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Technology-based economic development strategy (Pittsburgh

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Technology-based economic development strategy (Pittsburgh) ... Fax: 412-276-1934. www.impacteconomics.com. E-mail: simon_at_impacteconomics.com. GO STEELERS ! ... – PowerPoint PPT presentation

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Title: Technology-based economic development strategy (Pittsburgh


1
Rochester Higher Education Steering Committee
  • Evaluating Higher Education Institutional Impacts

2
Background
  • Simon J. Tripp
  • Principal - Impact Economics, LP
  • Director of Research Planning and Special
    Consultant Battelle Memorial Institute
    Technology Partnership Practice
  • Co-founder of Tripp, Umbach Associates, Inc.
    and Tripp Umbach Healthcare Consulting.
  • Specialist in
  • Economic and social impact analysis
  • Regional economics
  • Technology-based economic development planning
    and strategy
  • University and RD driven economic development
    and commercialization
  • RD core competency assessment

3
Some project examples
  • Economic Impact
  • Academic medical centers
  • Colleges and universities
  • Hospitals and health systems
  • Development projects
  • Research and development
  • Economic Development
  • Regional development plans
  • Technology-based economic strategy
  • Biosciences
  • Advanced Manufacturing
  • Information Technology
  • Program development and evaluation

4
Current Projects
  • Technology-based economic development strategy
    (State of Ohio)
  • Technology-based economic development strategy
    (Pittsburgh)
  • Bioscience technology park planning and
    assessment (University of Southern California)
  • Statewide economic impact assessment (University
    of Nebraska Institute of Agriculture and Natural
    Resources)
  • Planning and RD commercialization study (Iowa
    State University College of Agriculture and
    Center for Crops Utilization Research)
  • Economic impact assessment of US-AID funded
    crop-development programs for Africa and Central
    America
  • Bioscience and healthcare development strategy
    (South Dakota)
  • Civic design program evaluation (The Heinz
    Endowments)

Rochester Experience
  • Mayo Clinic/Mayo Health System economic impact
  • Regional economic analysis (Olmsted County)
  • Advisor to Tripp Umbach on Minnesota Partnership
    impact project

5
Economic Impact Analysis
6
The Basic Structure of University Impacts
Business Formation
Labor
Business Growth/Retention
RD
Business Attraction
Supplies
Multiplier Effect (Local Re-spending)
Forward Effects
Backward Effects
Local Spending
Utilities
Education
Private returns
Social returns
Building
Extension
Outreach Service
Volunteerism
Consulting
Total Impact (Backward Linkage)
Q of L Events
Image
7
Business Formation
Labor
Business Growth/Retention
Mayo Clinic Economic Impact Study
Minnesota Partnership for Biotechnology
and Medical Genomics Impact Projections
RD
Business Attraction
Supplies
Multiplier Effect (Local Re-spending)
Forward Effects
Backward Effects
Local Spending
Utilities
Education
Private returns
Social returns
Building
Extension
Outreach Service
Volunteerism
Consulting
Total Impact (Backward Linkage)
Q of L Events
Image
8
Function
Benefits
Impacts
University RD Functional Economic Impacts
Licensing of intellectual property
Jobs, output, income and govt revenue
Minnesota-based licensees. Open new markets,
generate new revenue streams, enhance
competitiveness.
Incubation and generation of new Minnesota
businesses
New Minnesota business enterprises. Open new
markets, generate new revenue streams, enhance
competitiveness.
Jobs, output, income and govt revenue
External research funds attracted to Minnesota
Enhanced income streams, product lines,
productivity and income for Minnesota businesses
New products for Minnesota industry
Jobs, output, income and govt revenue
Commercial research funding from external industry
Improved products for Minnesota industry
Enhanced income streams, product lines,
productivity and income for Minnesota businesses
Jobs, output, income and govt revenue
New products, discoveries and solutions to
problems
University Research and Development
Improved production technologies
Enhanced income streams, product lines,
productivity and income for Minnesota businesses
Jobs, output, income and govt revenue
Commercial research funding from Minnesota
industry
Enhanced position of Minnesota in rapidly
emerging biotechnology sector. New products,
companies and associated potential.
New bio-based products/ biotechnology
Jobs, output, income and govt revenue
Improved more cost effective healthcare
Enhanced public health, social welfare and
reduced healthcare/medical costs for business and
society
Productivity and reduced negative costs
State of Minnesota research funds
Jobs, output, income, govt revenue, reduced costs
Environmental protection and remediation
Enhanced environment, reduced remediation costs,
marketable technologies and processes
Enhanced rural and urban quality of life
Maintain social fabric, reduce poverty, sustain
quality of life and traditions
Reduced negative costs
9
The Impact on Business Growth and the Economy
10
Rochester Key Impacts to Examine
  • Business retention and expansion
  • Advanced workforce (education impacts)
  • Product development/RD (RD impacts)
  • New business formation
  • Advanced Workforce
  • Licensing and entrepreneurship
  • Business attraction
  • Advanced Workforce
  • RD partnerships
  • Clustering

