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Strengthening Innovation Capacity in Economically Under Performing Regions: Expanding Our National Innovation Capacity by Leveraging University Assets to Create Regional Innovation and Talent Hubs (RITH)

Strengthening Innovation Capacity in Economically Under Performing Regions: Expanding Our National Innovation Capacity by Leveraging University Assets to Create Regional Innovation and Talent Hubs (RITH)

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The Challenge: Economic growth and opportunity are distributed unequally. Many small industrial cities, rural communities, and certain areas within metropolitan regions are being left behind. Underperforming urban and rural regions suffer from stagnant job creation, lower paying jobs, eroding community assets, and the outmigration of their best talent.

The Solution: Expand the national innovation capacity by leveraging university research and development assets to create science, technology, engineering and mathematics (STEM) oriented Regionally-Based Innovation and Talent Hubs (RITH).
The Challenge: Economic growth and opportunity are distributed unequally. Many small industrial cities, rural communities, and certain areas within metropolitan regions are being left behind. Underperforming urban and rural regions suffer from stagnant job creation, lower paying jobs, eroding community assets, and the outmigration of their best talent.

The Solution: Expand the national innovation capacity by leveraging university research and development assets to create science, technology, engineering and mathematics (STEM) oriented Regionally-Based Innovation and Talent Hubs (RITH).

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Published by: PSUTRE on Feb 10, 2010
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NASULGC National Association of State Universities and Land-Grant Colleges

COLLABORATION TO STRENGTHEN INNOVATION CAPACITY IN ECONOMICALLY UNDERPERFORMING REGIONS: Expanding Our National Innovation Capacity by Leveraging University Assets to Create Regional Innovation and Talent Hubs (RITH)

