sort of 
difficult to understand how many different trends that are 
shaping the future will intersect 10, 20 years out. But, I 
think what we see are a lot of signals in the marketplace that 
this traditional model of, kind of, drawing a line around a 
piece of land and saying, ``Everyone that does science and 
technology, get inside that box,'' is something that's going by 
the wayside.
    What it is being replaced by are districts, zones, 
geographic clusters of facilities, labs, shared workspaces, 
university facilities, and private-sector speculative lab-space 
developments that are all tied together by the Internet, 
basically; by shared social networks, by Facebook, by 
scientific communities that form online.
    What we think is going to happen down the road is that 
someone is going to try to organize that and formalize that. 
And the way that might work out in the future is that, rather 
than going to a research park to get 10,000 square feet of 
space, a company might tap a network and say, ``I need 10,000 
square feet of space. I want some of it to be private, some 
collaborative, and I want it to be sort of in the same area.'' 
And that can be provisioned very rapidly and very efficiently.
    This model would have lots of advantages. It would probably 
be more efficient, in its use of space. It would probably 
reduce the risk for everybody involved, because you'd go from 
long-term leases to temporary leases. And it would foster 
collaboration, because it would also include a lot more shared 
space.
    Now, this is something we see already happening, naturally, 
in places like the--part of Cambridge, Massachusetts, around 
MIT. It's also something that's starting to become part of 
university-driven economic development strategy. So, if you 
look at the greater Oakland Keystone Innovation zone, around 
Carnegie-Mellon in Pittsburgh, they're not doing a single-park 
expansion of the campus. They're scattering investments, 
engaging lots of partners, and doing things in a very organic, 
evolutionary fashion.
    And so, we think that's a very compelling middle ground 
between the model, that we have continuing for 20 years, and 
research parks basically going into decline.
    Senator Pryor. OK.
    Mr. Darmody, let me ask you. Apparently, the University of 
Maryland research park, M Square----
    Mr. Darmody. Yes.
    Senator Pryor.--is that what they call it?
    Mr. Darmody. Yes.
    Senator Pryor. Could you tell us a little bit about that, 
and, kind of, what they're doing there, and what makes them 
stand out?
    Mr. Darmody. Well, because we're located inside the 
Beltway, we have three focus areas, kind of building 
partnerships among the university, the Federal Government, and 
the private sector. And among the Federal Government--I mean, 
we've talked about stovepipes here. So, for example, in food 
safety and food security, we have the FDA, the food safety part 
of the FDA, headquartered in our park. We also do--we have part 
of USDA. So, you know, the way we regulate food safety in the 
United States, we have USDA, a piece of it; FDA, another piece 
of it. We've brought them together. We've been the 
intermediary, as well as the university. And now we're bringing 
in private-sector people. And we're doing training, for 
example. So, you know, 40 percent of all of our food is 
imported, is now a commodity. So, if the food isn't grown 
safely and tested in other countries, that's an issue for the 
U.S. So, we are doing international training. We're setting up 
both regulatory and toxicology training so that other countries 
are going to adopt U.S. standards in food safety and food 
security, and that will help us. It helps build better science, 
because, really, science parks and research parks need to be 
thought of a communities of innovation. And, given our 
location, we've leveraged a--Federal, private sector, and the 
academic sector for that.
    And we're doing something similar with global climate 
change, where we have Department of Energy, NOAA, and NASA. We 
put them all together in the same place. Again, the Federal 
Government has some global climate change in each of those 
three departments.
    We've been the intermediary. And I think that's a good 
model. And even the private sector is looking at that, because 
insurance companies are--you know, have risk related to global 
climate change. They want to know what the proper models are.
    So, that has been our experience. But, then other parks 
across the United States have had more of a small business--
trying to build innovative companies out of--technologies out 
of universities.
    So, as the saying goes, ``If you've seen one research park, 
you've seen one research park.'' Because, frankly, they are 
very, very dissimilar, but they all add value and create new 
innovations for the country.
    Senator Pryor. Right. Well, thank you.
    Mr. Sallet, let me ask you. In the bill, in the Building a 
Stronger America Act, it requires the planning grants to be 
awarded on a competitive basis and to consider geographic 
diversity. Are those the right two criteria? I mean, does that 
make sense to you?
    Mr. Sallet. It does. The--having a competitive process is 
very important, for two reasons. One, the nature of competition 
will create the right incentives for local places to create 
real strategies. Knowing that they will have to compete for the 
money, it will help bring businesses together with the other 
parts of the community, to have a really thought-through 
strategy.
    The second thing it will do is help to ensure the 
efficiency of Federal spending, which is very important, in 
times of necessary fiscal restraint, by putting money to where 
it will have the biggest impact while, frankly, giving people, 
even who don't win a competition, the chance to learn from the 
experience and do a better job next time.
    At the--the provision on geographic dispersion is also very 
important. We have a tendency to think about clusters in 
innovation as if they're urban phenomenon. They're not. I mean, 
there's a lot of manufacturing in rural America that people 
don't take enough account of, for example. And we've seen, in 
the last year, a sharp decline in that kind of manufacturing 
employment. Automobiles, an obvious area. But, that's not just 
big cities in the Midwest; it's rural locations, as well. We've 
seen a decline in apparel, textiles, and paper products.
    And so, it's very important that we understand that the 
advantage of geographically concentrated innovation will work 
in rural America. And by emphasizing geographic dispersion in 
the bill, you've made people focus on that.
    Here's one reason why rural America has advantages. We know 
that rural America, when it comes to converting patents of 
well-established technologies, is just as good at it, has just 
as many patents as urban America. We know there are advantages 
in costs. For example, in advanced manufacturing, these days, 
we used to think of manufacturing as something that can't be 
done in the United States because wage costs are too high. But, 
as we get, particularly in the area of semi-conductors, in the 
world of advanced manufacturing, labor costs actually shrink. 
What companies need is to be in a nexus of innovation in places 
where community colleges are training workers for those kinds 
of advanced manufacturing. What rural economies have a good 
base for manufacturing--good wages that provide those kinds of 
opportunities. So, we need to keep our emphasis on rural 
America.
    Indeed, if I could just say, Mr. Chairman, I know that 
you've been very busy, of late. And the healthcare debate is a 
critical one. It--I think we're all appreciative of the fact 
that you've taken a moment out of that healthcare debate to 
focus on this, because this isn't the front-page story that 
healthcare was this morning, and will be tomorrow. But, 
actually, if we're going to have the new building blocks of 
American competitiveness, it's fundamentally important. And so, 
it's--we're all very appreciative that you've taken the time to 
focus on it.
    Senator Pryor. Well, thank you.
    And thank you all for being here. And I really appreciate 
your participation today, and your very thoughtful comments.
    And I know that you've helped my staff, and other staff on 
the Committee and other member staffs, to help us make this 
Building a Stronger America Act even better. And we're going to 
continue to improve it. So, if--we're working with Senators on 
both sides of the isle, here, to try to really have a good 
piece of legislation that we can get very broad bipartisan 
support for, and your assistance on this has been invaluable. 
And I hope we'll continue to discuss this as we go through the 
process.
    We're going to leave the record open, here, for just a 
week, maybe 4 or 5--let's say 5 business days. We're going to 
possibly get some questions from some of the members who either 
had to leave early or who--not able to be here today. So, if 
you get questions from the Committee, please try to get those 
back ASAP.
    I really appreciate your thoughtfulness and your time in 
trying to help us do something good for this country, and help 
us get back in the innovation business in a way that our global 
economy wants us to do this right now.
    Thank you very much for being here.
    And the Committee is adjourned.
    [Whereupon, at 4:21 p.m., the hearing was adjourned.]
                            A P P E N D I X

  Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
    Thank you, Senator Pryor, for holding this hearing today on the 
crucial issue of strengthening America's economic competitiveness by 
enhancing U.S.-based science research parks. Indeed, this hearing is 
truly timely as our Nation's economy hints at a tenuous comeback. With 
a high, 10 percent, unemployment rate and millions of jobless 
Americans, it is imperative that we continue to focus our efforts on 
economic revitalization and job creation. It is therefore critical that 
we follow President Ronald Reagan's inspirational message from his 
Second Inaugural address that, ``We must think anew and move with a new 
boldness, so every American who seeks work can find work; so the least 
among us shall have an equal chance to achieve the greatest things. . . 
.'' And, the best and most proven way to accomplish this mission is by 
investing in American innovation.
    In furtherance of that goal, we are here today to explore and 
recognize the nexus between science research parks, regional innovation 
clusters, business incubators, and the creation of jobs for the 21st 
century. Science parks promote an essential culture of innovation, 
collaboration and economic competitiveness among universities, research 
laboratories, and small businesses--working within close quarters or 
networking through ``virtual'' parks where technologies cluster--to 
move research from ``mind to marketplace.'' They are a vital part of 
our Nation's economy, employing more than 300,000 scientists and 
engineers. Significantly, every single job in a research park generates 
2.57 jobs outside the park. That is more than three quarters of a 
million (770,000) American jobs!
    To echo the message of President Obama at the recent jobs summit, 
we must take ``every responsible step to accelerate job creation'' and 
get the ``biggest bang for the buck.'' Science parks can help us 
realize both of these goals.
    As Ranking Member of the Senate Committee on Small Business and 
Entrepreneurship and a senior member of the Senate Commerce Committee, 
I enthusiastically encourage increased investment in science parks and 
regional industry clusters. That is why Senator Pryor and I introduced 
the ``Building a Stronger America Act'' (S. 583), to provide grants and 
loan guarantees for the planning, development and construction of 
science parks throughout the United States. This bipartisan legislation 
would drive innovation and regional entrepreneurship by enabling 
existing parks to make needed renovations while also encouraging rural 
and urban states to undertake studies on developing their own 
successful regional science clusters. Our legislation would allow the 
Secretary of Commerce to guarantee up to 80 percent of loans exceeding 
$10 million for the construction of science parks. Additionally, the 
bill would provide grants for the development of feasibility studies 
and plans for the construction or expansion of science parks. Notably, 
our legislation exemplifies the need to think of science parks as more 
than just the traditional ``mortar and bricks''--and leverage the 
networks of people and knowledge and clusters--if we are going to meet 
the economic development needs of the 21st century.
    In my home state of Maine, traditional science parks currently do 
not exist; and, yet, Maine is a national leader in providing business 
``incubation'' services. These incubators are critical to the success 
of new companies. To help start-up entrepreneurs in Maine, incubation 
centers around the state provide business support tailored to companies 
in their regional innovation clusters. The benefit of Maine's seven 
technology incubator centers has been nothing short of monumental, as a 
remarkable 87 percent of all businesses graduating from these 
incubators are still in business and creating new jobs. Under the 
``Building a Stronger America Act,'' business incubators as well as 
science parks will be eligible for vital assistance that will hopefully 
lead to similarly successful results in other states.
    More than simply stimulating job creation and strengthening U.S. 
competitiveness, this legislation can also help benefit military bases 
affected by the base realignment and closure (BRAC) rounds. 
Specifically, we can utilize this opportunity to help BRAC communities' 
redevelopment efforts and stem enormous job losses. For instance, with 
the closure of Naval Air Station Brunswick (NASB) in my home state of 
Maine, the Midcoast region is estimated to lose 6,500 jobs and $140 
million in annual income. Sadly, the closing will also leave behind a 
complex of buildings, state-of-the-art facilities and idle real estate 
property. It is essential that we do everything in our purview to 
lessen these negative impacts. This is why I plan to work with you, 
Senator Pryor, and our colleagues to ensure that one factor to consider 
when awarding grants under S. 583 is whether the award would assist in 
the transformation of military bases shuttered by the BRAC rounds into 
vibrant science parks.
    By resourcefully and adequately investing in American science and 
technology, we expand opportunities and build on a foundation for a 
better tomorrow. We must continue to encourage all avenues for 
advancing science and technology if America is to remain at the 
forefront of scientific and technology development for decades to come.
    In conclusion, thank you again, Senator Pryor, for scheduling this 
vital hearing today and for your invaluable and longstanding leadership 
on behalf of advancing innovative technology in our economy.
                                 ______
                                 
  Prepared Statement of Hon. David Vitter, U.S. Senator from Louisiana
    I want to thank the Chairman for scheduling this important hearing. 
Discussing ways the United States can maintain its crucial leading edge 
in scientific research and technological development is obviously of 
the utmost importance.
    I certainly understand and agree with the great value scientific 
research parks and consortiums can have, both for achieving scientific 
breakthroughs and fostering economic development. In my home state of 
Louisiana, I helped form the Stennis-Michoud Aerospace Alliance to 
promote the growth of the aerospace industry in the region between 
NASA's Stennis Space Center in Mississippi and Michoud Assembly 
Facility in New Orleans, as a means to both foster job creation as well 
as further scientific and technological breakthroughs in aerospace 
engineering and design. And in Shreveport, we have the burgeoning 
Intertech Science Park--home of the LSU Health Sciences Center, as well 
as private companies--dedicated to research in the biomedical field.
    More and more, we hear that America is falling behind--or the rest 
of the world catching up--in scientific research and development. As I 
noted, I have personally seen in my own state the immense value 
research parks and consortiums and cooperation and engagement between 
public educational institutions and private companies can have in terms 
of scientific research and job creation and economic growth.
    Research parks can be a useful tool for maintaining and improving 
America's role as the world's scientific and technological leader, as 
well as helping to grow local, state, and regional economies, and we 
should look for ways to encourage their development.
    I'd like to thank Dr. Wessner for his testimony and I look forward 
to continuing to discuss ways we can continue to foster scientific 
research and the job creation and economic growth that comes with it.
                                 ______
                                 
  Prepared Statement of Russ Lorince, Director, Research and Economic 
              Development Office, West Virginia University
Science and Research Parks Promote Innovation
    The West Virginia University Research and Economic Development 
Office submits this testimony in support of S. 583 and the prospect of 
developing and constructing science and research parks to promote the 
Innovation Economy. Such facilities are essential to the United States' 
ability to maintain its competitive edge in the global market place.
Competing in an Innovative World
    For the United States to remain a world leader in innovation and to 
compete effectively in the global economy, it is critical that 
infrastructure be in place to advance science and engineering 
education, research, technology transfer and commercialization. In 
recent years, alarming statistics indicate that the U.S. is falling 
further behind competitors in terms of the number of students engaged 
in science and technology fields. While American universities retain 
their standing as the world's leading institutions for post-graduate 
education, the trend is disturbing.
    The innovation continuum constructed around higher education has 
been a primary reason that the Nation has continued to move new 
discoveries and technologies to the market place and to realize the 
economic benefits of that work. That structure has provided a positive 
environment that has assured a competitive advantage with the rest of 
the world and has brought top researchers from around the world to 
American campuses. The Bayh-Dole Act, SBIR/STTR grants, business 
incubators and accelerators, industry collaborations and 
commercialization programs are among the innovation elements which have 
allowed the U.S. to lead the world in productive use of intellectual 
property.
Important Role of Science and Research Parks
    University research parks have earned their own status as vital 
components in advancing technology's role in economic growth. Over the 
past 50 years, an increasing number of U.S. institutions of higher 
education have added research parks to the innovation continuum, often 
as the last needed piece of physical infrastructure. After talented 
faculty researchers, world class laboratories, research support, 
technology transfer and business incubators have been put in place, 
parks add another essential dimension.
    Though they are physical places, the value of research parks comes 
from the unique economic ecosystem they create. These facilities supply 
a fertile environment for higher education, government and industry to 
collaborate and partner in ways which have yielded great returns. All 
three parties realize benefits from the proximity and regular 
interactions which spring from parks, in part from good fortune and in 
part from careful planning and management. It is the real estate 
element of a park which is most visible, but the true value is derived 
from programming which drives opportunities for tenants and visitors to 
define common goals, explore partnership options and experience 
scientific and economic success.
Support for Science Parks in Other Nations
    Recognizing the significant output from research parks in the U.S., 
competitors around the world have undertaken their own projects. 
Reflective of different economic systems, national governments 
elsewhere have been instrumental in building parks in and around their 
academic and scientific assets.
    European nations have longstanding parks which provide similar 
benefits to their U.S. counterparts. New facilities and expansions of 
existing parks are springing up across the continent.
    But it is in Asia where governments are investing huge sums in 
research parks with scale and scope which are difficult to grasp. In 
one extreme example, a single park in China contains 20,000 companies 
and 950,000 employees. Of course, the central government funds these 
projects in pursuit of economic growth and a greatly enhanced 
competitive position.
    In contrast, funding for research parks in the U.S. has come from 
the state and local level and through private partnership. 5583 
provides a new avenue through which the Federal Government can partner 
to promote further prosperity and improve return on the public 
investment made in research.
WVU Research Park
    The WVU Research Park was announced a decade ago and since that 
time Phase I has slowly been developed, now offering 24 acres served by 
roads and utilities and prepared for construction. One tenant has taken 
occupancy of a privately-finance building in the park, creating some 
activity and energy. Funding for the facility, which has come through 
the WVU Research Corporation, has been sporadic as the State of West 
Virginia and local governments have been limited partners.
    With the first tenant in place and important agreements and 
financing elements pending, the park is at a critical crossroads. The 
type of support which would be available through the programs in S. 583 
could be crucial to advancing the project. Funding for planning grants, 
including a current and more useful version of a 2002 consultant's 
report, would reaffirm the concept of the park and its market potential 
and possibly attract corporate collaborators to create a public-private 
partnership. The prospect of loan guarantees could be of great 
importance in finalizing a financing plan for the construction of WVU's 
first building in the park, which would serve as an Innovation Center 
to support entrepreneurs and start-up firms spun from the WVU research 
effort.
    While some states have been able to provide significant financial 
support for such projects, that hasn't been the case at WVU. Lacking 
that backing, the opportunity to compete for Federal planning grants 
and loan guarantees would provide wonderful new opportunities to 
advance the WVU Research Park.
Conclusion
    As the U.S. reassesses its competitive position in the global 
marketplace, it becomes clear that we must focus on sustaining and 
building the innovation infrastructure. Having the Federal Government 
partner with state and local investment in constructing university 
research and science parks is a sound strategy to build economic 
strength and S583 provides a reasonable means to that end.
    Thank you for considering our testimony.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Mark Warner to 
                         Hon. John R. Fernandez
    Question 1. Infrastructure is obviously the first step in the 
development of a research park and is addressed in S. 583. However, 
early stage high-tech companies quickly hit a source of funds 
roadblock. What should the Federal Government's role, if any, be in 
facilitating the flow of investment funds to emerging companies in 
research parks?
    Answer. EDA recognizes that the funding roadblocks are a major 
impediment to the full realization of the potential of the early stage 
companies that are an important source of employment growth. One study 
estimated that companies once backed by venture capitalists accounted 
for nearly 17 percent of America's GDP and 9 percent of private-sector 
employment (Economist, March 2009). Venture capital is also known to be 
important to innovation more generally. Since $1 in venture capital 
yields as many patent applications as $3 in R&D, venture funding is 
critical to research park success (Kortum and Lerner, 1998).
    Venture capital investment in the U.S. is down 51 percent since 
last year (Economist, October 3, 2009). However, some industry 
commentators believe venture capital was too prevalent and should 
become smaller based on low average returns over the last decade and 
the risk inherent in normal venture projects (Kauffman Foundation, June 
10, 2009). The Kauffman report concludes, ``the venture business should 
shrink . . . possibly by as much as 50 percent''. EDA believes that 
increased capitalization of its Revolving Loan Fund (``RLF'') program 
specifically targeted to supporting the commercialization of innovative 
new technologies particularly in markets that ``will continue to grow . 
. . including clean technology'' (Kauffman 2009) might be as useful as 
a recovery strategy and is currently attempting to estimate if an unmet 
need exists in this area.

