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Wednesday, December 2, 2009
How I See It
Higher ed investment will protect, fuel Mass. innovation
Companies born in the recession
MHT's Galen Moore: Hiring trends and opportunities
How is the economic crisis affecting tech companies?
Economic data released this month found that Massachusetts has not reached the end of the recession. Despite that, the commonwealth has great potential to emerge quickly from this downturn and spur robust job creation. But it will require that we focus on our strengths: higher education, innovation and talent.
A new Competitiveness Scorecard released by the Greater Boston Chamber of Commerce illustrates just how vital the higher education sector is to the Massachusetts economy. Our higher education industry is not only an economic engine, but also an innovation engine: Massachusetts leads the nation in per capita patent production by colleges and universities by a huge margin. The gap between Massachusetts and all other states in such patent production is more proof that the state has a world-class higher education sector.
The economic benefits of patents are widespread. In addition to encouraging inventions, they attract venture capital investment and spur a region’s “innovation infrastructure” — the skilled lawyers, financiers, accountants and marketing professionals involved in the development and promotion of patent-based products.
College and university-based innovation also drives the formation of startups. Higher education institutions’ technology transfer offices enter into licensing agreements with private-sector companies, which develop, produce and commercialize their innovations. In addition, the agreements generate close to $2 billion in licensing income for the higher education institutions annually.
Massachusetts ranks No. 3 in the country in the total number of startup companies created from university R&D, suggesting that our high patent numbers translate into a robust entrepreneurial market for the state. The ability to access college-based innovation and the talented students, faculty and graduates from across the globe that drive this activity has been invaluable to Massachusetts’ startups. Their success has spawned hundreds of thousands of jobs and acted as a counterweight to broader globalization trends that have sent jobs overseas.
Despite their strengths and critical importance to job creation and investment in Massachusetts, the state’s higher education institutions are threatened by the economic downturn and global competition. The recession and the resulting decline in institutional endowments have forced many institutions to delay or halt capital projects, lay off employees or freeze hiring.
To maintain and strengthen the Massachusetts higher education sector’s position as an innovation leader, the chamber proposes:
• Promoting patient capital for Massachusetts startups by adopting a “3 in 3” investment incentive, which would apply a 3 percent capital-gains tax to investments in Massachusetts-based startups that are held for at least three years (compared with the current 5.3 percent long-term and 12 percent short-term rates);
• Maintaining the financial strength of colleges and universities by sustaining the strong commitment to federally sponsored R&D and not taxing institutional endowments that continue to fuel research; and
• Strengthening higher education-business connections for talent development to keep college students here after they graduate.
Promoting patient capital for Massachusetts-based startup companies, maintaining the financial strength of the higher education sector, and enhancing local higher education-business connections are critical to ensuring that Massachusetts colleges and universities remain engines of innovation. The business community, higher education leaders, civic organizations and government officials must work together to guarantee that this critical industry can help spur job creation and lead Massachusetts to economic recovery.
Paul Guzzi is president and CEO of the Greater Boston Chamber of Commerce.
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