Maine Comprehensive Research & Development Evaluation & Innovation Index Overview & Findings

Maine Comprehensive Research & Development Evaluation& Innovation IndexOverview & Findings Prepared for The Maine Economic Growth Council & Maine Development Foundation November 26 2007 Presented by Jim Damicis, Principal www.policyoneresearch.com

Evaluation Overview • Legislatively mandated evaluation. (5 MSRA §13108) started in 2001and done annually since • Done in parallel with the MTI evaluation (same survey instrument) • Done in accordance to detailed evaluation plan updated in 2006-07 & tied to the State’s Science & Technology Action Plan • Managed by the Maine Office of Innovation and Conducted under contract with PolicyOne Research www.maineinnovation.com www.policyoneresearch.com

Evaluation Purpose: 5-key questions • Has Maine’s public investment in R&D stimulated & sustained consistent, competitive growth in Maine’s economy? • Has Maine’s investment in public & private university R&D led to increased research capacity; the development of an educated, technically skilled workforce; & increased commercialization of university technologies? www.policyoneresearch.com

Evaluation Purpose: 5-key questions con’t • Are Maine’s investments in nonprofit research institutions broadening their impact on Maine’s economy? • Is Maine fostering the growth of research-intensive companies, increasing private sector R&D activity, & building a technology-based entrepreneurial community? • To what extent are these investments increasing the competitiveness of Maine in its key strategic technology & industry areas? www.policyoneresearch.com

Evaluation Includes the Programs: • Maine Technology Institute • Applied Technology Development Center’s • Center for Law and Innovation - Maine Patent Program • Small Enterprise Growth Fund • Seed Capital Tax Credit Program • Maine Biomedical Research Fund • Maine Marine Research Fund • State EPSCoR Matching Funds • State R&D bonds • State R&D funding to the university system www.policyoneresearch.com

Evaluation Methods • Annual Web survey of all recipients of support from Maine’s R&D related programs (recipients are surveyed for 5 years following award/service) • Company & individual survey • Research institution survey • Case studies – subject matter changes annually • Innovation Index – annual statewide indicator trends and benchmarks report www.policyoneresearch.com

Evaluation Major Findings 2006-07 • Maine’s investment has contributed to consistent growth in Maine’s economy and has increased competitiveness related to other states. • Private sector recipients report higher job growth and much higher average wages than the Maine economy as a whole. • The state investments have helped the universities build their research capacity and contribute to an educated workforce. But, results have diminished over time. www.policyoneresearch.com

Evaluation Major Findings 2006-07 • Some university centers such as AEWC work extremely well with industry, but other measures of technology transfer are low compared to national averages (except spin-off companies). • The nonprofit research institutions have limited interaction with the private, research-intensive companies in the state and extremely limited formal technology transfer. • The net effect has been to increase the university and non-profit share of R&D in the state, while the private sector share of R&D has gone down. www.policyoneresearch.com

Recommendations 2006-07 • Maine needs to accelerate its investment in R&D to meet the goal of $1 billion in R&D by 2010 and to improve its relative position in the innovation economy. • Future investments should include a larger percentage for programs that support the private sector. • Future R&D investments should require more commercialization outcomes from university and non-profit-performed R&D. www.policyoneresearch.com

Evaluation 2007-08 Process • Private sector and institution survey completed and results being tabulated • Most indicators have updated for Innovation Index • Case study being conducted on understanding, measuring and growing private R&D in Maine • Reports to be issued by February 01, 2007 and presented to Governor, Legislature, Stakeholders www.policyoneresearch.com

Maine Innovation Index Overview • Compilation of 24 indicators & related sub indicators measuring Maine’s: • Research and Development Capacity • Innovation Capacity • Employment & Output Capacity • Education Capacity • Connectivity Capacity • Maine is compared to US, New England, and other EPSCoR states • Trends are tracked over a 10-year period and most current year available www.policyoneresearch.com

Importance of Innovation • Innovate America, Council of Competitiveness, 2004 describes innovations as: • “intersection of invention and insight, leading to the creation of social and economic value” • “innovation is “the single most important factor in determining America’s success through the 21st Century. It will drive productivity, standard of living, and leadership in the global economy” www.policyoneresearch.com