    Question 2. Universities can play an enabling role in the creation 
of intellectual property that could form the foundation of companies 
that could benefit from a research park environment. How would you 
recommend that the universities, especially the land grants, become 
incentivized to be more engaged in economic development throughout the 
states--especially supporting research parks that might not be adjacent 
to them like at Virginia Tech?
    Answer. The land grant universities already possess the outreach 
tools, such as Extension Service Agents, that will support activities 
remote from the university campus. EDA is currently sharing its ``Know 
Your Region'' curriculum and web-based local decisionmaking support 
tools with our colleagues at USDA Rural Development, who will be 
adapting its regional innovation systems core to their environment. 
(For example, see EDA's www.statsamerica.org/innovation). EDA is also 
collaborating with the Appalachian Regional Commission in a similar way 
to adapt these intellectual property transfer mechanisms to that 
region. These collaborations could be enhanced through closer 
coordination of EDA's University Center program and programs of our 
sister agencies. Outreach programs, such as the University of Oregon's 
Resource Assistance for Rural Environments (RARE), which provides 
students with practical work experience and partial support for their 
educational expenses if they work for rural governments and non-
profits, could be supported via competitive University Center grants, 
and could significantly increase contact with appropriate tech-transfer 
and other science park services. Other models, such as the Idaho 
Virtual Incubator, have also shown successful results. Taken together, 
EDA believes that successful models and best practices, appropriately 
adapted to regional conditions, are a critical component of university 
enabled company formation and broad based benefits of intellectual 
property creation.

    Question 3. I understand that the President's budget requested $50 
million in EDA funds for regional innovation clusters, and that a 
recent EDA report on regional competitiveness also touted the benefits 
of thinking regionally when engaging in economic development. However, 
I'm curious how that will work when the ``region'' crosses state lines. 
As the former Governor of Virginia, I know how Governors compete with 
each other to attract projects and employers--including new science 
parks that are likely to create high-paying technology parks down the 
road--to their state. How can you create incentives for multi-state 
regions to cooperate when each state involved wants to know that they 
are getting a return for their share of the investment?
    Answer. All of us who had the privilege of serving as elected 
officials understand the competition between political jurisdictions 
seeking to attract projects and employers to locate within their 
boundaries. We seek elected office to improve the lives of our 
constituents. This includes promoting their economic well-being and the 
tax base that allows us to provide the schools that educate their 
children, public safety programs that protect their lives and property, 
and the amenities that make their community or state a desirable place 
to live and work.
    These goals are not inconsistent with a regional approach to 
economic development that acknowledges the realities of economic 
interdependence and economic spillovers. EDA believes that the higher 
probability of improved economic outcomes that arises from a regional 
economic development approach is the best incentive, consistent with 
bottom-up economic development.
    The economic spillovers from the Virginia Tech Institute for 
Advanced Learning and Research are a prime example. Its location in 
Danville, Virginia is directly adjacent to several North Carolina 
communities. While EDA has not attempted to measure the spillovers, it 
is difficult to believe the benefits stop at a border that is only a 
few highway miles away.
    EDA encourages regional thinking because it produces better 
economic development outcomes. EDA has developed and deployed a ``Know 
Your Region'' economic development curriculum that embodies this 
thinking. EDA develops and deploys web-based analytical tools that 
support the regional approach. Both have been very well received. USDA 
Rural Development adopted the EDA ``Know Your Region'' curriculum and 
several other agencies are employing or evaluating our regional 
economic development analytical tools.
    EDA's educational outreach and the demonstrated economic 
development benefits are among the factors driving jurisdictions to 
embrace regional economic development collaboration. EDA believes that 
the critical path lies in the bottom up approach informed by the best 
information we can provide to state and local economic development 
policymakers. EDA is beginning to receive more requests that are rooted 
in this regional approach.
    For instance, EDA is funding a 12-partner collaborative initiative 
that involves three universities, three technical (community) colleges, 
several nonprofit economic development organizations, and several 
government jurisdictions. The members of this collaborative come from 
six counties: four in Wisconsin and two in Illinois.
    EDA recently designated an Economic Development District that 
includes cities and counties in Oregon and Washington. The planning 
activities EDA is funding are targeted at developing economic 
opportunities for this multi-jurisdiction, two state region.
    Other examples exist, such as Mobilize Maine. At Governor 
Baldacci's direction, the Economic Development Districts are 
collaborating with FairPoint Communications, the State of Maine, and 
collaborative investors to develop regional capacity throughout the 
State that will build a strong, growing and sustainable knowledge-based 
economy for all of Maine.
    EDA believes that focusing on the dissemination of information and 
best practices that inform state and local government economic 
development policymaking is the appropriate role for the Federal 
Government and supports improved bottom-up economic development 
decision-making.

