REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - NORTH CAROLINA RESEARCH CAMPUS – KANNAPOLIS, NORTH CAROLINA - THE ROLE OF UNIVERSITIES IN ECONOMIC DEVELOPMENT

TUESDAY, NOVEMBER 27, 2007

AS PREPARED FOR DELIVERY

Introduction

Thank you, Senator Burr, for that kind introduction, and for the invitation to be in Kannapolis today. I’m pleased to be here this morning on behalf of President Bush to discuss the role of universities in successful 21st century economic development. Senator, I appreciate your commitment to creating jobs and economic opportunity in the great State of North Carolina – and across the nation.

Your hosting of events like today is just another example of your leadership, and your active engagement in helping communities build strategies for success in the new, 21st century worldwide economy.

In particular, I admire your leadership in helping this region in the aftermath of the Pillowtex closure. The Department of Commerce appreciated the opportunity to work closely with you and our Federal partners such as the Department of Labor and the Small Business Administration in this endeavor.

Working alongside Senator Burr in this important effort is another national leader, Congressman Robin Hayes. Congressman Hayes, it’s a pleasure to be with you as well, and thank you for your work in Washington on behalf of the people of North Carolina. Congressman Hayes is a strong advocate for North Carolina’s economic future, and I thank him for his leadership.

I’d like to acknowledge the distinguished mayors in attendance today: Mayor Misenheimer of Kannapolis and Concord Mayor Padget, as well as the members of the state legislature and the county commissioners here today.

Of course, as we are fond of saying at the Department of Commerce, economic growth and job creation simply will not occur until the private sector is ready, willing and able to invest, and today we are honored to have the CEO of one of the world’s leading companies, Dole Foods, here with us – David Murdoch. Thank you for your global leadership and your local commitment.

Speaking of North Carolina’s future, there couldn’t be a more appropriate venue for this discussion than here at the new North Carolina Research Campus. Thanks to the vision and generosity of David Murdock and the leadership of many of the people here today, this former Pillowtex plant – a symbol of our economic leadership in the last century – will be a state-of-the-art university-led research institution that will be a symbol of our economic leadership in the 21st century.

The role that universities like those here in North Carolina play in spurring innovation and transforming American communities and regions in the 21st century economy is profound. As we discuss the role of universities in general, and the North Carolina millennial campuses in particular, I would like to share three things:

1. Some thoughts on why universities are important to economic development;

2. Some examples of premier university-led economic development initiatives; and

3. Some thoughts on the broader competitive context in which we all operate.

Why Universities are Important to Economic Development

As we consider the importance of universities to economic development, it is important to remind ourselves of one of the new realities of the 21st century economy – and that is that we do indeed live in a global marketplace. Tom Friedman of the New York Times is right…the world is flat. Our competition today comes from not necessarily the company next door, or city next door, or even the state next door. Our competition in the new flat global marketplace comes from any person, on any point of this globe with a good idea, a good education, and a good Internet connection.

In this new flat global marketplace, the ability to innovate is the only possible sustainable competitive advantage. It’s not location. It’s not even the cost of doing business. Factors such as these will continually shift in a dynamic worldwide economy. The key to success for a nation is to learn to innovate better and faster, and if it does, then it will grow and prosper in the 21st century – just as America did in the 20th century.

So, if we know that innovation is the key to competitiveness in the 21st century, how do we harness innovation to strengthen America’s competitive position? While there is no “one size fits all” strategy harnessing innovation, we can, however, point to some things that work – such as universities.

Universities are ideally suited to harness innovation. Perhaps the overarching reason for this is that universities are beacons of free thought, and free thought matters when it comes to innovation. Creativity thrives when ideas are allowed to flourish, and nowhere is this type of freedom more available than in the university setting.

Universities help to bridge the gap between the metaphysical and the physical, the philosophical and the pragmatic, and between research that is for “pure” knowledge and that which is applied. In doing so, they help to develop and commercialize the tools that we need to adapt to changing world and a changing economy.

This is particularly evident when we look at university research parks, which are increasingly becoming breeding grounds for technology commercialization, entrepreneurship and economic competitiveness. According to a new report by Battelle and the Association of University Research Parks:

• More than 300,000 workers in North America work in a company located in a university research park, and

• Every job in a research park generates an average of 2.57 jobs in the economy resulting in a total employment impact of more than 750,000 jobs.

Research parks spur homegrown business startups, aid in the retention of business and citizens, foster the expansion of existing businesses and level the tax base. Research parks, such as the one being developed here in Kannapolis, will become increasingly important for U.S. competitiveness in the 21st century economy.

Examples of Successful University-Led Initiatives

1. When anybody, anywhere thinks of universities and the private sector working together, what comes to mind? The world over thinks of the world-class example of the Research Triangle right here in North Carolina.

As I travel the nation and the world, I hear frequently that folks are attempting to recreate the success of the Research Triangle on the other side of this state. And that is great, because the Research Triangle is a model worthy of repeating.

The new North Carolina Research Campus here in Kannapolis is another example of leadership in North Carolina. You know it can be done in this region of North Carolina, because it has clearly been done in North Carolina.

The lessons of the Research Triangle are clear:

• First, the power of universities, the private sector, and government working together is immense. The Research Triangle essentially invented the concept of the public-private partnership – once again, North Carolina led the way.

• Second, the Research Triangle taught us that success takes time. I remind those around the world wishing to duplicate the success of the Research Triangle that the roots of the Triangle date back to the early 1950s. As successful as the Research Triangle has been, it didn’t happen overnight.