11
Must design not only a campus, but a system for
knowledge transfer and value-added capture
12
(No Transcript)
13
Why a research university?
  • The empirical evidence consistently supports the
    notion that knowledge spills over from university
    research laboratories and from industry RD
    laboratories as well. Location and proximity
    clearly matter in exploiting these knowledge
    spillovers
  • David Audretsch
  • The key is building from tacit or sticky
    knowledge. Specialized knowledge versus
    information.

14
Some baseline numbers to consider
  • Rule of thumb in university technology transfer
    is that for every 100 invention disclosures, ten
    patents and one commercially successful product
    result.
  • Sponsored university research is big business at
    30 billion in 2000. 58 of this is Federal
    Government funded University-based research
    sponsored by industry stood at 2 billion in
    2000.
  • Physical sciences get 10 of the 30 billion,
    engineering disciplines (including computing) get
    just under 20. Life sciences get the big share,
    with well over 50.
  • More than 70 of all industry patents cite
    publicly funded papers.
  • AUTM (1999) reports that 82 of firms formed
    around university licenses operate in the same
    state as the university that provided the
    license.
  • Circa 5 of venture capital backed firms are very
    successful, and another 30 are moderately
    successful.
  • Most university technology transfer operations do
    not break even. Their licensing revenues are not
    sufficient to cover administrative costs and the
    costs of filing and maintaining patents.
  • Between 40-60 of biotech companies are initially
    formed by academic scientists.

15
Top US Corporate Patent Classes
  • Surgical instruments
  • Biology of multi-cellular organisms
  • Surgery light, thermal and electrical apps
  • Surgery application, storage and collection
  • Prostheses
  • Computer and digital processing
  • Data processing
  • Special receptacle or package
  • Telephone communications
  • Communications directive radio wave
  • Chemistry molecular biology and microbiology

The primary innovation areas in the US are a good
match to the intended technological focus of the
new University in Rochester.
16
Entrepreneurial Environment
  • Entrepreneurship is distinguished by novelty and
    dynamism
  • Innovation-driven development expands the
    potential output of the economy, rather than
    moving output from one business to another
  • US competitive advantage lies in the creation and
    rapid exploitation of new ideas
  • Public policy and governance are critical shapers
    of an entrepreneurial environment

17
The Impact of Education
18
The Impact of Education
  • Private Returns to Education
  • The IRR on private investment in an undergraduate
    degree is 11.8 to 13.4
  • 7.2 Masters and 6.6 PhD
  • (gets lower as go higher because IRRs are cost
    based and individuals are putting off current
    income as they pursue higher degrees)
  • Social (Public) Returns to Education
  • The rate of public return on investment in
    undergraduate education is circa 11.6 to 12.1
  • Expect this is very conservative because of many
    non-calculated societal benefits.

19
The Impact of Education
  • Estimates show 25-40 of national income growth
    is attributable to higher education mostly
    through the application of knowledge/RD.
  • Quality of institution can add 10-15 to private
    returns
  • Returns vary greatly by field of study ranging
    from 20 for professional fields such as
    medicine, to negative (for clergy).
  • Good discussion in The Economic Value of
    Higher Education by Larry Leslie and Paul
    Brinkman, published by the American Council on
    Education.

20
Median Earnings and Tax Payments by Level of
Education, 2003.
95,700
79,400
59,500
49,900
37,600
35,700
30,800
21,600
Source US Census Bureau, 2004
21
Expected Lifetime Earnings Relative to High
School Graduates, by Education Level
22
What it takes to realize university-driven
technology-based economic development
23
Technology and RD infrastructure.
Technology
Three elements work together to achieve
RD-based business and economic development
Talent
Capital
Innovators, skilled technical workforce, business
development professionals, entrepreneurs
Pre-seed, seed, angel and VC
24
In general, two factors are associated with
early institutionalization of technology
transfer the presence of a medical school and
the status of the university as a land grant
institution.
Maryann Feldman American Research Universities
and Technology Transfer
Most commercially valuable university
intellectual property arises from biomedical
research.
Mowery et al, 1999 Feller et al, 2002
25
Mechanisms of Industry/University Interaction
  • Formal
  • Sponsored research agreements
  • Licensing of university intellectual property
  • Formation of spin-off companies
  • Informal
  • Faculty consulting
  • Industry hiring of students
  • Knowledge trading among friendship networks

26
The Questions
  • Will a university campus dedicated to advanced
    education and RD stimulate business growth and
    investment in Rochester?
  • Yes
  • What will the ROI be?
  • Depends on many factors (research mix,
    commercialization imperative and incentives,
    entrepreneurial environment, skilled workforce,
    capital availability, etc.)