    Question 4. How would the regional economic development model work 
within EDA's current structure, for example with EDA-designated 
economic development districts? Would they have to be redrawn 
accordingly, or dispensed with all together?
    Answer. The regional economic development model is already 
successfully utilized in many parts of America. Some initiatives are 
driven by existing EDDs, while others arose from the work of local 
partners independent of any EDD involvement.
    EDA continues to support the EDDs as the fulcrum of its planning 
activities. They are, and should remain, locally determined. EDA, 
through its program of practitioner accessible research, web based data 
access and local decision-maker support tools, and ``Know Your Region'' 
training outreach continues to foster regional perspectives because the 
regional perspective increases the probability of better economic 
outcomes. Considerable progress is being made. For instance, EDA 
recently designated an EDD serving Portland, OR and Vancouver, WA that 
includes 5 adjoining counties on both sides of the state line.
    In another example, EDA recently funded a complex collaborative 
regional innovation cluster planning process involving three 
universities, a liberal arts college, three technical colleges 
(community colleges), and a number of not-for-profit economic 
development organizations. The members of this collaborative cluster 
cover six counties, four in Wisconsin and two in Illinois. What makes 
this an interesting endeavor is the division of labor within a 
framework that crosses town, city, county and state lines.
    EDA does not know if local decisionmakers will formally ask to have 
EDD boundaries redrawn or otherwise re-structure themselves. What is 
clear is that the regional perspective and the importance of innovation 
and industry clusters to sustainable long-term economic growth is being 
understood and implemented across the Nation. EDA believes that its 
continued support of grassroots decisionmakers will continue this 
positive trend.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                         Hon. John R. Fernandez
    Question 1. In order to reverse the present tide of economic 
stagnation, America must invest in the creation, development, and 
promotion of homegrown technologies. A 2007 National Academy of 
Sciences study found that science parks drive regional economic 
development and enhance American competiveness by promoting technology 
and innovation, pooling local talent, and encouraging the exchange of 
ideas.
    The ``Building a Stronger America Act'' (S. 583), which Senator 
Pryor and I introduced, will provide grants and loan guarantees for the 
planning, development and construction of science parks throughout the 
United States. This legislation will not only stimulate job creation 
and strengthen U.S. competitiveness; it can also help benefit military 
bases affected by base realignment and closure (BRAC) rounds. That is 
why I pledge to work with Senator Pryor to ensure that one factor to 
consider when selecting awards under S. 583 is whether the grant would 
help the transformation of military bases shuttered by the BRAC rounds 
into vibrant science parks.
    Your testimony mentions that EDA's investments create conditions in 
which jobs are created, often in the midst of economic hardship or 
adjustment. What role could EDA play in assisting BRAC-affected 
communities under this legislation?
    Answer. EDA's commitment to constructive reuse of BRAC facilities 
to transition the economies of affected communities and regions will 
not change under this legislation. EDA will continue to support local 
decisionmakers as they seek to exploit their region's competitive 
advantages, including those offered by science parks, to create jobs 
for their citizens and a tax base that adequately supports local 
government services.
    EDA has a long and successful partnership with DoD's Office of 
Economic Adjustment (OEA). The current OEA deputy director and a member 
of his staff are EDA alumni and continue to work closely with EDA to 
plan and implement BRAC recovery strategies. Typically, OEA focused on 
reuse planning, and EDA funded implemention activities, typically 
public works projects. The two agencies have always employed a regional 
approach to constructive reuse of BRAC facilities and, when appropriate 
assets are in place or can be developed, leverage regional competitive 
advantages to create science parks.
    The additional funding for BRAC communities and the science park 
focus can be expected to produce significant results as part of EDA's 
regional innovation clusters approach to economic development.

    Question 2. A recent Brookings report, Clusters and 
Competitiveness: A New Federal Role for Stimulating Regional Economies, 
co-authored by now Small Business Administrator Karen Mills, asserts 
that regional industry clusters--geographic concentrations of 
interconnected firms and supporting organizations--represent a potent 
source of productivity at a moment of national vulnerability to global 
economic competition. To compete in technology development, a region or 
state must differentiate itself and cultivate and sustain areas of 
expertise where it can be a world leader. As a result, it has become 
more common for science parks to focus on identified technology areas 
or industry clusters. However, the Brookings report also asserts that 
this Nation's network of cluster initiatives remains thin and uneven.
    Given EDA's longstanding tradition of supporting regional 
innovation clusters, what can be done to make U.S. industry clusters 
more competitive? What can be done to catalyze growth producing 
collaboration in key industry clusters and help them realize their full 
potential?
    Answer. EDA's leading role in the implementation of the regional 
innovation clusters approach to economic development focuses on the 
competitiveness of U.S. industry clusters though its support of 
methodologically rigorous practitioner accessible research, web based 
decision support tools, practitioner training, and strategic planning 
and implementation investments. Many of EDA's research reports, tools, 
and training products have been cited or adopted by other agencies. EDA 
believes these form a solid base upon which to build more competitive 
U.S. industry clusters and assist them to achieve their full potential.
    While continuing to implement and update these activities, EDA's 
policy recognizes the importance of the Brookings critique. EDA's 2010 
budget initiates a cluster identification and mapping project designed 
to strengthen the network of clusters, disseminate best practices, and 
integrate across the cluster spectrum from fostering network linkages 
beyond the direct supply chain partners to include cluster specialized 
banking, consulting, and legal services, universities, and community 
colleges.
    EDA's 2010 budget includes funding for the initial steps toward a 
comprehensive cluster network mapping project that will extend beyond 
the European Clusters Observatory (ECO) model mentioned in the 
Brookings report. Based on the existing clusters definitions used by 
ECO and others, EDA's multi-year project will incorporate workforce 
skill set layers, as identified by Labor's Standard Occupation Codes 
(SOC), and important network relationships based on secondary and 
tertiary relationships. Phased project roll out will provide rapid 
access to initial cluster network information and support continuous, 
client informed, product improvement, so that the product evolves in 
the same manner as EDA's tool and training curriculum projects.
    EDA's partnerships with other agencies, including our Labor 
Department and Appalachian Regional Commission colleagues, are 
producing strong results and more needs to be done. EDA is 
collaborating with SBA, Education, Labor, USDA and other Federal 
partners to develop more coordinated regional investment strategies. 
Additionally, EDA recognizes the need to integrate private sector 
actors driving growing and emerging clusters more tightly into the 
planning and implementation processes.

    Question 3. Small businesses are the engines that drive job growth 
and they will lead us out of the current recession. I am deeply 
committed to ensuring that they succeed, not only because I am Ranking 
Member of the Small Business Committee, but because I truly believe in 
the power of small businesses to lift us out of our economic troubles. 
The ``Building a Stronger America Act'' (S. 583) is one of many efforts 
I have undertaken to encourage small business growth. Science parks 
provide small businesses numerous advantages, such as access to a range 
of management, marketing, and financial skills and services. At its 
heart, a science park provides an organized link to local research 
centers or universities, providing small firms with constant access to 
the expertise, knowledge, and technology they need to prosper. A recent 
Battelle report on science parks found that for each job in a science 
park, 2.57 additional jobs are created on average as a direct result.
    What do you foresee as the effects of the ``Building a Stronger 
America Act'' on job creation in the short- and long-term? How can 
investment in science park creation and redevelopment help lead us out 
this recession?
    Answer. EDA is not in a position to empirically estimate the 
effects of the pending legislation. EDA does note that studies by 
leading innovation policy authorities with whom it works closely, such 
as those at the National Academy of Sciences and OECD, repeatedly find 
countries around the world are adopting the parks model. The model is 
characterized by substantial public investments in infrastructure, new 
organizational approaches (e.g., Belgium's IMEC semiconductor 
facility), and public-private research collaboration (e.g., France's 
MINATEC).
    EDA's direct experience is also telling, especially in the area of 
small business development and growth. For instance, EDA's long-term 
partnership with state and local officials in the Fargo, ND area 
fostered the North Dakota State University Research and Technology 
Park, where many of the best practices, including co-location of 
private and public research teams, venture capital funding, and 
business advising services, continues to produce outstanding results. 
The Park's services include the Entrepreneur Program, co-led by 
University business school faculty and successful entrepreneurs. The 
Park's reach is extended through its Virtual Incubator program, which 
connects to even the most rural areas of North Dakota, and beyond.

