Chairman Kerry, Ranking Member Ensign, Senator Pryor and Members of the Subcommittee, thank you for the opportunity to testify on science parks and their impact on U.S. competitiveness.

 

As the Vice President for Regional Innovation, I am here on behalf of the Council on Competitiveness’ 150 corporate CEOs, university presidents and labor leaders committed to ensuring the future prosperity of all Americans through enhanced competitiveness in the global economy. The Council is a non-partisan, non-governmental organization based in Washington, D.C. that fervently believes that the best way to drive prosperity is for  America to have the world’s most productive workers and competitive firms so that we can succeed in the global market place.

 

This hearing comes at an opportune time as science parks are becoming increasingly important to our knowledge-based economy.  As the Council’s Competitiveness Index report found, American job growth will come primarily from small and medium sized businesses, science parks will play critical role in accelerating entrepreneurship and innovation.   The Congress, through the America COMPETES ACT, has already taken an important step in ensuring America's long term competitiveness.    The Council’s private sector, university, and labor leadership was actively involved in shaping and supporting the legislation through our National Innovation Initiative and we congratulate this committee and the Senate on its passage. 

 

The theme of my testimony this afternoon – regional competitiveness, and the role of science parks in supporting regional growth– has been a major focus of the Council for nearly a decade. Starting in the late1990s with our pioneering work with  former Council Chair and Bell South CEO Duane Ackerman and Professor Michael Porter on regional clusters of innovation and extending through our recent National Innovation Initiative effort, the Council has focused on understanding what elements contribute to US regional success in a the global knowledge economy.  Our president, Deborah Wince-Smith, served as the chair of Commerce Secretary Gutierrez’s Strengthening America’s Communities Initiative (SACI) Advisory Committee, In addition,  we have worked closely with the Economic Development Administration at the Department of Commerce, the Employment and Training Administration at the Department of Labor, and  dozens of economic and workforce development organizations across the country to catalyze and help implement programs that support, regional, innovation-based development.    

 

As the work of the SACI Committee and the Council’s National Innovation Initiative found, science and research parks can be a highly valuable asset in promoting national and regional competitiveness.  However, parks by themselves are no guarantee of regional success.  For science parks to succeed in promoting regional economic growth, they must be fully integrated into the overall regional economic development strategy.  We believe that any federal program to support parks should incorporate criteria that promote alignment with other regional assets and development efforts.  

 

Allow me to briefly discuss the key elements of regional innovation-based development and the role of science parks therein.   Today, in the United States, regional prosperity depends upon the ability of its people and institutions to innovate and the development of regional ecosystems that support high value economic activity.   In this country, it is increasingly difficult to compete based on low-cost commodity products or the production of standardized manufactured goods.  Instead, we compete most successfully on the commercialization of high-value products and services that command a premium on the world market.  This requires fast and effective innovation and deployment of in global markets.  To meet this challenge, regional leaders must work to create an environment that supports innovative workers and firms.  

 

Regional innovation capacity rests on more than just scientific discovery or idea generation – it is the output of a dynamic interplay of a variety of regional factors.  There are three high-level factors that are at play within every region:   Innovation Assets, Networks, and Culture. 

 

Assets in the innovation-based economic development model include the human, intellectual, financial, physical, and institutional capital located in a region.  The asset base incorporates many common criteria for corporate expansion decisions, such as: availability of skilled labor, the quality of transportation infrastructure, cost of doing business, proximity to customers, the tax and regulatory environment and quality of life.  Assets also include many other factors that are not as widely considered but are equally important to innovation, such as: research and development investment, risk capital firms, technology commercialization, and programs that catalyze entrepreneurship and small business growth.    Science parks and business incubators are an example of an economic asset that can support regional innovation.  However, like all assets, their value depends on how they are used.  This brings us to the second key factor: networks. 

 

Assets must be linked to support regional innovation. All too often, however, innovative ideas and people remain unconnected because formal and informal networks do not exist.  As we found in the Council’s Regional Innovation: National Prosperity report, many ideas generated by university researchers, while valuable from a purely intellectual standpoint, do not reach their full economic potential because they are not translated into new products or services. Similarly, many promising entrepreneurs never get the chance to succeed because local capital providers are unaware of the investment opportunity.  On the other hand, regions that do support a web of linked idea generators, managers, and capital, are more likely to become, what the Council calls innovation “hot spots.”

 

However, we find that many US regions lack a business culture that supports collaboration and other pro-innovation attitudes.   One key aspect of a regional business culture is the degree to which business leaders are willing to cooperate and share ideas even when they compete in some circumstances.  The whole concept of cluster-based economic development is that firms will thrive if they operate in an environment in which they leverage shared knowledge, while developing their own unique strategies.

 

Regional attitudes toward risk-taking comprise another key area. If innovation and entrepreneurship is to take hold, risk-taking must be appreciated and celebrated, even if it often leads to failure.  Failure must be understood as a component of the creative process.   And those who fail for the right reasons should be embraced, not ridden out of town.

 

A final cultural characteristic of note is appreciation of people who have diverse experiences and backgrounds.  An increasing body of scholarly work suggests that regions which are inclusive and embrace people of all sorts may be better suited for supporting innovation than those that do not.  Regions which support a wide variety of artistic expression, in music, physical arts, and the humanities are more attractive to the creative class.  Since innovators, by their very nature, often act and think outside the norm, regions where residents respect and embrace diversity may have an easier time cultivating innovators.

 

Supporting regional innovation is a dynamic and complex endeavor.  And science parks can play a very important role in mix.    Parks can offer general support services and specialized infrastructure that is critical to the work of targeted industry clusters – like wet labs for life sciences companies or clean rooms for work in optics research.    They can provide low cost space that supports creative interaction and offer training and mentorship programs to help entrepreneurs launch their businesses.  They can serve the critical function of linking scientists, entrepreneurs, capital providers, and managers – and become a network of networks for the region.   Through awards, public events, and successful incubation of firms, they can help build an entrepreneurial culture that values risk taking and collaboration.  

 

Successful research parks like the Delaware Technology Park that my colleague and fellow panelist Michael Bowman runs, and parks associated with our national labs at Sandia and Los Alamos, offer most of these services and have become truly integrated into the regional economies.  

 

But parks can also be islands.  Sometimes science parks become hermetically sealed locations that that operate with an inward-focus and have little relevance to the local economy.     Like underused bridges or poorly constructed water mains, they can become a costly infrastructure project with a poor return on investment.  Science parks de-linked from other regional innovation assets are destined to underperform.

 

The key to success for parks is to ensure they are developed in the context of an overall regional economic development strategy and connected to other regional assets.   They should be active nodes in a highly networked environment, not isolated islands.    As a recent report by the State Science and Technology Institute argues, “An incubator should be created only if a clear need, a sufficient market, and adequate resources to support the incubator have first been identified.” 

 

Therefore, if Congress were to offer special financial support for sciences parks, it should ensure that every successful recipient has demonstrated their clear relevance to existing regional development strategies, their specific plans for linking to regional institutions – not just the university to which the park may be affiliated, and their strategy for obtaining funding that would sustain park growth after federal support is exhausted.   Rather than measuring solely the number of jobs created or firms incubated, the park should be judged on the quality, or wage levels the new jobs provide, and the actual operational success of firms that graduate from the park.

 

As you mentioned Mr. Chairman, “science parks are often recognized as the gold standard of technology-led economic development.”   And they can be – but not without making sure they are deeply connected with all the other elements that are required for regional prosperity.

 

Thank you again for the opportunity to present to this hearing.  I look forward to your questions.