Innovation is the critical component of long-term economic prosperity, driving productivity growth and (if spread across key sectors of the economy) ensuring broad-based economic growth. Sparking innovation, however, requires capital (which is threatened by the current economic downturn), skilled-labor, scientific and technological advances, and creative collaboration between government and the private sector. Innovation cannot be dictated, but it can be cultivated.

In this paper, we focus on the importance of President Barack Obama’s call for a new federal effort to support regional innovation clusters. We know now—from a solid record of state and local achievements and academic research—that regional innovation clusters are a critical component of national competitiveness. Geographic regions that are bound together by a network of shared advantages create virtuous cycles of innovation that succeed by emphasizing the key strengths of the local businesses, universities and other research and development institutions, and non-profit organizations. Think information technology in Silicon Valley, music in Nashville, manufacturing in the Pacific Northwest, or life sciences in Massachusetts.

The United States, we argue in this paper, requires innovation policies for which responsibility is shared between regional leaders and the federal government. Leadership must begin in the clusters themselves—with local understanding of competitive strengths and strategies to increase the shared advantages that economists recognize as “positive externalities.” The federal government, however, can and should assume a vital role in which it frames critical national challenges, facilitates the flow of information and expertise to and between regions, and helps finance, in a competitive and leveraged fashion, valuable activities that clusters would otherwise be unable to undertake.

To that end, President Obama has requested that $100 million be appropriated in fiscal year 2010 for the Economic Development Administration of the Department of Commerce to support regional innovation clusters and associated business incubators.[1] That request is, by itself, a very small portion of the federal innovation budget. The U.S. government each year spends about $150 billion on basic scientific research and development. The EDA funding would help scientific breakthroughs resulting from this research find their way into new products and services that, in turn, could help foster broad-based economic growth.

We believe it is vitally important for Congress to appropriate this $100 million. After all, we devote less than 1 percent of our nation’s basic R&D budget to programs that support regional clusters, unlike our most aggressive international competitors (see box on page 2). As this paper will demonstrate, a relatively small federal initiative can be managed so that it yields significant economic advantages.

Such support could help create the next powerhouse information technology company like Google or the next pioneering biotechnology company like Genentech—and these are only two of the thousands of new companies, large and small, that spawned their groundbreaking technologies on university campuses in Silicon Valley before becoming Fortune 500 companies. New businesses, in turn, create new jobs, bolstering the overall economic well-being of the nation.

This $100 million would be money well spent. The reason: Never before has the U.S. government devoted a single penny to a comprehensive national program specifically dedicated to supporting regional innovation clusters and business incubators that fuse the geographically shared resources of universities and other research organizations, companies, research centers, governments, and workers.

Federal involvement is needed. Although the United States boasts a series of successful clusters, their true potential has not been fully realized. Cluster initiatives, according to a recent Brookings Institution report, are “too few” and they are “thin and uneven in levels of geographic and industry coverage, level and consistency of effort, and organizational capacity.”[6] Moreover, traditional clusters are under terrible stress. The automobile cluster in the Midwest is suffering not just from the perspective of the automobile manufacturers and their direct workers, but also with regard to the impact on the supply-chain, including specialized suppliers and local communities. Automobile parts manufacturers told the Treasury Department earlier this year that 130,000 jobs had been lost in eighteen months.[7]

Federal support to help innovation clusters improve their competitive strengths makes good economic sense. Begin by considering what regional economic clusters are and how they work. A simple, working definition is this: Clusters are geographic concentrations of companies, suppliers, support services, financiers, specialized infrastructure, producers of related products, and specialized institutions (such as training programs) whose competitive strengths are improved through the existence of shared advantages. So, for example, a successful cluster connects companies with academic institutions, research labs, and other nonprofit organizations in order to create the kind of virtuous cycle of competitiveness that creates jobs, stimulates business formation, and improves productivity.