    Question 4. In order to drive innovation, and encourage the 
clustering of advanced industries in specific areas, the ``Building a 
Stronger America Act'' (S. 583) that Senator Pryor and I have 
introduced provides grants and loan guarantees to promote the planning, 
development and construction of science, research, and technology 
parks. Science parks help drive innovation and regional 
entrepreneurship by promoting technology and innovation. In my home 
State of Maine, we presently do not have any traditional science parks. 
That said, Maine is a national leader in providing business 
``incubation'' services that are tailored to companies in their region. 
Incubators, like science parks, nurture the development of 
entrepreneurial companies, providing business support and helping them 
survive and grow during the start-up period, when they are most 
vulnerable. The benefit of Maine's seven technology incubator centers 
has been nothing short of monumental, as a remarkable 87 percent of all 
businesses graduating from these incubators are still in business and 
creating new jobs. Many other rural areas in Maine and throughout the 
Nation would benefit from this type of targeted economic development. 
Can you elaborate on the critical nature of encouraging innovation in 
rural areas where populations are not very dense while simultaneously 
encouraging the development of science parks in population centers? 
What more can we do to strengthen and grow business incubators?
    Answer. EDA's regional innovation clusters approach is best 
understood as including rather than excluding. Innovation is too often 
defined in such a way that excludes rural areas and regions are often 
thought to require an urban center. EDA's definitions, approach, and 
experience is not consistent with such exclusionary outcomes. 
Innovation, broadly considered, is not equivalent to `high tech' or 
even `new products'. Innovation is the spirit of America. It is 
embodied in everything we are, an innovative society that experiments 
with new ideas.
    For instance, employing EDA's regional innovation clusters 
approach, Minot State University's Bottineau campus is addressing a 
unique situation in an incubator-like fashion. Small farmers, unable to 
earn sufficient income, were leaving the land, although they preferred 
to stay. EDA provided funding that created a low-tech approach to 
extending the vegetable growing season, which created market potential. 
However, the local groceries, fearful of being dropped by distributors, 
refused to buy the produce.
    The EDA grantee and local vegetable farmers organized to gain 
access to the supply chain via the distributors. As a result of 
assessing regional competitive advantages, being innovative both in 
growing and entering the distribution chain, the extremely rural area 
is fostering an emerging cluster focused on locally grown produce.

    Question 5. We live in an increasingly globalized world. Science 
parks reflect the needs of a high-tech, innovative, and global 
marketplace. Science parks have helped lead the technological 
revolution. Our Nation's capacity to innovate is essential to ensure 
future economic growth. Ideas by innovative Americans in the private 
and public sector have paid enormous dividends, improving the lives of 
millions throughout the world. We must continue to encourage the 
advancement of this vital sector if America is to compete at the 
forefront of innovation. There was a lot of discussion at the hearing 
about the need to transform existing parks into more modern, 
collaborative environments primed for innovation in the 21st century. 
However, we cannot be blind to the technology challenges facing our 
Nation. For example, U.S. private corporate research centers are 
greatly downsized or, in some instances, no longer exist. Corporate and 
Federal support for R&D at universities is declining. And, science and 
technology are now global commodities.
    How can we better encourage the redevelopment of existing science 
parks in ways that will help them compete in a globalized economy? What 
specific measures can be taken to ensure that American science parks 
are evolving for the 21st century? How critical is it that a science 
park be physically located close to a university given that so much 
business is now done through networks and virtual environments?
    Answer. The National Academies of Science's recent report 
``Understanding Research S&T Parks'' identifies several conditions for 
creating successful 21st Century research parks. Perhaps one of the 
most important factors is the presence and involvement of a large 
research university or laboratory supporting a critical mass of 
knowledge workers. Also key is the availability of funding over a 
sustained period, and a strong and committed leadership guiding the 
development of the park's physical infrastructure and quality-of-life 
amenities. Finally, and not least, a successful park needs skilled 
entrepreneurs and managers. Talented and motivated individuals and 
teams in the private sector are needed to commercialize the knowledge 
generated. The benefits of a successful park are realized over the 
long-term, but short term benefits, such as architecture/engineering 
jobs in the design phase, and construction jobs and associated 
purchases, should not be overlooked in any evaluation of the park 
investments.

    Question 6. One of the most beneficial incentives in the tax code 
is the Research and Development Tax Credit. This credit enables small 
businesses to develop new technologies and create additional jobs. 
Unfortunately, Congress is not allowing the R&D Credit to realize its 
full potential. According to the Organization of Economic Cooperation 
and Development (OECD), the U.S. ranked first in research and 
development tax generosity in 1990, but has fallen to 17th since then. 
This is unconscionable at a time when our economy has shed 7.3 million 
jobs since December 2007. First and foremost, we must make this credit 
permanent, as Senate Finance Committee Chairman Max Baucus and I have 
attempted to do in ``Grow Research Opportunities with Taxcredits' Help 
Act'' (S. 1203). How can the research and development tax credit help 
science parks grow and generate innovation? How specifically would 
science parks and small businesses therein benefit and grow as a result 
of making this tax credit permanent?
    Answer. Small and large firms make up an important part of a park's 
innovation ecosystem. Tax credits increase the R&D engagement at the 
firm level, leading to additional innovation output. Recent research 
shows that recipients of R&D tax credits show significantly better 
scores on most performance indicators. Especially at a time of slower 
economic growth and stagnant employment, it is important to renew the 
R&D tax credit. Moreover, making the tax credit permanent will reduce 
uncertainty and promote business growth in an otherwise challenging 
environment.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. David Vitter to 
                          Dr. Charles Wessner
    Question 1. You said that the ``potential of research parks appears 
to be less widely understood in the United States.'' To what extent, in 
your estimation, has the U.S. fallen behind the curve the rest of the 
world is setting in developing and investing in science research parks?
    Answer. Success of U.S. Parks Has Led to Their Emulation Abroad.
    The United States created the idea of a science and technology park 
in the early 1950s. The Silicon Valley clusters--sometimes described as 
a large park--and the successful Research Triangle Park in North 
Carolina have inspired many governments to believe that they can create 
growth and jobs through the geographic co-location of resources.
    As documented in a recent report by the National Academies, 
Understanding Research, Science, and Technology Parks: Global Best 
Practices, countries as diverse as China, Singapore, India, Mexico, and 
France arc among those undertaking substantial national efforts to 
develop research parks of significant scale and scientific and 
innovative potential. Foreign efforts to build research parks often 
involve integrating research institutes, large and small companies and, 
often, universities, with first-class infrastructure. These ingredients 
are often complemented by substantial tax advantages and other direct 
incentives.
Comparative Scale of Foreign and U.S. Parks
    Currently, one can argue that U.S. parks, in comparison to its 
major competitors, lack scale, lack resources, and lack the 
infrastructure and facilities needed to compete in the global economy.
    On the issue of scale, Figure 1 below compares the size of the 
average North American Research Park (at 358 thousand acres) with that 
of the average Chinese research park (at over 10 million acres.)


    Figure 1: Research Parks in Comparative Perspective--an Issue of 
Scale \1\
---------------------------------------------------------------------------
    \1\ ``Average North American Research Park'' data are from 
``Characteristics and Trends in North American Research Parks: 21st 
Century Directions,'' commissioned by AURP and prepared by Battelle, 
October 2007; ``Average IASP Member Park'' data are from the 
International Association of Science Parks annual survey, published in 
the 2005-2006 International Association of Science Parks directory.

    The Chinese parks are large, in some cases with numerous top-tier 
multinationals, and benefit from significant political authority. In 
short, our Chinese colleagues have taken the park concept and put it on 
steroids.
    The scale of China's investments in research parks might well be 
compared to the massive efforts undertaken in the United States during 
the Cold War in building national laboratories. To the extent that 
these more commercially oriented investments are successful, they may 
give a significant boost the competitive position of Chinese industry.
    Singapore and France provide two additional points of comparison in 
terms of financial support for the development of research parks. 
Singapore, with population of 4.5 million, has allocated a 5-year 
budget of $10 billion over 5 years to strengthen its research and 
development base, especially in the area of biotechnology. Both the 
Biopolis and the Fusionopolis urban research parks arc key features of 
Singapore's competitiveness strategy. These parks are well staffed, 
include international scholars, and benefit from the latest equipment 
and close proximity to major universities and the airport. France is 
reinventing its innovation system through the development of 
competitive clusters, called ``poles de croissance,'' with a budget of 
$2.2 billion for a country of 65 million, over 3 years. By comparison, 
S583 proposes $500 million over 5 years for the United States, a 
country of over 300 million.
What Will Be the Impact of the Growth of Parks Around the World?
    The substantial investments that the world's leading nations are 
making to grow research parks reflect an appreciation of their capacity 
to spur knowledge-based growth and enhance technological 
competitiveness through innovations that are supported by government 
infrastructure, government research, government finance and, in some 
cases, assured national procurement markets. These research parks arc 
expected to generate very significant benefits to regional development 
and job creation. Indeed, to the extent that foreign research parks are 
effective, they have the potential to help shift the terms of global 
competition, not least in leading technological sectors.
What must the United States Do?
    The acceleration in the pace of planning and development of 
research parks around the world shows that research parks are widely 
seen as a key tool to improve economic competitiveness through 
accelerating innovation. To stay in the game, the United States need to 
make commensurate investments basic and applied research, in growing 
research parks, and in creating other incentives to encourage the 
transition of research to the market. In addition, we need to learn 
from the experiences of others and adopt and adapt those lessons to 
U.S. circumstances just as other countries are adapting what they see 
as positive lessons from the U.S. experience.
    Good S&T research parks are not a panacea, but they are an 
effective tool to help U.S. firms and American citizens compete in the 
global economy. Currently, with regard to parks, we lack the enabling 
legislation and resources to compete effectively in the 21'' Century.