2. A key to successful research park – or to any university-led economic development initiative – is public-private partnerships. And you couldn’t find a better example of public-private partnership than the North Carolina Research Campus right here in Kannapolis. With partners including the City of Kannapolis, Duke University, UNC, NC State, the NC Community College System, Red Hat, BioMarker, and of course David Murdoch. The North Carolina Research Campus is truly a model for building partnerships between businesses and institutes of higher education to advance innovation and economic development.

The campus will be a significant step in the state's economic transformation from a leader in industries such as textiles and tobacco, to an innovator in emerging industries like biotechnology.

3. Another great example of university-led economic development can be found in North Dakota, a state which, like this region of North Carolina, has faced economic challenges. Under the leadership of Governor Hoeven, North Dakota has partnered with universities and the private sector to transform their economy. Through these efforts, North Dakota has reversed a long trend of out-migration, now has an unemployment rate well below the national average, and is out-pacing the nation in both new jobs created and per capita income gains.

The Department of Commerce is supporting North Dakota’s efforts in several ways, including a partnership with the University of North Dakota’s Center of Excellence for Life Sciences and Advanced Technologies. This campus research park leverages research in viral diseases and high-tech engineering encompassing a regional industry cluster stretching from the Great Plains to Winnipeg, Canada.

The center is just one of a statewide network of Centers of Excellence creating new economy jobs in North Dakota. North Dakota, in my opinion, is another excellent example of strong State leadership, successfully utilizing the assets of universities, partnering with the private sector, leveraging Federal programs, and focusing on key challenges that have yielded specific, tangible, and impressive results. This is the type of leadership that it takes to prepare a region to compete in the 21st century marketplace.

The Broader Context

Which brings me to the broader context of our discussion today. As I said earlier, the only sustainable competitive advantage in the 21st century worldwide marketplace is innovation, and universities are tremendous innovation assets. And not all players on the international stage are well versed in this. According to a recent study by the Organization for Economic Cooperation and Development based in Paris, universities are an under utilized resource across the globe in advancing innovation. In most parts of the world, the division between the world of Ivory Tower Academia and the world of Commerce are indeed worlds apart.

While universities across the globe may be untapped resources, universities in the U.S. are far more engaged with the private sector – and that is a competitive advantage for the United States in the global marketplace.

And, with over 95% of the potential customers for U.S. products and services outside of the U.S., such a competitive advantage offers tremendous opportunities. There’s a whole global marketplace out there for us to tap into with the right products and services.

The global marketplace is paying off for the American consumer. According to research by the respected Financial Services Forum, the average American family income is $10,000 a year higher because of our participation in the global marketplace.

Today our export performance is booming. U.S. exports are up 11% over last year and for the first time in recent memory; exports are rising at a faster clip than the rate of imports, narrowing our trade deficit.

When President Bush came into office, we had Free Trade Agreements with three countries: Canada, Mexico, and Israel – today we have implemented 14. I am pleased to join the President and Secretary Gutierrez in promoting four new Free Trade Agreements: Columbia, Panama, Peru, and South Korea.

As Governor Haley Barbour says, I may have been born at night, but I wasn’t born last night. I know that FTAs are controversial in some parts of our country, and our two distinguished Members of Congress have not always agreed with President Bush on this issue. The goals of an FTA are to reduce barriers to U.S. goods and services, better ensure intellectual property protection, promote fairer and more transparent trading practices and government processes, and level the playing field.

The evidence shows that Free Trade Agreements work. Our trade deficit with FTA countries is substantially less than our trade deficit with the rest of the world. Since NAFTA was implemented, the exports between the U.S., Canada, and Mexico all increased, and the economies of all three countries grew significantly; the U.S. by 48%, Canada by 49%, and Mexico by 40%.

But regardless of where you stand on Free Trade Agreements, we can all agree that our marketplace is truly global and economic prosperity is directly tied to our success in this global marketplace. One of the most important things universities can do is to help prepare our businesses for the opportunities in the global marketplace. The old business rules of mastering your local market, then your regional market, then the national market, and then the international market no longer apply. You can have an exceptionally successful business right here in Kannapolis, and sell most of your services or products overseas.

Thanks in large part to this type of export success, our American economy is strong:

• Our unemployment rate is 4.7%, a figure most economists consider to be below the full employment rate.

• America has experienced job growth for the last 50 months, which makes this the longest, most robust job expansion in our nation’s history.

• Our GDP has grown for nearly 6 years in a row, growing 3.9% in the third quarter of 2007.

• Despite some exciting days on Wall Street, the stock market is up about 500 points since the beginning of the year.

• Despite what you hear in the media, home ownership remains near record highs and 35% of people own their own home outright – no mortgage at all. And 95% of all mortgages are being paid on time – including 85% of so-called sub-prime mortgages.

The fundamentals of our economy remain strong, and the World Economic Forum recently ranked the United States as the most competitive nation on Earth – which is directly tied to our economic prosperity, which is in turn is linked to the leading edge research that is being commercialized into the must-have products of tomorrow at universities across this great country.

Universities deserve a great deal of the credit for America’s export success. The leading-edge technologies, applications and products made possible by universities and their partnerships with the private sector are critical to our export strength. The ability of universities to “think outside the box” can and must play an ever increasing role in making our companies and communities more competitive in the global marketplace.

Universities help us adapt, and that’s important because the pace of change in the 21st Century will only continue to accelerate. Think of this; it took 55 years for the automobile to reach 25% of the American marketplace…it took the Internet only 7 years to reach this same milestone. Imagine how quickly we will adopt the next big thing.

At the Economic Development Administration we are focused on three key priorities:

• Innovation

• Entrepreneurship, and

• Regional collaboration.

I see all three factors here in the new North Carolina Research Park and I am excited about the possibility of our agency helping these impressive efforts.

On behalf of President Bush, I thank you for commitment to advancing the art and science of economic development, and for the invitation to be with you today.

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