What are the kinds of advantages shared by the participants in clusters? They could be a set of workers who boast particular skills, such as building boats in Maine. Or community colleges that offer training to manufacturing workers in places where advanced manufacturers are located. Or companies that decide to locate somewhere because of the presence of well-trained employees. Or research centers that conduct basic research into biotechnology close to start-up biotechnology companies. Anything, really, that creates what an economist would call a “positive externality,” a benefit that is captured not just by a single company, but by entire communities.

Positive externalities are nothing new. Nor are high-tech innovation clusters. Some, like Silicon Valley or the Route 128 corridor outside Boston, boast world-class universities and research institutions anchoring fervent communities of networked high-tech information technology and biotechnology companies served by a critical mass of commercial, legal, and financial talent. And some, like Akron, Ohio, have leveraged historical expertise; Akron’s rubber industry has spawned an innovation cluster anchored by companies committed to polymer science and advanced manufacturing innovation.

Here is what is new: The notion that regions can work closely with the federal government to consciously focus on the creation of shared advantages within clusters to create jobs, create businesses and, of course, stimulate long-term economic growth.

Job creation and business creation, the main economic benefits coming from innovative clusters, mostly spring from so called “high impact” companies (high-tech startups and established companies alike) that sell goods and services outside their clusters to both national and international markets, drawing revenue back into the cluster.[8] These “traded” services boost regional economic growth and national economic competitiveness. As measured by patent rates, productivity rates, and other innovation metrics, an innovation cluster creates new companies and new jobs in a helter-skelter but overall positive direction.

The federal government, of course, does spend money on a variety of innovation programs designed to help communities across our country create some of the ingredients necessary to replicate the success of thriving high-tech innovation clusters, such as the San Diego biotech cluster, the medical devices cluster around Minneapolis, and Research Triangle Park in North Carolina. These programs help fund the early commercialization of innovative products and services as well as regional workforce development and economic development efforts to provide the infrastructure necessary for innovative companies to flourish.

But these programs fall short of their true potential precisely because they are not organized in a systematic fashion to reap the advantages of an innovation cluster. The programs often fail to coordinate their work and leverage their unique strengths toward innovation cluster development as their central mission. That’s why a modest federal investment in a national cluster development program would multiply the benefits of our existing federal innovation programs, coordinate these efforts, and match federal expertise to the weaknesses and needs of regional clusters.

Policymakers must absolutely ensure they maintain the serendipity, competition, and ad hoc collaboration that have characterized successful clusters in the United States. The importance of regional clusters to competitiveness, however, raises three interrelated policy questions:

• Do federal programs that fail to focus on all of the ingredients needed to create a successful innovation cluster lack the direction and heft to make a difference?
• Can a government program dedicated specifically to the creation of new innovation clusters make a difference?
• And are there other factors that account for the unique innovative qualities that make Silicon Valley and Route 128 a success yet doom efforts in other regions of the country to failure?

The answer is “yes” on all three counts, which presents policymakers with a troubling dilemma: how best to invest limited federal resources?

This paper offers policymakers a guide through this dilemma. In the first part of the paper, we will explore briefly the lessons learned by those who have both led and researched innovation clusters over the past several decades. We will reconfirm the observation that, first and foremost, “place matters.”[9] Successful regional innovation clusters are not fungible—success rests upon differentiated competitive advantages that exist for different reasons in different parts of the country.

We will then demonstrate that access to finance matters, too. The greatest challenge that clusters need to bridge is the so-called “valley of death” financing gap that leaves young innovative companies with good ideas unable to fund the commercialization of those ideas due to the lack of seed-stage and early-stage financing. The current financial crisis has widened this valley, not just for young companies, but also for established companies that once could turn to more liquid debt and equity markets or to local or regional lenders and investors to fund their new ideas. Strategies to attract new private capital to regional innovation clusters are critically important.

There’s also a similar dearth of human capital—both managerial and workforce—in many regions of the country that wish to create or expand vibrant innovation clusters. American workers are very productive and much of our nation’s manufacturing sector could operate profitably in the United States if we took advantage of our global leadership in research and development, innovation, and process technologies to forge more competitive regional economies. The problem is we don’t do that today in any nationally systematic way involving clusters. The result is a growing structural unemployment problem with seemingly few solutions to match our productive workforce to the needs of innovative regional businesses.