    Question 2. You said that there are ``challenges of getting these 
research parks off the ground and integrating them with their 
universities' missions.'' Can you provide examples of the specific 
challenges research parks face in their initial development that makes 
Federal financial support so important to their creation? In your 
opinion, is state funding simply not enough to foster their growth and 
help them clear these initial challenges?
    Answer. U.S. Research Parks Receive Most of Their Support from 
State and Local Governments.
    As noted above, science parks now exist in most parts of the world; 
they are seen as a proven policy tool to spur economic growth and 
enhance technological competitiveness. They benefit from significant 
financial and policy support from national and state governments.
    The United States remains an exception in this regard, where 
support for research parks is principally undertaken by state and local 
governments with only limited participation by the Federal Government. 
While some state governments are experimenting with technology zones to 
support research parks and technology incubators, and to increase 
technology-led economic development clusters, others have lagged 
behind.
Challenges Facing State and Local Governments in Supporting Research 
        Parks
    The National Academies report, Understanding Research, Silence, and 
Technology Parks: Global Best Practices, identifies the availability of 
significant levels of funding and policy support over a sustained 
period as key to the successful development of a research park. This 
requires a policy environment that is patient, adaptable and focused on 
commercialization.
    Some states like North Carolina have been able to provide the 
resources and farsighted leadership needed to grow a successful park. 
The state's approach to the development of Research Triangle Park is 
particularly commendable in that it recognized the importance of 
``patient'' support, especially through the first 10 years of its 
existence when the park made little tangible progress.
    Other states face balanced budget requirements and/or other fiscal 
and political exigencies that preclude the scale and consistency of 
support necessary for the development of successful parks. Many local 
governments lack the fiscal base to make the scale of investments 
necessary to support globally competitive research parks. The paradox 
is that the Federal and state governments make substantial investments 
in education and research, yet the early-stage investment to 
commercialize this research in not readily available.
How Can the Federal Government Help?
    While recognizing the traditional role of state and local 
governments in local economic development, the Federal Government can 
play an important role in providing incentives for states and regions 
to undertake significant, long-term investments in research parks, and 
by supplementing these investments when merited.
    State and local governments can also take advantage of Federal 
programs, like the Small Business Innovation Research (SBIR) Program, 
to encourage the development of innovation networks between 
universities and small firms and to provide seed capital for small 
business entrepreneurship. Other partnership programs can help states 
and localities leverage the substantial investments the Federal 
Government is already making in universities, national laboratories, 
and other research facilities around the country.
    This can be a win-win proposition for the Federal and state 
governments, as the case of Sandia Park illustrates. Here, Sandia 
National Laboratories gains from the research park through the 
retention of the needed skills base near the Laboratory, while the 
community benefits from the commercialization of knowledge and the jobs 
and growth made possible by the Laboratory's presence.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                             Brian Darmody
    Question 1. Ever since the cluster concept was introduced, it has 
rapidly attracted attention as a means to enhance the capability for 
innovative conversion of science and technology into products, 
services, and new business growth. Nowadays, clusters of existing and 
emerging science-based activities have been shown to be crucial factors 
in shaping the economic winners and losers of the first half of the 
21st century. What are some best practices and successful models of 
knowledge transfer in science based clusters? What are the necessary 
conditions for success and issues of sustainability of clusters?
    Answer. First, regional leadership and buy-in by local stakeholders 
in the business and academic communities are critical factors. Second, 
technologies do not know in which political jurisdiction they are being 
developed. Strategies to break down competing political jurisdictions' 
natural inclination to control and instead allow initiatives to grow on 
a regional basis must be develop, such as establishing a regional 
authority. Finally, cluster development can help grow a region but 
unless there is some core technology base, declaring a region a cluster 
will not help regional technology led economic development. You need 
the core technology to grow the regional cluster.

    Question 2. In order to drive innovation, and encourage the 
clustering of advanced industries in specific areas, the ``Building a 
Stronger America Act'' (S. 583) that Senator Pryor and I have 
introduced provides grants and loan guarantees to promote the planning, 
development and construction of science, research, and technology 
parks. Science parks help drive innovation and regional 
entrepreneurship by promoting technology and innovation. In my home 
State of Maine, we presently do not have any traditional science parks. 
That said, Maine is a national leader in providing business 
``incubation'' services that are tailored to companies in their region. 
Incubators, like science parks, nurture the development of 
entrepreneurial companies, providing business support and helping them 
survive and grow during the start-up period, when they are most 
vulnerable. The benefit of Maine's seven technology incubator centers 
has been nothing short of monumental, as a remarkable 87 percent of all 
businesses graduating from these incubators are still in business and 
creating new jobs. Many other rural areas in Maine and throughout the 
Nation would benefit from this type of targeted economic development. 
Can you elaborate on the critical nature of encouraging innovation in 
rural areas where populations are not very dense while simultaneously 
encouraging the development of science parks in population centers? 
What more can we do to strengthen and grow business incubators?
    Answer. Technology incubators are a key element of any regional 
technology strategy. The `Building a Stronger America Act' does 
recognize the role of technology incubators in growing small businesses 
in the United States, and includes startup incubators in the definition 
of `science parks.' Many university research parks have an incubator in 
or (as in the case at the University of Maryland) on the campus that 
work together, and many startup companies are located in research 
parks. Indeed the Bayh-Dole Act is encouraging universities to create 
startup companies, and technology incubators are critical in filling 
this role. The Association of University Research Parks works very 
closely with the National Business Incubation Association (NBIA) on 
programs and legislative initiatives such as programs to support 
technology infrastructure and technology led economic development.

    Question 3. We live in an increasingly globalized world. Science 
parks reflect the needs of a high-tech, innovative, and global 
marketplace. Science parks have helped lead the technological 
revolution. Our Nation's capacity to innovate is essential to ensure 
future economic growth. Ideas by innovative Americans in the private 
and public sector have paid enormous dividends, improving the lives of 
millions throughout the world. We must continue to encourage the 
advancement of this vital sector if America is to compete at the 
forefront of innovation. There was a lot of discussion at the hearing 
about the need to transform existing parks into more modern, 
collaborative environments primed for innovation in the 21st century. 
However, we cannot be blind to the technology challenges facing our 
Nation. For example, U.S., private corporate research centers are 
greatly downsized or no longer exist. Corporate and Federal support for 
R&D at universities is declining. And, science and technology are now 
global commodities. How can we better encourage the redevelopment of 
existing science parks in ways that will help them compete in a 
globalized economy? What specific measures can be taken to ensure that 
American science parks are evolving for the 21st century? How critical 
is it that a science park be physically located close to a university 
given that so much business is now done through networks and virtual 
environments?
    Answer. Providing infrastructure support, as provided in `Building 
A Stronger America Act', is a necessary, but not sufficient response to 
encourage innovation and cluster development. My written testimony 
amplifies some other ideas and they are further explored in `The Power 
of Place, A National Strategy for Building America's Communities of 
Innovation, http://aurp.net/meet/The_Power_of_Place.pdf. A number of 
Senators at the hearing asked about the role of Federal labs, and I 
have provided some policy ideas below related to Federal, private and 
academic sectors to encourage cluster development:
    Use Federal Labs and Lab Spin Outs as Anchors in Cluster 
Development:
    Over $25 billion a year in internal research and development 
spending (nearly as much as is spent at colleges and universities) and 
tens of thousands of brilliant researchers are employed at Federal 
labs, but much of the talent and technology remains inside, and the 
Federal labs are not often integrated into the community where they 
reside:

   Create local technology companies from Federal intramural 
        research: Create Congressionally-chartered Federal 
        commercialization intermediary organization, based on best 
        practices of technology commercialization intermediary models 
        found at leading research universities (WARF at U. Wisconsin), 
        in states (TEDCO in Maryland) and individual Federal labs (for 
        example, the Congressionally-chartered Jackson Foundation at 
        Uniform Health Science University), through expanding the 
        funding, authority, venture staffing, and venture acceleration 
        capacity of the Federal Lab Consortium established in 15 U.S.C. 
        sec. 3710. Just as when Congress wanted to improve Pennsylvania 
        Avenue, it chartered the Penn Ave Development Authority to take 
        on business of redevelopment, a Federal technology 
        commercialization authority needs to be chartered by Congress 
        to take on business of tech transfer and to create technology 
        spin outs to locate near the Federal labs and improve the 
        communities where Federal labs are located.