27
  • Where will the skilled talent come from?
  • Major start-up packages attracting stars
  • Top student talent attracted to prestige people
    and institutions
  • State-of-the-art facilities and equipment
  • Funding support and subsidies
  • Attracting scarce domestic students
  • Rochester Q of L
  • Multiple clustered employers
  • Entrepreneurial culture
  • Capital

28
  • Risks of not making the investment?
  • Innovation economy needs innovation engines (so
    risk is not participating in the part of the
    economy generating growth)
  • Technology, talent and capital are mobile must
    anchor with tacit, sticky knowledge. (so the
    risk is not attracting and retaining talent.
  • Spin-off enterprises largely locate close to
    source of knowledge (so risk is not being the
    source of knowledge)
  • Mayo and IBM are multi-location organizations
    (the risk is they grow elsewhere instead of
    Rochester).

29
  • What will be the drivers of a high ROI?
  • Funding sufficient to attract the best RD talent
    (human capital)
  • Highly competitive RD facilities
  • Domestic students
  • Favorable entrepreneurial policies and procedures
  • Creation of celebratory and supportive
    entrepreneurial culture
  • Very early stage pre-seed funding through venture
    capital availability
  • Business spin-offs, licenses and technology
    captured and transferred locally
  • Branding and image

30
Economic Impact Assessment for the Planned
University in Rochester
31
Work Plan and Schedule
32
Project Deliverables
  • Methodology used in the assessment
  • Demographics of the region and the state of
    Minnesota
  • Businesses in Rochester and the surrounding area
    most likely to partner with the University of
    Minnesota to develop services, technology, and
    products that will increase the economic
    viability of Rochester and the state of
    Minnesota. This section shall give examples of
    services, technologies, and products that might
    be produced by the collaboration of Rochester
    area businesses and future businesses.
  • An estimate of the economic impact on Rochester
    and the state of Minnesota of the increased
    collaboration between businesses in Rochester and
    the University of Minnesota Rochester if the
    University of Minnesota increases its educational
    offerings and research projects in Rochester

33
  • An estimate of the return on investment for a
    dollar of state investment
  • An estimate of the possibility of the economic
    development moving to another state or another
    country if the investment is not made in the
    increased educational offerings and collaboration
    of the University of Minnesota in Rochester
  • 7. Projections about the kinds of skills
    necessary to promote growth and whether or not
    those skills can be obtained by education and
    training of people already in the Rochester area
    or whether the Rochester collaboration will have
    to attract people from outside the Rochester
    area. This section shall include a trend analysis
    of the student population available in the area
    and how many of those people might chose to stay
    in Rochester for their postsecondary education.
    The trend analysis should comment on the number
    of people that must be attracted from outside the
    Rochester area in order to sustain the economic
    growth of the businesses developed through the
    collaboration between the UM and the businesses
    in the Rochester area.

34
  • Provide scalability in the report calculations
    so that the yield on various levels of investment
    may be calculated.
  • Produce a detailed document summarizing the
    results and findings of the study.
  • Help facilitate the roll-out of the study by
    actively participating in the development of a
    presentation of the study results.
  • Be available to assist in the roll-out and
    presentation of results.
  • Be available to testify before the Minnesota
    Legislature during the 2006 session regarding the
    results of the study.
  • Make best efforts to complete the assessment
    report by Friday, April 28, 2006.
  • In performing the work Impact Economics will
    work closely with the Rochester Higher Education
    Development Committee and the Minnesota Office of
    Higher Education.

35
To Discuss
  • Advice on key contacts for interviews
  • Sources of information/data
  • Local/regional business and industry
  • School district enrollment projections and
    demographic data
  • Local college and university enrollment data
  • Current research volumes and core competencies
    (Mayo, U of M, IBM)

36
6 Jaycee Drive Pittsburgh, Pennsylvania
15243 Telephone 412-276-1986 Fax
412-276-1934 www.impacteconomics.com E-mail
simon_at_impacteconomics.com
37
GO STEELERS !
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