Defining Innovation • “the development and adoption of new products, processes, and business models” - State New Economy Index 2007, Information Technology and Innovation Foundation & Kaufman Foundation www.policyoneresearch.com

Innovation Index Types of Indicators • Input Measures - “raw materials” essential to the growth of Maine’s innovation economy. Examples: R&D spending, education attainment, venture capital investments, and Internet connectivity • Output Measures – Tell us how Maine’s innovation economy is performing and the degree to which inputs are starting to lead to desired outputs and outcomes. Examples include: patents issued, technology-business establishments, and technology employment. • End Outcome: Higher incomes and better quality of life for Maine Citizens www.policyoneresearch.com

R&D Capacity Indicators • Total R&D Performance • Industry R&D Performance • Academic R&D Performance • Not-for-Profit Laboratory R&D Performance • Federal R&D Obligations • State R&D Investments www.policyoneresearch.com

Maine’s Financial Commitment www.policyoneresearch.com

Maine’s R&D Capacity www.policyoneresearch.com

Innovation Capacity Indicators • SBIR/STTR Funding • Venture Capital Investments • Patents Issued www.policyoneresearch.com

Maine’s Innovation Capacity www.policyoneresearch.com

Employment & Output CapacityIndicators • High Technology Employment - % Change • High Technology Business Establishments - % Change • S&E Occupations in the Workforce • Ph.D. Scientists and Engineers in the Labor Force • Gross State Product - % Change • Per Capita Income www.policyoneresearch.com

Maine’s Employment Capacity www.policyoneresearch.com

Education Capacity Indicators • Math Skills of 8th Grade Students • Science Skills of 8th Grade Students • Higher Education Enrollment among Young People – Chance for College by Age 19 • Science and Engineering Graduate Enrollments • Science and Engineering Degrees Awarded • Education Attainment - % of Population 25 and Older with Bachelor’s Degree or More www.policyoneresearch.com

Maine’s Education Capacity www.policyoneresearch.com

Connectivity Capacity Indicators • Household Connectivity • High Speed Internet Access • Classroom Connectivity www.policyoneresearch.com

Maine’s Connectivity Capacity www.policyoneresearch.com

Major ConclusionsInnovation Index • Maine has made past progress at advancing its innovation driven economy • However, many indicators point to Maine being at risk of losing ground www.policyoneresearch.com

Sources for Additional Indicators • State New Economy Index, Information Technology and Innovation Foundation & Kaufman Foundation • Kaufman Entrepreneurial Index, Kaufman Foundation • Development Report Card for the States, Corporation for Enterprise Development • State Technology and Science Index, Milken Institute • The Dynamics of Technology Based Economic Development, Technology Administration, Office of Technology Policy (defunct) • Science and Engineering Indicators, National Science Foundation • Tech-based Economic Development Resource Center, State Science & Technology Institute www.policyoneresearch.com

State New Economy Index • 2007 version produced by • The Information Technology and Innovation Foundation (ITIF) (www.innovationpolicy.org) • The Kauffman Foundation (www.kauffman.org) • Indicator Categories with Data and Rankings for each State • Knowledge Jobs • Economic Dynamism • Globalization • The Digital Economy • Innovation Capacity www.policyoneresearch.com

KNOWLEDGE JOBS Information Technology Jobs Managerial, Professional, and Technical Jobs Workforce Education Immigration of Knowledge Workers Manufacturing Value-Added High-Wage Traded Services ECONOMIC DYNAMISM “Gazelle” Jobs Job Churning Fastest Growing Firms Initial Public Offerings Entrepreneurial Activity Inventor Patents GLOBALIZATION Export Focus of Manufacturing and Services Foreign Direct Investment Package Exports THE DIGITAL ECONOMY Online Population Internet Domain Names Technology in Schools E-Government Online Agriculture Broadband Telecommunications INNOVATION CAPACITY High-Tech Jobs Scientists and Engineers Patents Industry Investment in R&D Venture Capital STATE NEW ECONOMY INDEX www.policyoneresearch.com

