Tuesday, May 29 2018
By Angelos Angelou, CEO, Angelou Economics
For those so inclined, a quick glance at any scientific journal or publication reveals a community of discovery that is exciting, complicated, and, frankly speaking, bizarre. Recent breakthroughs include, but are by no means limited to: the observation of a neutron star collision that gave birth to an unfathomable amount of deep-space gold; the growing of a premature lamb in a plastic bag; and continued development of the CRISPR gene-editing technique. Researcher’s at the University of Cambridge even taught sheep to recognize Emma Watson’s face.
Alright, so all of that is…interesting. But it also raises an important question: why? What’s the point? How do we get from a celebrity-enamored sheep to a practical, commercialized good or service? The fact is, while discovery for discovery’s sake is great, it’s also expensive. Framing it another way, if research is to remain viable in the long-run, the knowledge gained must at some point make it out of scientists’ imaginations and into the hands of consumers. Unfortunately, the road from discovery to dollars is not always an easy one.
It is precisely this challenge that spurred global rise of science and/or research parks over the past 70 years. At their essence, research parks are intended to serve as that bridge between abstract discovery and commercialization, to translate the hard science of academia into useable technologies that propel humanity forward. They have been quite successful in this noble endeavor. And, in the process, they have turned into huge economic development engines for the communities they call home.
The unquestionable success of research parks as vehicles for both science and commerce can be seen in the speed with which they proliferated the global economy. After all, research parks are, in the grand scheme of things, a relatively new development. Their origin can be traced to the Stanford Research Park founded in 1951, and the concept didn’t really start to catch on until the 1960s. Since then, they’ve spread like a wildfire. The United Nations Educational, Scientific, and Cultural Organization (UNESCO) maintains a database listing more than 500 research parks worldwide, to include 11 in Africa and 36 in the Middle East. UNESCO’s database contains some 72 entries for the United States alone, and it is by no means a comprehensive list.
In fairness, 500+ institutions might not seem very impressive on a planet with seven billion people and tens of trillions of dollars in economic activity. But this line of thinking does not account for the sheer scope of these operations; research parks are not small endeavors. Consider some prominent examples. The aforementioned Stanford Research Park covers 700 acres and employs 23,000 individuals, while the campus of the world-renowned Cummings Research Park (CRP) in Alabama is almost 4,000 acres and houses nearly 300 companies. Then there’s North Carolina’s Research Triangle Park—the largest in the world—encompassing more than 7,000 acres and providing 22.5 million square feet of office space for 60,000 workers. Needless to say, research parks are oftentimes mini-cities in and of themselves.
As it turns out, more and more research parks are making that “mini-city” dynamic a literal reality. Though still distinct from High Technology Business Districts, which are less planned and organized, research parks are increasingly incorporating mixed-use developments into their master plans. Both the University of Maryland and University of Illinois research parks have added retail and residential developments, and the University of Virginia is likewise planning to follow suit, possibly even adding a hotel to its North Research Park. Other yet-to-be-built research parks are embracing this holistic design concept from the ground up. The planned NeoCity sensortech research park in Osceola County, FL, for instance, has 1.7 million square feet of residential space and 250,000 square feet of retail space baked into its design. As communities look to grow in a manner that is smarter, greener, and more convenient, it is likely that this trend will continue to shape how the next generation research park looks and works.
But what about the actual research and commercialization activities? What makes research parks so successful, and worthy of billions of dollars and thousands of acres of prime real estate? The first and obvious answer is that they promote industry clustering. That is, by concentrating common endeavors onto a relatively small geographic footprint, they foster the cross-pollination of ideas, enable efficient supply chains and support services, and attract top-grade talent. This clustering effect benefits all aspects of the economy, not just research and development. That’s why one can find similar organizational structures across the full spectrum of industries, including business parks, industrial parks, arts and culture districts, the list goes on and on.
