Report Review: A Strategic Assessment of the Economic Benefits of Investments in
Research in Arizona
June, 2007
A recent collaborative effort of The L. William Seidman Research Institute of the W.P. Carey School of Business at Arizona State University and The Economic & Business Research Center of the Eller College of Management at The University of Arizona has produced a new report for the Science Foundation Arizona (SFAz). The authors are Kent Hill, Dennis Hoffman and Jose Lobo from Arizona State University and Alberta Charney and Maile Nadelhoffer from the University of Arizona.
Although the Arizona and U.S. economies have shown tremendous growth over the past 15 years, serious concerns have been raised regarding U.S.’s and Arizona’s scientific and technological foundations that have been critical to our past economic successes. In particular, the National Academy of Sciences has expressed “deep concern that the scientific and technological building blocks critical to our economic leadership are eroding at a time when many other nations are gathering strength.” Their report prescribes policy actions designed to bolster science education, increase federal investments in research, set targets for education and skill attainment in the workforce and establish a fiscal/regulatory environment that fosters innovation. The Council on Competitiveness notes a number of concerns, including: the rapid growth in research and development (R&D) investments diverted to emerging economies; the decline in federal R&D investment as a share of total R&D; the reduction in the share of domestic students pursuing degrees in science and technology; the concentration of venture capital in particular regions of the country; and the lagging performance of the U.S. educational system in terms of both attainment levels and test-score achievement.
These concerns can be underscored by comparing the educational attainment of young workers (aged 25 – 34) with older workers (aged 45-54) for different countries. In Canada, France, Japan, Korea, and Mexico, younger workers a significantly more likely to hold an Associates Degree or than their older counter parts (at least 7% more likely). In Germany, the United States and Arizona, older workers have a higher education attainment than younger workers. In Arizona, 37% of the older workers have an Associates Degree or higher, compared to only 30% of younger workers (for the U.S., comparable figures are 36% and 35% for older and younger workers, respectively). This represents a serious erosion of U.S.’s and Arizona’s ability to meet the global challenge head-on.
Within the U.S. Arizona ranks 22nd among states in the 2007 State new Economy index. While a respectable ranking, concern arises over the fact that Arizona is among the states whose ranking has declined the most since the index was first compiled in 1999 and the state’s performance is very poor on some very important measures, including the knowledge component of recent migrants from abroad, the importance of foreign direct investment in the state, and the index of “innovative” entrepreneurial activity within the state.
Are Americans, and Arizonans in particular, achieving maximum levels of economic prosperity today? And even if recent overall performance is strong, are we prepared to compete in the global economy in a manner that maintains or improves future prosperity? The analysis in this technical report, A strategic Assessment of the Economic Benefits in Research in Arizona, helps inform readers about these issues and builds an understanding about how a science and engineering foundation with an emphasis on research can ensure sustainable economic prosperity.
To better understand these issues, the report first provides perspective on someconcepts including competitiveness, the role played by productivity in achieving economic prosperity and a strategic analysis of Arizona’s economic development plans. Then attention is turned to the business plan for Arizona and how research investments can harmonize with and promote the objectives of this overall plan.
SFAz is a nonprofit organization initiated in 2006 by Greater Phoenix Leadership, Southern Arizona Leadership Council and Flagstaff 40. SFAz’s goal is to serve as a catalyst in the construction of knowledge infrastructure in Arizona that will position the state to compete in the global economy. It is dedicated to building science, engineering and medical research capabilities in the state of Arizona, primarily through strategic investments in research initiatives. Its governing board of directors includes both academic and business persons from around Arizona and outside the state. In fiscal year 2007, $35 million was approved for the Arizona 21st Century Competitive Initiative Fund (HB2477). These funds were distributed on a competitive basis to nonprofit and research-performing institutions across the state. Priority is given to research pursuits capable of attracting significant funding from other sources. Another goal of SFAz investments is to help strengthen science and mathematics in Arizona’s K-12 education system. Science Foundation Arizona |
The economic case for SFAz is laid out in Chapter 1 and an overview of SFAz’s structure and programs is provided. Topics include: the rational for a local industrial policy in a knowledge economy; the importance of universities in determining the location of innovative activity; evidence of local economic development from university research; and a discussion of conditions favoring the localization of benefits from university research.
Chapter 2 examines the economic effects of university research, including: input-output, or “multiplier,” impacts of research expenditures; patents, royalties, start-ups and licenses connected to universities; university spin-offs and technology licenses; spillovers from university research to private-sector R&D; and the relationship between new firm formation, human capital and university research.
The relationship between university research expenditures and economic performance is examined in Chapter 3 by comparing urban areas. The role of patents as a channel of research impact is also examined.
In Chapter 4, lessons for SFAz are drawn from an overview of Science Foundation Ireland (SFI). The origins, structure and programs of SFI are discussed, along with an assessment of progress made in Ireland. The results of an international review of SFI is presented. In addition, a comparison is made between Ireland and Arizona in order to assess the relevance of SFI to SFAz.
An inventory of initiatives in other states that are designed to promote research and innovation is provided in Chapter 5. All of the initiatives outlined relate to research in some way: through grants intended to research, the funding of research facilities, the establishment of centers or institutes, or the formalization of private-public partnerships in research in innovation.
Read the full report
|
