REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - ASSOCIATION OF UNIVERSITY RESEARCH PARKS - ST. LOUIS, MISSOURI

THURSDAY, OCTOBER 25, 2007

AS PREPARED FOR DELIVERY

Introduction by: Austin Beggs, AURP President

OPENING

Thank you, Austin, for that kind introduction, and thank you for the invitation to be here today in St. Louis. Acknowledgements:

• Past AURP presidents in attendance;

• EDA staff (including Bob Olson, DRO RD);

• Others.

I appreciate AURP’s commitment to advancing the art and science of economic development, and I’m pleased to join you here today to consider the important role of university research parks in 21st century economic development. University assets are critical to America’s competitive edge, and the fact that U.S. universities are more engaged with our economic development, and have more robust partnerships with the private sector than other countries is a significant competitive advantage for the United States.

And you are a significant competitive advantage for the universities you are associated with. University research parks are a critical attractor of talent – both for professors and students. Universities, like companies, are engaged in a fierce battle for world-class talent, and you are an important weapon in this important endeavor.

I am pleased that AURP is a leader in this effort, and I am glad to see that AURP members will be testifying before Congress on the role that universities play in advancing innovation and competitiveness.

And innovation and competitiveness is one of EDA’s key policy priorities. At the “new” EDA, we are focused on three primary policy goals:

• Collaborative, regional development approaches;

• Advancing high-growth entrepreneurship; and

• Answering the “what’s next” question for our economy and economic regions by focusing on innovation and competitiveness.

EDA is in the “what’s next” business – and that makes the university research parks and EDA good friends, because we share similar missions.

And as we contemplate strategies for tapping into the assets of university research parks to strengthen regional economies, a little context can be helpful. I would like to help frame our discussions by, first, providing a snapshot of the national economic environment and priorities, and then discuss some of the realities of our 21st century economy.

OUR ECONOMY IS STRONG AND GETTING STRONGER

We meet at a positive time for the U.S. economy. 110,000 new jobs were created in September, marking the 49th consecutive month of job growth, making this the longest, most robust record of job growth in our nation’s history – ever.

The national unemployment level remains low at 4.7 % – and when I was taking economics in college, my professors told me that anything below 5% was essentially full employment.

The economy has created about 2 million new jobs over the past year – and for those of you keeping score at home, that’s over 8 million new jobs since the economic expansion began in late 2003, more jobs than all other major industrialized countries – combined.

And this robust job growth is due to small and medium sized innovative companies – not large corporations – the type of innovative companies supported by university research parks. You are helping to drive our national prosperity.

The American economy grew at 3.8% in the second quarter of 2007, providing for nearly 6 straight years of uninterrupted economic growth. All this shows that we have a very resilient, diversified, and flexible economy.

EXPORT GROWTH

One of the key reasons for America’s economic strength is the growth in U.S. exports – a reflection of our nation’s ability to succeed in the 21st century worldwide marketplace.

U.S. exports have increased by 11% over 2006, and for the first time in memory, the rate of growth of our exports is greater than our growth in imports. This has led to a narrowing of our trade deficit by nearly 8% or $30 billion compared to the same period in 2006.

This is important, because the jobs associated with exports have higher wages than other jobs, which helps drive our national prosperity.

That’s why it is important to open worldwide markets to U.S. goods and services. A key tool to accomplish this is Free Trade Agreements – FTAs. FTAs help our companies, farmers, manufacturers and workers sell American goods and services to new markets around the world.

When President Bush took office, we had Free Trade Agreements with just 3 countries – Israel, Canada and Mexico. Today, we have free trade agreements with 16 countries with 4 more under consideration.

The critical role exports play in our economy highlights the importance of the Free Trade Agreements the President is pursuing with Columbia, Panama, Peru and South Korea. These FTAs will provide U.S. companies, farmers, manufacturers and workers access to over 126 million consumers in emerging markets across the globe – representing a combined GDP of over $1 trillion. Taken together, these FTAs would represent the U.S.’s 6th largest trading partner.

The role universities, and university research parks, play in this global marketplace is critical. The leading-edge technologies, applications and products made possible by university research parks is critical to our continued export strength. Additionally, universities help us adapt to a changing world and a changing economy.

And the research parks associated with universities develop and commercialize the tools we need in order to adapt to this changing world and changing economy.

So, thanks – at least in part – to our strong export performance, it is clear that the American economy is resilient and strong. This is good news not just for the nation, but for regions in which you work as well – because a strong, growing national economy allows economic regions and individuals to tap into this expanding economic pie and share in our national prosperity. It takes both smart national policies and forward-thinking regional action in order for economic growth to occur.