Research parks do, however, have one defining characteristic that distinguishes them from other hubs of industry and commerce, and that is their close proximity to colleges and universities. As the direct link between academic research and market commercialization, it makes sense for research parks to be located on or near centers of higher education. Oftentimes, they go hand in hand. One survey of global research parks found that more than two-thirds were located on or within five kilometers of a major university, and 70 percent shared services with a partner university. This is no happy coincidence, either. A 2017 research paper by Kelsi Hobbs, Albert Link, and John Scott found that the distance between a research park and a university was one of the key factors in determining research park success.
Of course, the colocation requirement with an academic institution is by no means rigid; national labs and other prominent research institutions also serve as effective partners in the cultivation of a research park. The Cummings Research Park has flourished not because Huntsville, AL is a great town, but because it was built a stone’s throw from government R&D facilities at the Redstone Arsenal. In a similar vein, the Sandia Science and Technology Park in Albuquerque, NM was explicitly built to partner with Sandia National Laboratories nuclear research facility. But the point is, research parks don’t generate research organically; they build upon research activity that is already taking place.
All of this is to say that, perhaps unlike some other economic development tools and strategies, research parks cannot help every community. They cannot thrive in a vacuum. Without that external foundation to build upon, without some existing research base to commercialize, it is exceedingly unlikely that a new research park will be able to attract tenants, promote clustering, and, ultimately, succeed in growing the local economy.
The good news is that research parks can succeed within any number of R&D intensive industries, and thus a great many communities can potentially leverage them as an economic development engine. CRP first specialized in aerospace tech, Boston’s BioSquare focuses on the life sciences, and the Stanford Research Park championed some of the 20th century’s biggest advances in software and information technology. As long as cutting-edge research is being done, commercialization can follow.
Even better, as research parks grow in size and success, they attract industries outside of the scope they may have originally specialized in. The Stanford Research Park is a great example of this.
In addition to numerous prominent software companies, it has also become home to firms in industries as diverse as aerospace (Lockheed-Martin), biopharma (Jazz Pharmaceuticals), automotive (Ford Motor Company), and many more. Attracting such varied and big-name firms obviously generates a lot of economic impact through supply chain development, but the importance of this dynamic goes beyond job growth and tax revenues. By fostering economic diversity, these research parks are making their host communities more resilient to economic downturns that may disproportionately impact a specific industry. This hardiness is vital if communities wish to remain vibrant and prosperous in the long run.
Naturally, Federal policy, legislation, and regulation can also play a significant role in promoting (or strangling) the success of these economically and technologically vital centers of innovation. This fact is hardly lost on the research parks themselves. In their publication, The Power of Innovation, the Association of University Research Parks (AURP)—an aptly named organization representing research park managers and tenants—outlined ten possible Federal reforms that could benefit technology commercialization in the United States.
The document is admittedly a bit dated, and some of the recommendations have been at least partially enacted (changes to Office of Management and Budget rules pertaining to Federal research grants) while others are rather vague (“encourage entrepreneurship”). The remaining recommendations, on the other hand, shed a light on just how much more the Federal government can be doing to support the nation’s research parks.
To start with, there’s the oft-talked about Federal Research & Experimentation Tax Credit. Making the R&D tax credit permanent in 2016 was a big step in the right direction, coming as a boon not just to research parks, but to any business related to the cultivation of new technologies. Further expanding the credit could do much to offset the high capital expenses associated with R&D and thus encourage more investment. Some of the other reforms proposed by AURP are tailored specifically to the unique relationships that research parks have with universities and research labs. By eliminating some of the tax rules associated with licensing university research and broadening leasing and collaboration opportunities near Federal research labs, for instance, the government can remove artificial barriers hindering the growth and expansion of research parks nationwide.
Make no mistake, research parks have been one of the most important industrial organization innovations of the past century. They employ hundreds of thousands of workers in high-skilled, high-paying jobs and have helped convert countless patents into countless billions in sales. Moreover, as the U.S. economy continues its shift from a manufacturing to a service base, the intellectual property created by these innovation centers will be an integral part of the country’s future economic growth. It is therefore imperative that they be recognized as the important economic development tools that they are and that they receive the support that such importance merits.