National Association of State Universities and Land-Grant Colleges Commission on Innovation, Competitiveness, and Economic Prosperity Council on Engagement and Outreach The Challenge: Economic growth and opportunity are distributed unequally. Many small industrial cities, rural communities, and certain areas within metropolitan regions are being left behind. Underperforming urban and rural regions suffer from stagnant job creation, lower paying jobs, eroding community assets, and the outmigration of their best talent. At the heart of the regional opportunity imbalance are significant disparities in the infrastructure assets required for innovation. Small and medium-sized employers, which are an economic mainstay, need greater local access to innovation technologies and talent to remain competitive. Communities need locally embedded, nationally and internationally engaged, institutional partners and facilities to anchor redevelopment and be magnets for innovation and growth. The Solution: Expand the national innovation capacity by leveraging university research and development assets to create science, technology, engineering and mathematics (STEM) oriented Regionally-Based Innovation and Talent Hubs (RITH). Universities are drivers of economic growth because they are creators and disseminators of knowledge, which can favorably impact regional economic conditions. Universities connected to the local economies can be catalytic, driving research and innovation, and drawing talent to their geographic regions. We propose deploying innovative funding vehicles to develop and advance alliances among the private sector, local governments and research universities in economically underperforming regions to establish economic anchors that lead to the creation of greater numbers of well-paying jobs, higher levels of educational and workforce preparation, and innovative, fast growing companies. Retaining talent and innovation in a region requires partnerships among universities, localities, and emergent industry sectors as evidenced by the early public strategies that supported private growth trajectories in Research Triangle, Silicon Valley, San Diego, Austin, Boston, and many other areas. RITHs build on the expertise and capacity in higher education institutions by driving innovation capabilities beyond the campus into economically underperforming regions. RITHs will provide contract research and development services to regionally-based small and medium-sized companies; spin out new companies; anchor cluster development through applied, place-based research; and integrate student experiences in business and industry into undergraduate and graduate educational programs. RITH research and development activities will be conducted by university-affiliated researchers, technicians, and graduate students who collectively will constitute STEM talent hubs in the regions. By leveraging leading universities’ research
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programs, RITH communities will build innovation strategies from a base of institutional credibility and capacity. RITH programs will develop, attract and retain human capital, support job creation through the expansion of industries and local firms attracted by cost, knowledge infrastructure and human resource advantages, and expand community development efforts leading to improved quality of life in the region. The Vehicle: Create RITHs through a cooperative funding model which leverages state and regional investments against federal funds to develop a physical and intellectual innovation center core in underperforming regions. Direct the federal dollars into targeted regions, to be invested by regional partnerships, as an incentive for university leadership to expand the national innovation capacity. In this funding model, regions will contribute facilities, states will contribute salary dollars for research personnel, and the federal government will contribute funds for up-fitting laboratories, procuring specialized equipment, and sustaining projects that create long-term institutional relationships between regions, local business and industry, and universities. Funding would be contingent on the region establishing a partnership with a research university to develop an innovation, research and development center that focuses on one or more targeted economic sectors that the region strategically develops to advance its competitiveness. Research and development activities at these regional centers would be applied, translational and built upon partnerships with local employers to strengthen economic clusters. Key sectors of innovation activity would include national priorities such as: clean energy, sustainable buildings and food systems, advanced and sustainable manufacturing, information technology, national security, transportation, space science, health, biotechnology, and nanotechnology. Recommended Policy Measures for Implementation: 1. Create Innovative Places - Commit $400M for a minimum of 50 research equipment and capacity building grants of up to $8M each. Grants would be used to establish RITHs linked to strategic local industry sectors in qualifying regions and would match federal funds against state and local contributions. 2. Leverage Credible R & D Partners to Build Place-Based Applied Research Capacity – Direct $250M annually to partnerships in underperforming regions to develop applied and translational research and development projects that support sustainable institutional relationships between local business and industry, qualified regional innovation centers and universities. These grants will be spent within the qualified region to support research conducted by RITH personnel and university-based faculty. This research will be focused in sectors identified by the regional political and industrial leadership as areas of opportunity, aligned with national innovation priorities, from which to build stronger business clusters. 3. Attract Human Capital and Connect STEM Talent to Business and Industry Provide $50M annually for STEM talent attraction grants in qualifying regions to initiate sustainable relationships between small and medium-sized employers and university students. Grants would include matching funds from employers and could be used to establish internship and service-learning programs for undergraduates, assistantships for graduate students, and entry-level researcher appointments for postdoctoral students.
1307 New York Avenue, N.W. Suite 400 Washington, DC 20005-4722 (202) 478-6040 Fax (202) 478-6046 www.nasulgc.org Page 2