THE 5 NEW REALITIES OF 21ST CENTURY ECONOMIC DEVELOPMENT

So, with a strong national economic foundation and the realization that our economy is interconnected with the rest of the world, what is the environment university research parks will encounter in the 21st century global marketplace?

I believe that there are 5 realities of 21st century economic development we must understand and respond to.

Having just mentioned America’s strong export performance, let’s begin with New Reality #1 of the 21st century economy: While perhaps the most obvious, it’s also the most important; and it’s that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says – the world is…flat. In the new flat global marketplace, competition is not just from the firm down the road; our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

We think of Airbus as a European manufacturer of airplanes – while this is true, did you know that some of the most important components for the Airbus products are built here in the Midwest – in Kansas?

The number one selling car in America is a Toyota – and all those Camrys sold in the United States are built right here in the United States.

What’s more American? A Toyota Camry built in the United States, or a Ford Fusion built in Mexico? It’s an interesting question.

So, yes, our competition is indeed global, but with global competition comes opportunities for global partnerships – opportunities to expand our markets and increase our competitiveness. And, with 95% of potential customers for American products outside the United States, this reality becomes more important every passing day.

University research parks can play an important role in helping our companies adopt to the new reality of the global marketplace.

New Reality #2: Competition is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the U.S. population. It took only 7 years for the Internet to reach that same milestone. Imagine how quickly we will adopt the next big thing.

The nature of innovation itself is changing: innovation is becoming multidisciplinary as different technologies converge, creating new fields. Fields that didn’t even exist just a few decades ago. People smarter than me debate where bioinformatics or nanotechnology will take us, but all agree that they will become major drivers of the U.S. economy.

This new reality where cycle times for products and ideas continue to shrink will require all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do have the opportunity for reward.

New Reality #3: Yes, the world becomes a bit more complicated every day. In order to respond to this increased complexity, we must realize that we have reached a point where the components of competitiveness can no longer be pursued separately. Just as technologies are converging to create new fields of innovation, so are the components of competitiveness merging to shape economic growth in the 21st century. This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs occurring in separate silos can no longer be tolerated. The interconnected challenges of these components of competitiveness must be tackled in concert.

Second, in our new 21st century global economy, we must acknowledge what we all learned on the school playgrounds of our youth, that we are stronger when we stand together than when we stand alone.

Standing together means that we need to look beyond traditional institutional and political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

New Reality #4: Public-Private partnerships become more critical every day. While governments at all levels, universities and other non-profit institutions are important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur, regardless of how much government spends. The private sector should not just have a seat at the table, but should actively be engaged as full partners in strategies for economic growth.

The private sector should be helping to shape – within the parameters of public accountability, of course – the development strategies that will lead to more higher-skill, higher-wage jobs. If the private sector is not fully engaged in your region as a partner for long-term economic development, it is the responsibility of the universities – who play the critical role of honest broker – to insist that they be included.

New Reality #5: At the end of the day, it is the ability to innovate that is the only possible sustainable competitive advantage in the 21st century. 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. But if a nation can maintain its edge in innovation, it will grow and prosper.

America is clearly the world’s leader in innovation. The spirit of discovery is one of our national strengths. From Edison's light bulb to Jarvik’s artificial heart to the iPod to the frozen pizza, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive and more prosperous.

Companies – by necessity – must continually innovate to stay one step ahead of their global competitors, especially as the pace of change in our global marketplace continues to accelerate. If they don’t, they will cease to exist. There are no pit stops in this race. And the challenge will not go away by ignoring the reality or by closing off America to the rest of the world.

Meanwhile, government, university, and nonprofit leaders at all levels have the same responsibility to adapt their approach to fit the changing times. Government – by design – moves slowly, and that can be a problem in our fast-moving economy. Unless government can offer flexible and innovative programs and tools to economic regions, we risk putting these areas that we are responsible for at a competitive disadvantage in the global marketplace. Innovation is just as important in the public and nonprofit sectors as it is in the private sector.

So, these are some of the “new realities” we collectively face in the 21st century – filled with opportunity and challenge:

• We are in a global economy.

• The pace of change will continue to accelerate.

• The components of competitiveness can no longer be pursued separately – and we must work collaboratively.

• Partnership with the private sector is critical.

• And innovation is the only sustainable competitive advantage.

I am confident that, working together, we can rise to the challenges and maximize the opportunities presented by these new realities. University research parks are uniquely positioned to help us accomplish this by serving as catalysts for innovation and economic development, and I am pleased that EDA’s support for these institutions has significantly increased in recent years. Together, we can help American regions reach new levels of prosperity in the 21st century.

It has been my pleasure to be with you today on behalf of the President of the United States. Thank you.

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