   Connect Federal researchers with private companies: The 
        Administration has called on Federal researchers to be more 
        involved with private sector companies (See, e.g., August 4 
        2009 OMB/OSTP directive to heads of Executive Agencies). No 
        comprehensive agency-wide program exists, however, to allow 
        Federal research assignments with private sector companies. 
        Issue a Presidential Executive Order on Federal lab technology 
        commercialization and private sector partnerships (See, e.g., 
        EO 12591) based on the NASA Innovation Ambassadors Program. 
        www.nasa/gov/office/innovation_incubator/

   Connect fed labs to local communities: Embed regional 
        economic development mission into all fed labs missions; 
        currently Department of Energy labs have this mission; will 
        help spur Administration's regional cluster initiatives.

   Create more private sector involvement near Federal labs in 
        urban areas: Expand Enhanced Use Lease (EUL) authority (which 
        allows leasing of fed land and equipment) to all Federal 
        agencies, not just DOD agencies. See, 10 U.S.C. 2667.

   Create culture of Entrepreneurship: Create entrepreneurial 
        leave programs to encourage Federal researchers to take 
        temporary assignments with private sector technology firms, and 
        protect their positions in the fed labs upon their return. 
        Encourage `entrepreneur in residence' (EIR) programs as all fed 
        labs and create programs to encourage Federal researchers to 
        create companies and mentor the process through the EIR 
        program.

   Create regional clusters: Issue GSA/Army Corps of Engineers 
        policy encouraging fed labs to build and lease in area near 
        innovation assets, such as research parks, health science 
        centers, other fed labs, private research centers and colleges 
        and universities.
Research Universities and Commercialization
    Improve University Commercialization in the U.S. by imbedding 
commercialization in U.S. grant and contract funding model: The U.S. 
created the Bayh-Dole Act that spurred university technology 
commercialization around the world but now lags the UK in tech 
commercialization since Federal grant and contract policies provide no 
funding for tech transfer office or initial proof of concept funding to 
make them attractive for follow on investment. Reform OMB A-21 
restrictions on overhead to increase by 1 percent overhead negotiated 
rates with cognizant Federal agency for cost reimbursement for patent 
expenses and seed commercialization fund at universities to bridge 
first `valley of death' consistent with the Bayh-Dole Act to create 
more companies and jobs in U.S. This can be done without new Federal 
legislation, or Federal agency, and can be implemented quickly, without 
a new bureaucracy.
Private Sector
    R and D Tax Credit: To keep more R and D at home, develop an 
enhanced corporate R and D tax credit for projects undertaken in 
partnership with college and universities.
    Keep more Corporate R and D in U.S.: Remove Federal IRS 
restrictions on private use in tax exempt research facilities by 
corporations sponsoring research by removing tests related to IP 
licensing. IRS Revenue Procedure 97-14 needs to be reformed to allow 
corporations to keep more of the IP they sponsor; otherwise they will 
continue to ship R and D to universities overseas.
Education
    From `STEM' to `ESTEEM': Move from focus on `STEM' (Science, 
Technology, Engineering and Math) issues to `ESTEEM' (Encouraging 
Science, Technology, Engineering, Entrepreneurship, and Math) skills 
since job creation will be dependent on new startup companies.
    Entrepreneurship Programs at Department of Education and NSF: 
Develop new U.S. Department of Education program, joint with NSF, to 
encourage university based partnerships for innovation and dormitories 
for entrepreneurs and living learning centers to encourage study of 
entrepreneurships and new company formation as basis for economic 
growth in the U.S.

    Question 4. One of the most beneficial incentives in the tax code 
is the Research and Development Tax Credit. This credit enables small 
businesses to develop new technologies and create additional jobs. 
Unfortunately, Congress is not allowing the R&D Credit to realize its 
full potential. According to the Organization of Economic Cooperation 
and Development (OECD), the U.S. ranked first in research and 
development tax generosity in 1990, but has fallen to 17th since then. 
This is unconscionable at a time when our economy has shed 7.3 million 
jobs since December 2007. First and foremost, we must make this credit 
permanent. Senate Finance Committee Chairman Baucus introduced the 
``Grow research Opportunities with Taxcredits' Help Act'' (S. 1203), 
which I cosponsored, to make the credit permanent. How is a research 
and development tax credit essential for the growth of science parks 
and generating innovation? How specifically would science parks and 
small businesses therein benefit and grow as a result of making this 
tax credit permanent?
    Answer. Many of the larger companies in university science parks 
avail themselves of the Federal tax credit and making the tax credit 
permanent and expanded would be of great help. A program to give an 
enhanced credit to corporations doing joint R and D with universities 
would help keep more R &D in the United States. Additionally, we need 
to focus on the needs of the smaller technology companies, many of whom 
may not qualify for the Federal R and D tax credit due to their size or 
their tax status. A Federal program to provide a tax credit to angel 
investors, who have invested in the startup company, would help spur 
more investment in smaller companies.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Jonathan Sallet
    Question 1. You noted during the hearing that ``some of our 
strongest international competitors, including Japan, South Korea, and 
many European countries, have invested in significant national cluster 
initiatives, directing great amounts of money and resources toward 
making innovation clusters the main focus of their economic and 
innovation policies.'' And, you pointed out an irony that while foreign 
innovation policymakers have studied our successes and consulted with 
our experts, ``the United States has conspicuously failed to embrace 
cluster initiatives as an explicit part of its own innovation policy.'' 
What are some of the crucial factors in shaping our Nation's economic 
winners and losers? What are some best practices and successful models 
of knowledge transfer in science based clusters? What are the necessary 
conditions for success and issues of sustainability of clusters?
    Answer. In our paper from the Center for American Progress 
referenced in my testimony, we explain why the critical components of a 
national economy are strong regional economies. As we have looked at 
the lessons of successful regional economic strategies, we see key 
lessons that include:

   Place Matters. Not every location can do everything. 
        Boatbuilding is better suited for Maine than for states far 
        from the coast, for example. So a key step is for a region to 
        understand its real and prospective competitive advantages. 
        Important in the success of a ``place'' is, of course, 
        leadership from local educational institutions, a supply of 
        capital, and well-trained workers.

   Networks of Collaboration. A region will be successful 
        because it is competitive and because it hosts businesses that 
        are fiercely competitive, often with each other. But 
        collaboration at the pre-competitive is very important as well. 
        Consider, for example, information processing businesses that 
        work together to incent local community colleges to offer 
        education in their field, creating a supply of talented workers 
        from which all can draw.

   Local Leadership. Regional economies are built from the 
        ground up. Our examination of successful clusters reveals a 
        high sense of leadership, incorporating the private sector, 
        universities, local government and civic organizations. And, 
        equally importantly, that leadership inevitably needs to look 
        beyond local political boundaries--often to regional economies 
        that cross state lines.

    Question 2. In order to drive innovation, and encourage the 
clustering of advanced industries in specific areas, the ``Building a 
Stronger America Act'' (S. 583) that Senator Pryor and I have 
introduced provides grants and loan guarantees to promote the planning, 
development and construction of science, research, and technology 
parks. Science parks help drive innovation and regional 
entrepreneurship by promoting technology and innovation. In my home 
State of Maine, we presently do not have any traditional science parks. 
That said, Maine is a national leader in providing business 
``incubation'' services that are tailored to companies in their region. 
Incubators, like science parks, nurture the development of 
entrepreneurial companies, providing business support and helping them 
survive and grow during the start-up period, when they are most 
vulnerable. The benefit of Maine's seven technology incubator centers 
has been nothing short of monumental, as a remarkable 87 percent of all 
businesses graduating from these incubators are still in business and 
creating new jobs. Many other rural areas in Maine and throughout the 
Nation would benefit from this type of targeted economic development. 
Can you elaborate on the critical nature of encouraging innovation in 
rural areas where populations are not very dense while simultaneously 
encouraging the development of science parks in population centers? 
What more can we do to strengthen and grow business incubators?
    Answer. As a resident of the Eastern Shore of Maryland, which 
continues its agricultural base, I see this problem first hand. That's 
why I believe that any Federal efforts should be sure to reach beyond 
metropolitan areas to include rural AmericAnswer. And why I believe 
that local economies should have flexibility to use Federal support in 
the ways that they believe will work for them. I have suggested, 
therefore, that the science parks initiative, very important on its 
own, would be even stronger if it were part of a larger effort that 
includes business incubators and other tools of growth. With the kind 
of record of success show in Maine, and experience around the nation, 
it is clear that business incubators are critical.