Overcoming all of these connected hurdles requires us to rethink how we go about supporting clusters. So, also in the first part of this paper, we will examine how forward-thinking state and metropolitan governments have adopted practices that foster strong clusters, creating jobs, helping established companies grow and, of course, providing opportunities for new businesses. The key lesson for regional governments: Patience and leadership are necessary in the creation of all clusters.

Cases in point: North Carolina’s Research Triangle Park and San Diego’s CONNECT cluster—two regions that focused on all the ingredients needed for success, including federal funding—took several decades to reach their current prominence among U.S. clusters and were piloted there by a coterie of forward-thinking government, university, and business leaders. Newer clusters that recognize the importance of patience, such as those budding around the Arizona State University in Tempe, the Washington, D.C. metropolitan region’s many universities, and in rust belt cities in the Midwest such as Pittsburgh, are making headway.[10]

In the second part of the paper, we will discuss the reasons why Congress should support, and how the Obama administration should effectively implement, the president’s proposal that the Economic Development Administration be appropriated $100 million to support regional innovation clusters and associated business incubators. We will demonstrate that the Obama proposal is the answer to the failures of federal support identified in our earlier discussion of federal efforts. And we will show how this new effort—alongside dedicated White House leadership—can simultaneously increase the effectiveness of other federal programs, such as Small Business Innovation Research and Small Business Technology Transfer programs, which are administered by a variety of government agencies in coordination with the Small Business Administration, and the efforts of other Commerce programs, including those housed at the National Institute of Standards and Technology and the National Science Foundation. (See Appendix for a summary of the main federal programs that could measurably increase the impact of a clusters approach).

Support for clusters through the Department of Commerce’s EDA must be targeted at what matters most to innovation: The shared advantages that accrue to businesses, workers, and communities alike when the success of a cluster spawns a virtuous cycle of economic growth. Operating at the micro-economic level, the EDA must show a keen understanding of the ecosystem of innovation to ensure that its targeted innovation investments go where they can make a difference building cluster infrastructure and thereby do the most good for the longest time.

Specifically, we will explain how the Obama proposal provides the missing elements that are needed to support state and regional leadership. The federal government should leave leadership to the regional community, which knows best its own competitive advantages. But a bottom-up approach can reach the top level of government, with EDA supplying necessary funds to allow clusters to create shared resources, and with universities, community colleges, and research centers supplying a national framework against which the importance and success of clusters can be measured. Funding should be tightly connected to effective information exchanges, which will strengthen the ability of clusters to plot their own competitive strategy, and aligned with other federal programs through, for example, so-called “one-stop shops.”

We conclude this paper by sketching out the critical program-design elements that should be endorsed in the appropriations process for the proposed $100 million for EDA to implement a federal clusters strategy. Specifically, in this paper we propose that EDA should:

• Administer a competitive matching-grants program, with established criteria used to ensure the greatest impact of federal funding, among them an emphasis on local leadership from the private and public sectors, including universities and other research institutions.
• Align the cluster selection process with national priorities such as energy-efficiency, advanced manufacturing, and new technologies when administering this matching grants program.
• Assist economically distressed areas of the country by pooling regional resources from within and outside of distressed areas in order to bring together a critical mass of university savvy, business acumen, and productive workers.

No single grant application should have to meet all these criteria, but having these three principal guidelines in place will help ensure transparency and effectiveness. Funding should be focused on building the common infrastructure of innovation in a region, which effectively lowers the cost of business growth and creation. Examples include program development plans for business incubators and research centers, worker-training programs, and technology-transfer efforts focused on small- and medium-sized companies. Where regions have no effective clusters, smaller planning grants should also be available for the creation of strategies based on comparative advantages.

