Public investment in science and technology
by Jane Larson

For Arizona to generate high-paying jobs and thriving businesses, it will have to focus its universities on key strengths and track their progress over the long-term.

That's the conclusion of "Seeds of Prosperity: Public Investment in Science and Technology Research,'' a new report on the economic potential of such research at Arizona State University. ASU's Morrison Institute for Public Policy presented the findings of its yearlong study to the Governor's Council on Innovation and Technology and to the Arizona Board of Regents in late April.

Science and technology research is key to building Arizona's economic future with knowledge-based industries, the report says. It emphasizes that universities and businesses must work more closely together to help the state's economy grow in new ways.

"The issue is, is Arizona going to make it in the brain race?"said Rob Melnick, director of the Morrison Institute.

Traditional industries like tourism and real estate will always be important to Arizona's economy, but science and technology-based work will grow in significance, and Arizona needs to balance its portfolio and its revenue streams with the new industries, Melnick said.

The report looks at the results so far of ASU's spending on Proposition 301-funded research, but the institute also broadened its analysis to suggest an original model - Connections, Attention and Talent, or CAT - for measuring the long-term success of that spending.

Proposition 301, approved by Arizona voters in 2000, dedicates about $45 million a year from state sales taxes to university research and kindergarten-through-12th-grade education. Over the next 20 years, that will total some $900 million.

Those millions can have a huge impact on economic development, because businesses rely on universities to attract and train innovators and to develop the products of the future, the report notes.

"The products and services likely to generate the most new wealth and high-wage jobs will come from advances in science and technology,'' the Morrison report said.

It's not just the money, though. Commer-cialization of ASU's science and technology research will also yield solutions to problems in medicine and health, homeland security and communications, all of which will improve the quality of lives worldwide.

The Morrison report found that ASU did reasonably well in meeting its goals for the first year of research under Proposition 301. The six chosen areas met most of their goals, generating more than $14 million in federal and corporate funding, training more than 150 students and adding new researchers and new partnerships.

The projects also took many steps toward building a foundation for future research and economic development, the report said.
ASU received $15.6 million in fiscal 2001-2002 from Prop 301 and targeted biosciences/biotechnology, information science, advanced materials and manufacturing for initial funding. Two areas that support research and development, workforce development and technology transfer, were also funded.
Each field offers tremendous potential for solving problems, creating new industries and benefiting society. Specifically:

Biosciences and biotechnology

Cancer-fighting drugs, more nutritious plants and medical devices that diagnose or treat diseases are just some of the innovations coming out of this ever-widening field. The industry generated $39 billion in revenues in 2001, and demand for better health care is expected to drive more federal dollars toward bio research.

Yet, the Morrison report warns, metropolitan Phoenix lags behind because even though it has made large investments in health care facilities, the investment in research facilities that attract federal grants has been relatively small.

ASU used its Prop 301 funding to develop a biomedical research program with the Arizona Biomedical Institute as its centerpiece. It also partnered with area hospitals on research and worked toward making Phoenix more competitive in the industry.

Information and communications technology

Computer hardware, software and related services have changed the way we work and communicate. Further change is coming as companies embed such technology in smart appliances and autos, use information technology to process biotech data, and combine computing and communications in single devices.

Information technology is a major industry for the United States and the world, and in Arizona employs at least 150,000 people.
ASU has pushed forward in this area by forming consortiums with industry to focus on embedded technology and wireless communications, and by establishing more internships and other efforts to connect students with technology companies.

Advanced materials and nanotechnology

Small collections of atoms are becoming the new building blocks for stronger fibers, more powerful memory chips and more efficient solar and electrical devices. Such developments touch so many other fields that the National Science Foundation predicts the nanotech market could reach $1 trillion by 2015.

To further its work, ASU executed an agreement to participate with Sandia National Labs in a variety of projects, and won a five-year grant for graduate education from the NSF.

Manufacturing

Despite shifting operations overseas, manufacturers remain important to the U.S. because of the network of suppliers they support and the new technology they provide to other sectors. Manufacturing is also one of the country's largest employers and producers, contributing $1.5 trillion to the U.S. economy, and through a continuous search for increased productivity and lower costs it fuels continuing improvement and innovation.

ASU concentrated its research locally on supply networks for the semiconductor industry, hoping to enhance the efficiency of one of Arizona's major industries.

ASU is also exspending Prop 301 funds on workforce development, because the fastest growing occupations demand greater skills and education. Competency in using computers and information technology is now a requirement for almost every profession, leading ASU to assign technically oriented faculty members to non-technical departments as part of the "IT Across the Curriculum'' program.