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4. Develop and Grow Innovative Businesses and Industries - Provide $100M annually in innovation grants to small and medium sized enterprises to procure university research and development services through qualified regional innovation centers. Fund grants up to $50K per company in first round, up to $100K in 2nd round, and $250K in 3rd round. 5. Strengthen Innovation Networks in Underperforming Regions - Add an economic impact requirement to new science and technology innovation funding (i.e. America Competes Act, Clean Energy, DOD, etc.) which particularly encourages university grantees to partner with economically challenged regions to grow new or strengthen existing industry clusters. Consider modeling this requirement after the National Science Foundation “broader impacts” criterion. Qualifying Regions: Qualifying regions would meet the criteria for underperforming economic areas set by the Office of Management and Budget (OMB) – or other appropriate Federal agency - as determined by published standards applied to Census Bureau data. The criteria for qualifying regions would include micropolitan statistical areas (to be defined) and underperforming parts of metropolitan regions. Funding Model: Federal program funding for RITHs will provide incentives for partnerships and development of networks to link innovation centers with research university campuses, federal laboratories, and private research and development facilities in more established centers of innovation. The cooperative funding model links a federal funding stream to state and local jurisdiction funding as well as to private sector matching contributions. Alignment: The National Association of State Universities and Land-Grant Colleges’ Commission on Innovation, Competitiveness, and Economic Prosperity (CICEP) and Council on Engagement and Outreach (CEO) believe that this “Collaboration to Strengthen Innovation Capacity in Economically Underperforming Regions” proposal aligns with key initiatives supported by CICEP and CEO, including: the Innovation Competitiveness and Economic Prosperity Toolkit, the Science and Math Teacher Imperative, and the Transformative Regional Engagement Roundtable. In addition, CICEP and CEO believe that this “Collaboration to Strengthen Innovation Capacity in Economically Underperforming Regions” policy proposal is consistent with many strategic policy directions put forward by President-Elect Obama, including: 1. Supporting Regional Innovation Clusters in Metropolitan Regions 2. Creating a National Network of Public-Private Business Incubators 3. Investing in the Manufacturing Sector and Creating Five Million New Green Jobs 4. Doubling the Research Budgets of Key Science Agencies 5. Actively Encouraging Multidisciplinary Research and Education 6. Inspiring Americans to Excel in, and Embrace, Science and Engineering 7. Leveraging National Efforts and Encouraging State Collaboration to Improve Implementation 8. Expanding and Improving STEM Education in Community Colleges 9. Expanding America’s Research Workforce 10. Doubling Funding for the Manufacturing Extension Partnership
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11. Projects to Harness Science and Technology to Address 21st Century Challenges in (1) Clean Energy, (2) Health, (3) National and Homeland Security, (4) Manufacturing, (5) Information Technology, (6) Transportation, (7) Space Science, and (8) Agricultural Productivity. Distinctive from and Complementary to the Manufacturing Extension Program: The Manufacturing Extension Program supports manufacturers through nearly 1600 specialists who provide direct assistance to customers through 59 centers in the US. MEP provides manufacturing customers with fundamental services in business and process improvements. These programs cover topics such as lean manufacturing, energy and environmental services, information technology, and others. Complementing the MEPs, RITHs will provide place based economic development capacity focused on building talent stickiness and innovation assets in support of regional cluster development for underperforming economies. RITHs will leverage the substantial research and innovation capacity of the nation’s research universities along with existing and new federal investments in science, health, and energy. RITHs extend and build upon the significant role that research universities play in innovation supply chains and entrepreneurial networks. MEP programs will complement the RITH program by supporting manufacturers with direct assistance in services that build from the talent and innovation hubs created by the RITHs. Benefits of Policy Approach: This policy will leverage existing investments in universities to create regional hubs for talent, business and industry, and entrepreneurs. It will help communities attract and retain talent vital to their economic futures. It will provide innovation infrastructure from which communities can build global economic competitiveness. It will create incentives for connecting regions to global networks of innovation interests. It will provide a focal point for regional cluster development. The targeted regions will benefit from: • Spillover for new firm starts, talent and technology • Place-based expertise (faculty, researchers, engineers, and graduate students) • Outsourced research and development capacity for small and medium enterprises • Technology transfer (patents into local firms) • University educated STEM talent in region – Talent to attract companies – Future entrepreneurs – Talent stickiness (place-based talent attracts and retains additional talent) • Creative climate attractive to high value jobs and workers • Economic development strategy to strengthen region’s primary economy • Traffic from gazelles and talent into regions • Connections to national and global value networks • Brand prestige of partners (university, federal, and private R & D) • Part of a “compelling story” about community progress, civic atmosphere, and vision • Image as a progressive place to work and live Case Examples of Success: In addition to the well known examples noted above, universities have successfully partnered with small and medium-sized businesses as well as with regions to support and drive economic competitiveness. However, since few policy mechanisms currently exist to incentivize such relationships, the examples and success stories are limited. A notable
1307 New York Avenue, N.W. Suite 400 Washington, DC 20005-4722 (202) 478-6040 Fax (202) 478-6046 www.nasulgc.org Page 4
This work is licensed under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.

exception was the U.S. Department of Labor Workforce Innovation in Regional Economic Development (WIRED) initiative, which encouraged the development of regional approaches to economic development and in several cases included university partners. Beyond WIRED, universities have experimented with regional partnerships focused on economic development when sufficient human and financial resources were available. Several of the WIRED grantees and university leaders associated with regional partnerships gathered with local and national public leaders for a University Roundtable on Transformative Regional Engagement at Penn State University in October 2008 to share their experiences and discuss the systemization of economically-focused university-regional partnerships. These examples are available upon request.

1307 New York Avenue, N.W. Suite 400 Washington, DC 20005-4722 (202) 478-6040 Fax (202) 478-6046 www.nasulgc.org Page 5
This work is licensed under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.

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