Time to act

Support for regional innovation clusters and business incubators is good public policy—and good political leadership. Successful cluster policies have been implemented at the regional level by both Republican and Democratic officials alike because clusters represent a pragmatic approach that requires collaboration with the business community and that, when successfully implemented, benefits communities as a whole.

Similarly, pioneering research into the role of clusters by policy advisors to both Democrats and Republicans has created a bipartisan foundation that increases the chances that, once initiated, federal cluster efforts will be supported for a long time by members of both parties. This is important because, as we have noted before, patience matters and, therefore, federal clusters efforts must be able to garner long-term political support.

Moreover, in a coming time of budget austerity, the regional cluster initiative does not require large sums of funding. That’s because federal support will be leveraged, providing resources that are not otherwise available but always contingent on regional governmental and private resources to amplify the impact of federal dollars. In fact, federal support in fiscal year 2010 budgets would come at an important time for state governments, which are under tremendous fiscal pressures. States including Ohio, Kansas, Connecticut, and Pennsylvania have either reduced economic development spending or encouraged large reorganizations of programs to control it.

Over time, the implementation of regional cluster strategies can increase the effectiveness of other federal spending. Just within the Department of Commerce itself, for example, export promotion and technology outreach programs at the International Trade Administration and NIST, respectively, would be strengthened by their links to effective cluster strategies, which in turn could supply valuable expertise to increase EDA’s own effectiveness. Even more importantly, federal support for regional innovation clusters presents an important opportunity for EDA to forge a close partnership with the Small Business Administration, whose own programs reach deep into local communities.

In the pages that follow we will present our analysis, conclusions, and recommendations in greater detail. In the end, we hope the case is made that Congress needs to appropriate that first $100 million toward a national program for regional innovation clusters. We are confident this step will help ensure that the $150 billion taxpayers invest annually in basic scientific research and development can better deliver on the promise of more and better jobs, new businesses, and transformative technologies across our nation.

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Jonathan Sallet is a managing director of The Glover Park Group and a former director of the Department of Commerce’s Office of Policy and Strategic Planning under Secretary Ron Brown. (The views expressed herein represent only his views, and not those of his firm or any client thereof.)

Ed Paisley is Vice President for Editorial at the Center for American Progress and Editorial Director of Science Progress, A CAP project. He is a 20-year veteran of business and finance journalism who was previously responsible for award-winning coverage of technology finance and international finance at The Deal, a specialist Wall Street publication, and at Institutional Investor magazine.

Justin Masterman worked first as an Intern and then as a Special Assistant for Science Progress at the Center for American Progress. A recent graduate of the University of Pennsylvania, where he was a University Scholar, Justin wrote about innovation policy and economic development for Science Progress.

Notes

[1] Although the $50 million allocated for business incubators is not money explicitly dedicated to regional innovation clusters, business incubators perform a very important support function in innovation clusters. The business incubator programs accelerate the creation and development of successful businesses, an essential component of innovation clusters.

[2] Steven Ezell, “Benchmarking Foreign Innovation: The United States Needs to Learn from Other Industrialized Democracies” (Science Progress: January 12, 2009).

[3] Information gathered from program website available at http://www.competitivite.gouv.fr/index.php?&lang=en

[4] Karen G. Mills and others, “Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies.” (Washington: Brookings Institution) available at http://www.brookings.edu/reports/2008/04_competitiveness_mills.aspx.

[5] Michael E. Porter, “Why America Needs an Economic Strategy,” BusinessWeek , available at http://www.businessweek.com/magazine/content/08_45/b4107038217112_page_4.htm.

[6] Karen Mills, Elisabeth Reynolds, Andrew Reamer, and others, “Clusters and Competitiveness: A new federal role for stimulating regional economies.”,” (Washington: Brookings Institution, April 2008). Pgp. 6.

[7] The Economist, “The American Car Industry,” The Economist, February 19th, 2009, available at http://www.economist.com/business/displaystory.cfm?story_id=13145718.

