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Technology boom shifts development paradigm
By Shelia Watson
Contributing Writer
The forward, or more accurately, fast-forward, movement of science and technology has changed the global economy in profound ways. In a global economy, knowledge-based technology can play a role as important as capital and labor.
During the past few years, the paradigm has shifted from the industrial age to the information age, and as technology evolves, there is both a growing demand for and a growing reliance on knowledge and information.
Technological change is always an important component of economic growth, but the acceleration of technological innovations has easily moved information technology to the forefront of key economic drivers.
In a micro view, technology can alter business activities, affecting a company’s efficiency and its client’s convenience when doing business with it. In a macro view, technology influences patterns of employment and investment and has created entire industries.
Knowledge as commodity
Because IT can increase productivity, the knowledge itself has become a valuable commodity. Knowledge-based organizations, such as research institutes and universities, are seeing increased roles in economic development. In fact, research universities are becoming known as economic development engines, particularly in their technology transfer departments.
“Historically, economic development had not been a major part of the university’s mission, but now it’s becoming much more important, especially in public universities,” said Robert Pozner, interim director of MUSC’s Foundation for Research Development and director of technology transfer.
State commitment
Recent state legislation is being called one of the most significant victories for South Carolina’s research universities and tech entrepreneurs in the past 50 years. The passing of the legislation by a wide margin highlights a serious commitment on the part of state government to invest in the economic development paradigm shift.
The legislation is Senate Bill 0560, which creates a $50 million venture capital fund for the state and offers tax credits and other incentives to attract large life science and pharmaceutical businesses. It facilitates borrowing up to $250 million for university construction and improvement projects encouraging research and tech-based economic development.
The bill includes three sections:
The South Carolina Life Sciences Act provides multiple tax credits for recruitment and expansion of large life science facilities. To receive the credits, the business must invest more than $100 million in the new facility and create a minimum of 200 full-time jobs that pay up to two times the annual per capita income for the state or county in which the facility is located. The act allows the state to issue up to $250 million in general obligation bonds to pay for infrastructure improvements necessary to induce the location of large life science facilities within the state.
The Venture Capital Investment Act of South Carolina creates two funds within the Department of Commerce, the South Carolina Venture Capital Fund and the South Carolina Technology Innovation Fund. The $50 million venture capital fund may provide equity, near-equity and seed capital of up to $5 million or 15% of the committed capital of the investor, whichever is less. Deals must be for South Carolina-based firms. Uses of the Technology Innovation Fund are more varied, permitting the state to provide small grants to support research and tech transfer through the technology incubators connected to the state’s research universities. Administration of the Innovation Fund will be contracted to a separate nonprofit.
The South Carolina Research University Infrastructure Act increases the state’s debt limit by half a percent to provide as much as $250 million for facility and infrastructure improvements at the state’s three research universities. Projects must advance economic development and creation of a knowledge-based economy.
Measuring the value
A recent economic impact statement conducted for the SCRA by Charleston Southern University’s Center for Economic Forecasting underscores the value of the research technology industry. In his report, Al Parish, director of the CEF, says, “The CEF used a 53-sector … dynamic virtual econometric replication of the economy of the state of South Carolina over a 35-year period.”
In addition to a review of the universities’ and the SCRA’s roles, the study included comments on the benefits of technology and research from several companies that have partnered in various ways with the SCRA, including Scientific Research Corp., Project Seahawk, Vought Aircraft Industries, Rockwell Automation, Northrup Grumman Corp., ICF and Savannah River National Laboratory, among others.
The findings for future annual economic impact, combining research operations and research parks, included the potential for generating the following:
• 15,420 jobs.
• $582.9 million in personal income.
• $97.8 million in tax revenues.
• $1.2 billion total economic impact.
With so much potential at stake, universities are becoming much more proactive in their technology transfers and technology-based ventures, using them to leverage resources for job creation.
“IP has become much more important over the past couple of years,” Pozner says. “It’s clearly an important part of what we do.”
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