Tuesday, October 14, 2014

Kenney & Mowery: Public Universities and Regional Growth

I've received my new copy of Public Universities and Regional Growth: Insights from the University of California, edited by Martin Kenney and David Mowery. It is an excellent book, demonstrating the complex interactions between university, industry, and government that underlie the unmatched growth in certain sectors of the California region. The book contains numerous case studies of University of California campuses' involvement in major technological developments, including semiconductors and chip and software design at UC Berkeley, UCLA, and UC Santa Barbara, wireless at UC San Diego, and biotechnology at UCSD and UC San Francisco, and more. Each of these campuses became anchors for regional clusters that stimulated economic growth in their respective regions along with advancing science.

I especially enjoyed Martin Kenney, David Mowery, and Donald Patton's chapter, Electrical engineering and computer science at UC Berkeley and in the Silicon Valley: modes of regional engagement. The theme of their chapter, like much of the book, is that university-industry technology transfer is characterized by a two-way interaction. Much of the literature, the authors write, "has focused on the transfer of technology from the university to industry, but university-industry interactions are more accurately described as involving a two-way flow of people and knowledge. University researchers absorb knowledge from industry through many of the same mechanisms that transfer knowledge from the university to industry."

Despite what intellectual property law scholars might expect, the emphasis on industry role and commercially applicable knowledge occurred in the absence of patents as well as in their presence, and many of the chapter's case studies illustrating this phenomenon occurred before the boom in patenting after the Bayh-Dole Act. For example, the authors discuss the development of processing power (time-sharing systems) at MIT and UC Berkeley in the 1960s. The UCB researchers developed their program GENIE, on a new computer produced by a Los Angeles based start-up (Scientific Data Systems, SDS). The authors explain that government was eager for commercialization to occur, writing that Defense Advanced Research Projects (DARPA) gave the software to SDS to develop and is even said to have "helped sell the first SDS [software, which was] outfitted with UCB software." This SDS venture was an enormous commercial success, and it led other firms in the field to move to the area. UCB continued to be a part of this industry, as graduate students from UCB went on to work at these companies. Eventually, the California region time-share industry died away, when the technology was overtaken by minicomputers developed by Massachusetts-based companies. But during its lifetime, this spatially concentrated hub of academics and industry talent working together produced a major advance in computer technology and created wealth for people living in the area.

The book adds granular detail to ambitious empirical estimates of the "social returns to academic research." For example, Edwin Mansfield famously estimated the social returns of academic research at around 28%, with an average time lag between the conclusion of academic research and first commercial introduction at about seven years. This book demonstrates that the situation is far more complex and context dependent, and probably better analyzed through detailed case studies like those in this volume. Through its use of case studies, this book is able to go beyond quantitative indicators of innovation like patents, patent citations, and number of faculty spin outs. The book does suggest considering hiring of graduate students by industry as one of the main candidates for measuring how academic innovation diffuses into the economy.

By providing in-depth studies of the regional hubs surrounding different UC campuses, this book is also a crucial complement to research on innovation clusters and the spatial dimensions of knowledge. Economists like Paul Krugman draw on theory to posit that proximity in firm location can be explained by agglomeration benefits like lower transportation costs, specialized suppliers, larger pools of skilled labor, and vaguely defined "information spillovers" among co-located firms and residents. Regional Growth to some extent seems to confirm these hypotheses about the importance of co-location to innovation, but, again, shows the importance of context. A remaining question, evoked by Enrico Moretti's (also excellent) new book The New Geography of Jobs, demonstrating the great geographic divergence in innovation wealth across the country, is whether other regions that lack the advantages of California and do not have the UC system, can hope to match this kind of growth.

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