    Question 3. We live in an increasingly globalized world. Science 
parks reflect the needs of a high-tech, innovative, and global 
marketplace. Science parks have helped lead the technological 
revolution. Our Nation's capacity to innovate is essential to ensure 
future economic growth. Ideas by innovative Americans in the private 
and public sector have paid enormous dividends, improving the lives of 
millions throughout the world. We must continue to encourage the 
advancement of this vital sector if America is to compete at the 
forefront of innovation. There was a lot of discussion at the hearing 
about the need to transform existing parks into more modern, 
collaborative environments primed for innovation in the 21st century.
    However, we cannot be blind to the technology challenges facing our 
Nation. For example, U.S., private corporate research centers are 
greatly downsized or no longer exist. Corporate and Federal support for 
R&D at universities is declining. And, science and technology are now 
global commodities.
    How can we better encourage the redevelopment of existing science 
parks in ways that will help them compete in a globalized economy? What 
specific measures can be taken to ensure that American science parks 
are evolving for the 21st century? How critical is it that a science 
park be physically located close to a university given that so much 
business is now done through networks and virtual environments?
    Answer. Collaboration with universities is very important. Although 
we may not want to enact a Federal requirement of particular geographic 
proximity, we certainly want to ensure that science parks, along with 
other tools of regional economic growth, are part of a well-considered, 
strategic plan for the region. Ensuring the presence of a strategic 
plan is a critical--perhaps the critical--step in ensuring that Federal 
monies are well-spent and that local efforts are really tied to areas 
of current or prospective economic advantage. And a critical part of 
any strategic plan is the inclusion of local institutions of higher 
learning. As we write in our CAP paper:
    Innovative companies were once innovative ideas, many of which came 
from the scientists, professors, and engineers that work at 
universities, corporate R&D facilities, and government laboratories. 
The ``spillover'' of ideas from these knowledge-creation institutions 
(and their intellectual property practices) to the local community and 
network of entrepreneurs is the central process that takes place in 
fertile innovation clusters. As more and more ideas move from labs to 
eager individuals and their business partners, scores of innovative 
businesses are started, feeding an auspicious cycle.
    Science parks would be a leading beneficiary of this approach.

    Question 4. One of the most beneficial incentives in the tax code 
is the Research and Development Tax Credit. This credit enables small 
businesses to develop new technologies and create additional jobs. 
Unfortunately, Congress is not allowing the R&D Credit to realize its 
full potential. According to the Organization of Economic Cooperation 
and Development (OECD), the U.S. ranked first in research and 
development tax generosity in 1990, but has fallen to 17th since then. 
This is unconscionable at a time when our economy has shed 7.3 million 
jobs since December 2007. First and foremost, we must make this credit 
permanent. Senate Finance Committee Chairman Baucus introduced the 
``Grow research Opportunities with Taxcredits' Help Act'' (S. 1203), 
which I cosponsored, to make the credit permanent. How is a research 
and development tax credit essential for the growth of science parks 
and generating innovation? How specifically would science parks and 
small businesses therein benefit and grow as a result of making this 
tax credit permanent?
    Answer. Business strategy and investment is always aided by 
certainty. The quest to make the R&D tax credit permanent has gone on 
for too long. Passage of your legislation is very important.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                          Dr. Anthony Townsend
    Question 1. What are the trends shaping the plausible future for 
science parks? What will happen if we maintain the status quo and who 
do you see as the early adopters and the resisters of these scenarios?
    Answer. The Institute for the Future identified fourteen external 
trends that will shape the future for science parks. Four of these will 
play a special role, as their future direction of change has a high 
degree of uncertainty, and may play out in a variety ways. These highly 
uncertain trends are:

   The Economic Role of Universities--Some universities will 
        embrace entrepreneurialism while others reject a larger role in 
        the economy. But all will face challenges navigating the 
        conflicting demands and increased strains of a shifting 
        economic and intellectual role. As the major developer of 
        science parks today, the future role of universities is a 
        critical variable. Realizing the full potential of universities 
        to drive growth will probably require a painful and extended 
        overhaul of intellectual property management and technology 
        transfer frameworks.

   Growth of New Science Institutions--Scientific societies, 
        journals and other institutions that set the basic rules of who 
        can call themselves a scientist, and how they should conduct 
        research and share results, will come under tremendous strain. 
        New science networks are forming, organized via the Internet 
        and social software, but their future role and their connection 
        to centers of science could play out in many different ways.

   Sustainability--The cost of energy will drive business and 
        policy decisions across the board. How will R&D ecosystems 
        react to different energy frameworks, and the scientific and 
        technological challenges of battling global warming? We expect 
        this will reinforce the desire to cluster some research and 
        development activities in science parks, but also create forces 
        that favor virtualization and dispersion.

   The Bio-industrial Complex--Bioscience is supplanting 
        physics as the source of great breakthroughs, but there are 
        fundamental flaws in systems for commercializing those 
        discoveries. It is unclear how to fix the many problems in the 
        ``bio-industrial complex'', the role of the public sector, and 
        whether science parks will be able to create environments that 
        address any of the structural challenges, and accelerate 
        innovation and commercialization.

    Question 2. Can you elaborate on the critical nature of encouraging 
innovation in rural areas where populations are not very dense while 
simultaneously encouraging the development of science parks in 
population centers? What more can we do to strengthen and grow business 
incubators?
    Answer. New technologies for computing and communication, as well 
as changes in the nature of scientific collaboration are creating new 
opportunities to extend the science park model from its traditional 
base in population centers to rural areas. First, many of the tools and 
instruments of both basic science and technological development are now 
networked and can be accessed remotely. Cloud computing technologies 
allow anyone with an Internet connection to access almost infinite 
computing capacity on-demand for simulation, data analysis and 
visualization and modeling. Second, the practice science and technology 
are becoming more global and distributed, reducing the cultural, 
organizational and logistical obstacles to participation in 
collaborative R&D for researchers in rural locations. Third, we must 
note that many colleges and universities are indeed located in rural 
communities. As these institutions seek to play a more important role 
in economic development they are well-positioned to provide support for 
rural scientists and engineers to participate in global R&D networks. 
Finally, there are great opportunites to connect networks of 
metropolitan and rural science parks in mutually beneficial ways. For 
instance, the North Carolina Research Parks network combines the global 
brand and appeal of the Research Triangle Park with potentially lower 
cost alternatives of the state's seven other science parks. The network 
can market a wide range of assets to potential tenants, that combine 
benefits of rural or more metropolitan locations.

    Question 3. How can we better encourage the redevelopment of 
existing science parks in ways that will help them compete in a 
globalized economy? What specific measures can be taken to ensure that 
American science parks are evolving for the 21st century? How critical 
is it that a science park be physically located close to a university 
given that so much business is now done through networks and virtual 
environments?
    Answer. The most important way to redevelop existing science parks 
is to recognize that their management needs to be upgraded for the 21st 
century. Managing science parks effectively over the coming decades 
will mean a greater focus on managing activity than managing buildings 
and land. This requires as different kind of manager and developer, 
different relationships with tenants, and different tenants themselves. 
While large companies will continue to be an important part of the 
tenant mix in science parks, small and medium-sized companies will play 
a growing role in driving technological innovation. Science parks will 
need to learn how to market to them, how to attract them, how to serve 
them and help them grow, and how to maximize their local economic 
impact.
    Specifically, I recommend that the Federal Government support 
upgrading and expanding the ``software'' of science parks at the same 
time it supports the ``hardware'' of science parks in S. 583. Science 
parks could use this funding to expand staff focused on social capital 
development--creating new business networks, engaging and cultivating 
venture investors and angels, and other kinds of activity that 
characterize successful technology clusters like Silicon Valley.

    Question 4. How is a research and development tax credit essential 
for the growth of science parks and generating innovation? How 
specifically would science parks and small businesses therein benefit 
and grow as a result of making this tax credit permanent?
    Answer. Making the R&D tax credit permanent would expand the market 
for science parks by expanding the overall expenditure on R&D in the 
U.S. economy. Creative science park managers and developers could 
package advisory services on the R&D tax credit with their leasing 
programs to help small and medium-sized companies plan for long-term 
growth and expansion. This would create a virtuous cycle of investment 
supporting the overall business model for new and expanded science 
parks.

                                  
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