Creating Competitive Advantage and Economic Growth in Arizona:
Strategic Investments in Bio, Info and Nano Technologies

Overview
Arizona’s most effective route for creating new and high value economic opportunity for its citizens is through increasing the research and innovative capacity of its universities. The future will belong to those regions that have strong knowledge-based economies, built on the success of their universities as knowledge producers.

Arizona State University, therefore, requests a catalytic investment in new facilities to enhance our ability to produce world-class research in science and technology. Developing such new capabilities will provide a high and sustained rate of return to the State’s economy and contribute to the creation of entire new industries.

The value of research and development infrastructure

Research capacity building in science and technology is the most critical factor in deciding the economic fate of regional economies [Milken Institute, October 1, 2002]. Universities in particular have unique roles as knowledge producers. The emergence of Arizona State

University as a research engine, intellectual property generator, and innovative force in the life sciences, physical sciences, and engineering is fundamental to the State’s ultimate ability to:

• Diversify and balance its economy
• Create a broader tax base and a more vibrant business and economic climate
• Attract and create more jobs in high-wage sectors

Our competitor states are making, and have made, very substantial investments to increase the research capacity of their systems of higher education. Arizona’s choice is simple — invest or get left behind in the competition for economic prosperity.

Provide broad benefits

Investment now will provide broad benefits. New knowledge creation and discovery will push innovation into the private sector in Greater Phoenix and throughout the State, anchor the creation of new economic clusters and enhance the competitiveness of existing clusters by:

• Providing a robust, skilled and technically literate workforce at all levels.
  There is ample evidence that workers with higher levels of formal education are able to earn consistently higher wages. ASU engages the needs of its community, providing programs to meet the increasingly high-demand for higher education in all sectors of the economy.
• Providing opportunities to partner with government and business to grow, retain and attract companies for Arizona.
  ASU provides the strong educational and research base that the business community recognizes as necessary for the continued success of established and emerging industries. Educational institutions are a strong draw for knowledge intensive, high wage industries and a catalyst for new ventures—both spinoffs generated by university research and new companies attracted by access to ASU’s research capacity.
• Engaging in partnership ventures with other innovators.
  Through ASU’s work with TGen, and with our sister institutions, we are building a path to continued economic success and increased resiliency in Arizona’s economy.
• Creating a new research and technology base for the region’s economic identity.
  Research universities are integral to the success of economic centers, providing the base of cutting edge knowledge and expertise that workers, companies and industries seek. ASU’s research strengths can help to enhance the visibility and impact of metro Phoenix.

Accelerate success

Our investments over the past decade have increased the monetary value of ASU’s research funding portfolio from $47 million to $114 million. Our research portfolio growth is accelerating, with annual growth rates of 18% per year in each of the last two years.

Remarkably, ASU has achieved this success without benefit of substantial new additional research space (the last research building to come on line was the Goldwater Center in 1993).

ASU’s phenomenal growth has not been coupled with substantial capital investment. Unfortunately this places ASU’s continued success and strong new research initiatives at risk.

• The most recent annual Arizona Board of Regents space management and utilization report identified ASU’s current research laboratory space deficiency in life and physical sciences and engineering in excess of 400,000 net assignable square feet.
• Conservative projections point to a shortage of at least 600,000 square feet by 2004.

It is clear that reprogramming of existing space alone is not an option. The shortfalls are too great, and the Bio:Nano:Info initiatives that will be most beneficial to ASU and to Arizona as a whole require a new kind of space – facilities and environments that foster open-exchange, collaboration, interdisciplinarity, and entrepreneurism.

A strategic investment in new research space will enable ASU to build on our successes and on our strong base of interdisciplinary science and engineering research excellence in three signature areas:

• Biotechnology, including biomedical engineering, genomics, vaccines, and plant biology,
• Nanotechnology, including nanoelectronic devices, single molecule biophysics, and nano-biological interfaces, and
• Information Technology, including embedded systems for internetworking applications, wireless communications, and network development.

These rapidly moving transcendent technologies promise to drive vibrant economic growth, and through innovation and convergence, dramatically improve our quality of life.

A strategic investment in research infrastructure will enable ASU to intensify our efforts, and reap great returns for the state of Arizona. ASU is, therefore, requesting a $14 million investment from the state that will enable $185 million in construction spending. This investment will provide dramatic, sustainable and documentable economic benefits.

Economic benefits

Immediate benefits
Immediate benefits will arise directly from the building construction activity. The $185 million in construction spending will create approximately 3,000 jobs (person years). The economic multiplier for such large-scale construction is significant. This investment will yield $330 million in total immediate, local economic impact. The investment will also generate a total of about $15 million in tax revenue:

• $10.2 million in state taxes
• $2.3 million in county taxes
• $2.3 million in city taxes

Medium-term benefits
In the immediate term this new space will enhance ASU’s capability to attract and conduct new research conservatively estimated at $50 million per year (new external funding from federal, industry and private foundation sources).