Kaufman Entrepreneurial Index • Produced by The Kauffman Foundation (www.kauffman.org) • Based on new business creation • Indicator Measurement: percent of the population of adult non-business owners who start a business www.policyoneresearch.com

Development Report Card for the States • Produced annually by Corporation for Enterprise Development (CFED) (www.cfed.org) • 67 measures organized into a three-index framework with data and rankings for each State (includes traditional economic and community development and “new economy” indicators) • Performance - "How well is the state's economy providing opportunities for employment, income, and an improving quality of life?" • Business Vitality - "How dynamic are the state's large and small businesses?" • Development Capacity - "What is the state's capacity for future development?" www.policyoneresearch.com

Strength of Traded Sector New Companies Job Creation by Start-Up Businesses Technology Industry Employment Initial Public Offerings Venture Capital Investments PhD Scientists and Engineers Graduate Students in Science and Engineering Broadband Access Academic Research and Development Federal Research and Development Private Research and Development SBIR Grants Royalties and Licenses Patents Issued Business Created Via University R&D Development Report Card for the StatesIndicators Related to Innovation www.policyoneresearch.com

State Technology and Science Index • Produced by Milken Institute (www.milkeninstitute.org). Last done in 2004 • 75 indicators in five categories to measure how well a state will perform in today’s knowledge-based economy. • Research and development inputs; • Risk capital and entrepreneurial infrastructure; • Human capital investment; • Technology and science workforce; and • Technology concentration and dynamism. www.policyoneresearch.com

R&D Inputs Federal R&D Industry R &D Academic R&D National Science Foundation Funding National Science Foundation Research Funding , Percent R&D Expenditures on Engineering R&D Expenditures on Phys Sciences R&D Expenditures on Environ Sciences R&D Expenditures on Math & Comp Sci R&D Expenditures on Life Sciences R&D Expenditures on Agricultural Sciences R&D Expenditures on Biomedical Sciences Average Annual # of STTR Awards STTR Awards (Award Dollars) SBIR Awards SBIR Awards per 10,000 Business Establishments (Phase I) SBIR Awards per 10,000 Business Establishments (Phase I) Competitive NSF Proposals Funding Rate Risk Capital & Infrastructure Total Venture Capital Investment Growth # of Companies Receiving VC Investment Venture Capital Investment Average Annual SBIC Funds Disbursed Number of Business Incubators Patents Issued Number of Business Starts IPO Proceeds State Technology and Science Index www.policyoneresearch.com

Human Capital Investment Bachelor's Degree or Greater Advanced Degree or Greater PhD Degrees Number of Students in Science & Engineering State Spending on Student Aid Average Verbal SAT Scores Average Math SAT Scores Average ACT Scores State Appropriations for Higher Education (per Capita) State Appropriations for Higher Education (percent Change) Number of Doctoral Scientists Number of Doctoral Engineers Number of Science & Engineering PhDs Awarded # of Science & Engineering Post doctorates Awarded % of Bachelor's Degrees Granted in Sci & Eng Recent Bachelor's Degrees in Sci or Eng Recent Master's Degrees in Sci or Eng Recent PhDs in Sci or Eng Households With Computers Households With Internet Access State Technology and Science Index www.policyoneresearch.com

Technology & Science Workforce Intensity of Computer & Information Scientists Intensity of Computer Programmers Intensity of Software Engineers Intensity of Computer Support Specialists Intensity of Computer Systems Analysts Intensity of Database & Network Administrators Intensity of Agricultural & Food Scientists Intensity of Biochemists and Biophysicists Intensity of Microbiologists Intensity of Medical Scientists Intensity of Physicists Intensity of Other Life, Phys Occupations Intensity of Electronics Engineers Intensity of Electrical Engineers Intensity of Computer Hardware Engineers Intensity of Biomedical Engineers Intensity of Agricultural Engineers Intensity of Other Engineers Technology Concentration Percent of Establishments in High-Tech SIC Codes Percent of Employment in High-Tech SIC Codes Percent of Payroll in High-Tech SIC Codes Percent of Establishment Births in High-Tech SIC Codes Net Formation of High-Tech Establishments Number of Technology Fast 500 Companies High-Tech industries (Average Yearly Growth) Number of High-Tech Industries Growing Faster than U.S. Number of High-Tech Industries With LQs Higher Than 1.0 Number of Inc. 500 Companies State Technology and Science Index www.policyoneresearch.com