The Prop 301 funds are also being used to improve ASU's transfer of technology to the commercial world. The newly formed Arizona Technology Enterprises LLC will serve as a bridge between university and business and will seek outside investments in ASU-related technologies.

Even as ASU advances, though, competition from other states is strong. States like California and Michigan have also made major investments in cutting-edge research. Despite this competitive environment, Arizona leaders think the state can establish a lead position.

"Arizona is just one of many states running in the high-stakes race for leadership in science and technology, so we must move swiftly and aggressively to be competitive,'' ASU President Michael Crow said.

That will take universities and businesses joining forces to move advances from the research stage to commercialization, he said. ASU can help by linking its researchers with entrepreneurs, investors and companies willing to work on early-stage products and processes, he said.

It is not too late for Arizona to take a lead, "if we're both lucky and smart,'' said Jonathan Fink, vice president for research and economic affairs at ASU.

The state can be lucky in having bioscience leaders like Jeff Trent and Charles Arntzen want to relocate to the Phoenix metropolitan area, in having land available for new research facilities, and in having a quality of life that can still attract ambitious, creative people, he said.

But Arizona must be smart in pulling together the resources that show superstars it is serious about competing nationally and internationally, Fink said. It must be smart, too, he said, in developing fund-raising partnerships and in addressing the problems of rapid urban growth.

Part of being smart also is knowing how to measure the return on research investments that often take years to bear fruit.
The Morrison Institute recognized that and called for innovative measures that would go beyond counting new hires and new programs.

"Every state throws money at science, but they don't have good metrics for how things are working,'' director Melnick said.
So the Morrison report recommends the state track the following:

Connections

These are the links between university researchers and outside groups that can commercialize the technology, using measures such as the number of researchers on company boards and the number of joint ventures and licenses.

For example, an ASU professor is director of the Factory Operations Research Center, which seeks to improve the efficiency of semiconductor manufacturing plants. ASU also participates in the International Innovation Initiative, which bundles research from member universities to make the package attractive to industry for licensing.

Attention

This is the awareness outside the university of its research, measured by factors such as media attention, national presentations and industry's recruitment of science and technology students. Businesses and others outside the university have to be aware of research before it can have an effect, the report said.

A Women's Health Research Forum held last year, for example, brought together researchers from around Arizona to share their work. Not only did the forum spark collaboration between researchers, it raised awareness that the region has a critical mass of people studying this important area.

Talent

This is the main ingredient today for attracting and retaining business, as measured by the recruitment and retention of top faculty, graduate students, and "visitors in residence'' at universities and businesses.

"We need to recruit science and engineering superstars from other universities, government laboratories and industry, in order to have local access to people who can generate the new ideas that will lead to new technologies that can ultimately drive new industries,'' ASU's Fink said.

But Arizona is not known nationally for its talent, the report said. It has relied too long on old standards of low taxes, minimal government regulation and proximity to markets to attract business.

Making more connections will help the state become more competitive in commercializing technology developed here. Attention will bring the state recognition as a ground for innovation. And, like the adage "it takes money to make money,'' having top talent here attracts other knowledge workers to Arizona to work with the best.

Those, obviously, are not short-term investments or quick changes. Improving Arizona's economy will take clear policies, regular assessments and patience, the Morrison Institute says.
Business leaders say the report shows that Prop 301 funds have given ASU a strong start. And they call the CAT measures unique and important.

"From a business perspective, the report illustrates excellent progress on a quantitative and qualitative basis,'' said Edmund Zito, vice president of Comerica Bank and chairman of the Governor's Council on Innovation and Technology.

The CAT measures should be used alongside more traditional yardsticks, he said, but "it has considerable merit in depicting qualitative factors, momentum and perceptions, which are meaningful considerations in the economics of the investment.

"Remember, economics is a behavioral science,'' he added.
Michael Fong, chief executive officer of Tempe-based Calence Inc. and a member of the Governor's Council, said factors like the state's attraction of Trent's Translational Genomics Institute and ASU's prominence in information technology mean "we're starting from a pretty good spot.''

He said he is pleased to see key measures identified, but wants more.

"It is one thing to have a measure, but where is the goal?'' he said. Targets will need to be set, and people will need to be made accountable for reaching them.

ASU's Crow also favors the CAT measures.

They represent "a significant new means of 'keeping score' on Arizona's investments in science and technology research that will serve us well into the future,'' Crow said.

Melnick hopes two things will come out of the report. First, he wants leaders to use it as a tool to better understand and demystify the research ASU is doing in these vital areas

And he wants leaders to see connections, attention and talent as critical pieces of what Arizona needs to do to succeed in the brain race.