Evidence suggests that $1 of expenditures creates $5 to $7 of regional economic activity. Therefore this additional $50 million will yield a minimum $250 million per year return on the $14 million annual investment required to create this economic chain reaction.

Long-term benefits
Finally, there will be long term value. Arizona can reasonably anticipate that a host of new companies-- and perhaps entire new industry clusters--will be created by intellectual property and technological innovations developed within these new ASU facilities. ASU is rated a “top ten” university in spinning off new startup companies (per total research expenditures). The nature of such ventures makes ultimate economic return difficult to predict, but it is reasonable to conservatively assume a direct additional economic impact of $25 million per year.

In order to effectively leverage ASU’s growing portfolio of federal and private research Arizona must invest in substantial, additional high quality multidisciplinary research space. The additional capacity will have a profound multiplier effect on economic development in Arizona.

Scientific research and technological innovation take place in a fast-paced, globally competitive environment. Arizona and ASU face a very real shortage of the infrastructure to support such research, and are threatened with a huge opportunity cost if we do not invest now in the implementation of the following capital projects:

• $60 million for construction of AZBiodesign Institute Phase II. This facility will be integrated with the $69 million Phase I building now under construction to complete the AZBiodesign Institute and the biotechnology corridor along the new eastern gateway to the University. The Institute will provide space to enable interdisciplinary use-inspired research in biologics, therapeutics, and integrated nano-bio systems.
• $53 million for construction of a building for the newly created School of Life Sciences that will provide interdisciplinary research and instructional space for biology, microbiology and plant biology. A suite of creative learning and discovery environments incorporated in the facility will promote development of the knowledge and skills needed by life scientists in the 21st century.
• $35 million for construction of an Information Science and Engineering Center (ISEC) building. This interdisciplinary facility will provide an environment where our rapidly growing hardware and software information technology capabilities can flourish and converge. The Center will enable ASU to create novel embedded technologies with exciting new applications, including wireless networks of distributed sensors for the environment and assistive-living smart rooms for the handicapped.
• $13 million for construction of a Nanotechnology and High Tech Materials building that will include an 8000 square foot joint-use cleanroom facility. When fully operational, this state-of-the-art facility will enable fabrication and testing of a wide range of nano-scale devices and systems by the entire ASU research community, including those in the AZBiodesign Institute and the ISEC.
• $14 million for ASU West for construction of a research center and integrated learning environments to explore information science and technology-driven cross-dimensional issues embedded in growing metroplexes like Phoenix, including for example the role of technology in enhancing K-12 education, and geographic information systems to address urban development issues.
• $10 million for ASU East for construction of an Applied Biological Sciences Research Complex including a research building to facilitate collaboration with researchers in the AZBiodesign Institute, and a Health Sciences Center to provide the infrastructure for a Healthy Lifestyles Institute.

Step up to the plate and compete

Long term economic growth and prosperity, like proverbial “good fortune,” favors the prepared. Many other states, in spite of the current economic cycle and their own financial difficulties, are finding it wise to strategically invest in biotechnology, information technology and nanotechnology arenas. For example, in early 2001, California announced a commitment to invest $300 million over four years to create the following three multi-university research institutes: The California Institute for Bioengineering, The California Nanosystems Institute, and the California Institute for Telecommunications and Information Technology. In October 2002, Illinois announced $123 million in new investment to build a Post Genomic Institute, a National Center for Supercomputing Applications, and a Micro/Nanotechnology Laboratory at the University of Illinois. In September 2002, New York announced a $50 million capital investment for a Center for Excellence in Cancer Genomics at SUNY-Albany and a Center for Bioengineering and Medicine at RPI; a separate earlier investment of $400 million has been committed to create a Microchip R&D facility at SUNY-Albany. Within the last year, North Carolina has funded almost $600 million in research infrastructure with state-financed bonds, including broad-based commitment to biotechnology-related projects across the state and a new Nanotechnology R&D building at NC State University. In the face of this stiff competition, it is paramount that we invest now to strengthen our capacity if we are to assume a leadership position.

Build for the future

The national economy is in transition. However, science and engineering innovation are accelerating and will certainly drive the next period of economic expansion. Arizona is positioned to become a world leader in science and technology and can substantially grow its economy by achieving this status. However, we are currently at a crossroads where this leadership position can be accomplished only if strategic investments are made to build the research and development infrastructure of our state’s universities. A modest, yet fundamental investment of $14 million per year will enable Arizona not only to maintain but to enhance its competitiveness, grow its economy, and assume a national leadership role in science and the technologies of the 21st century.

Appendices

1. Appendix 1: Arizona State University’s Economic Impact on Arizona
2. Appendix 2: Creating Competitive Advantage and Economic Growth in Arizona: Strategic Investments in Bio, Info and Nano Technologies
3. Appendix 3: Arizona Biodesign Institute: Vision Sketch