The Dynamics of Technology Based Economic Development • Produced annually by the Federal Technology Administration, Office of Technology Policy, 200-2003. (www.technology.gov) • No defunct, but past reports provide good list of indicators and sources of data www.policyoneresearch.com

Total Performed R&D Expenditures Industry-performed R&D Expenditures Federally Performed R&D Expenditures University-performed R&D Expenditures Federal R&D Obligations SBIR Awards SBIR Award Dollars STTR Awards STTR Award Dollars Mathematics Test Scores High School Completion Percent with a Bachelor’s Degree Associate’s Degrees Granted Bachelor’s Degrees Granted Percent of Bachelor’s Degrees in S&E S&E Graduate Students Computer Specialists in the Work Force Life & Physical Scientists in the Work Force Engineers in the Work Force Recent S&E Bachelor’s in the Work Force Recent S&E Ph.D.’s in the Work Force Venture Capital SBIC Funds IPO Funds Business Incubators High-technology Establishments High-technology Employment High-technology Payroll High-technology Establishment Births Net High-technology Business Formations U.S. Patents Technology Fast 500 Companies Inc. 500 Companies Average Annual Pay Population Above Poverty Per Capita Income Labor Force Participation Work Force Employment The Dynamics of Technology Based Economic Development www.policyoneresearch.com

Science and Engineering Indicators • Produced annually by the National Science Foundation (www.nsf.gov) • Includes 42 indicators group into the following categories: • Elementary and Secondary Education • Higher Education • Workforce • Financial Research and Development Inputs • Research and Development Outputs • Science and Technology in the Economy www.policyoneresearch.com

Elementary and Secondary Education Fourth grade mathematics performance Fourth grade mathematics proficiency Fourth grade science performance Fourth grade science proficiency Eighth grade mathematics performance Eighth grade mathematics proficiency Eighth grade science performance Eighth grade science proficiency Elementary and secondary public school current expenditures as share of gross state product Current expenditures per pupil for elementary and secondary public schools Share of public high school students taking Advanced Placement Exam Share of public high school students scoring 3 or higher on at least one Advanced Placement Exam Higher Education Bachelor's degrees conferred per 1,000 18–24-year-olds Bachelor's degrees in natural sciences and engineering conferred per 1,000 individuals 18–24 years old S&E degrees as share of higher education degrees conferred S&E graduate students per 1,000 25–34-year-olds Advanced S&E degrees as share of S&E degrees conferred Average undergraduate charge at public 4-year institutions State expenditures on student aid per full-time undergraduate student Science and Engineering Indicators www.policyoneresearch.com

Workforce Bachelor's degree holders as share of workforce Individuals in S&E occupations as share of workforce S&E doctorate holders as share of workforce Engineers as share of workforce Life and physical scientists as share of workforce Computer specialists as share of workforce Financial Research and Development Inputs R&D as share of gross state product Federal R&D obligations per civilian worker Federal R&D obligations per individual in S&E occupation Industry-performed R&D as share of private-industry output Academic R&D per $1,000 of gross state product Science and Engineering Indicators www.policyoneresearch.com

Research and Development Outputs S&E doctorate conferred per 1,000 S&E doctorate holders Academic article output per 1,000 S&E doctorate holders in academia Academic article output per $1 Million of academic R&D Academic patents awarded per 1,000 S&E doctorate holders in academia Patents awarded per 1,000 individuals in S&E occupations Science and Technology in the Economy High-technology share of all business establishments Net high-technology business formations as share of all business establishments Employment in high-technology establishments as share of total employment Average SBIR program award dollars per $1 million of gross state product Venture capital disbursed per $1,000 of gross state product Venture capital deals as share of high-technology business establishments Venture capital disbursed per venture capital deal Science and Engineering Indicators www.policyoneresearch.com

Maine Comprehensive Research & Development Evaluation & Innovation Index Overview & Findings