[8] Zoltan J. Acs and others, “High-Impact Firms: Gazelles Revisited,” Small Business Administration, available at http://www.sba.gov/advo/research/rs328tot.pdf.

[9] Maryann Feldman, “Place Matters: Innovation Springs from Many Seeds, But Soil Is Equally Important.” (Washington: Science Progress, Center for American Progress, January 2009).

[10] http://www.scienceprogress.org/innovation-clusters/ provides some specific
regional examples.

SBIR is the single largest federal program dedicated to support of our nation’s innovative small businesses, making over $2.2 billion in annual competitive grants to small businesses engaged in the innovative research and development. The smaller Small Business Technology Transfer (abbreviated STTR) program funds R&D partnerships between small businesses and universities.

The House version of the bill modernizes SBIR by increasing Phase I award sizes to $250,000 from $100,000 and Phase II awards to $2 million from $750,000. The Senate version makes more modest increases, to $150,000 for Phase I and $1 million for Phase II. The grant sizes are important given the dearth of seed-stage and early-stage risk capital from angel investors and venture capitalists amid the economic downturn.

Both bills, however, allow venture capital-backed small businesses to once again apply for awards, repealing a restriction on these businesses that had been in place since 2003. A comprehensive study of the SBIR program by the National Academies found that venture capital-backed small businesses were often the most innovative and successful and that shutting VC-backed startups out of SBIR funding was ill-advised.

The two bills open the funding to venture capital-backed small businesses in different ways and to different extents. The House version allows SBIR grants to small companies so long as no single VC firm has a majority stake in the company. The Senate version deals with the issue differently, opening only a limited number of awards to small businesses with venture capital funding, specifically directing the National Institutes of Health to award no more than 18 percent of its SBIR awards to small companies majority-owned by VC firms and directing the other agencies to award no more than 8 percent of theirs to such companies.

Both bills were passed in an overwhelmingly bipartisan fashion, so crafting compromise legislation in conference committee should not threaten final passage of the legislation by the full Congress. President Obama is expected to sign the legislation since his administration is keen to implement more coordinated innovation policy involving not just the SBIR and STTR programs but also the array of other innovation programs. The reason: Innovative small businesses are one of the primary sources of economic growth, jobs, and the development of the technologies that will help us solve pressing national challenges such as health IT, clean energy, advanced manufacturing, and high-speed transit. Stronger and more sustained support for innovative small businesses is a smart choice for America as we deal with the recession and a more competitive global economy.

For more on SBIR/STTR and its crucial role in the national innovation infrastructure, see the features on Manufacturing Innovation and on a National Innovation Framework. Also, check out the Science Progress series on Innovation Clusters for an in-depth look at how they can play a central role in national innovation policy.

The Manufacturing Extension Partnership program is not very well known even among technology and innovation experts in the administration and on Capitol Hill. But MEP should be a more widely recognizable acronym, not only for what it does, but also for what those involved with it have learned over the past 20 years. Intriguingly, the program is a lesson in government discovering what small- and medium-sized businesses need and then delivering those services—actions most people rarely consider a government program capable of.

But first, what is MEP? The Manufacturing Extension Partnership is a program within the National Institute of Standards and Technology, or NIST, which is housed in the Department of Commerce. MEP was created by the Omnibus Foreign Trade and Competitiveness Act of 1988 “to enhance productivity and technological performance in United States manufacturing.”^[1]

Over the past 20 years, MEP developed from a small pilot program with three centers into a sprawling system of 59 centers in 393 locations in every state and in Puerto Rico, employing over 1,600 specialists in business and manufacturing. MEP provides small- to medium-sized manufacturing companies with a wide array of fundamental services, helping them to become more efficient, resilient, and strong in an increasingly competitive global market. With $125 million allocated to the MEP in the proposed fiscal 2010 budget, up about $15 million from fiscal 2009 levels, the program is on a strong financial footing and is poised to expand and improve its services.

After eight years of flat growth during the Bush administration, MEP is poised once again to play a small but vital role in helping America’s small manufacturers compete with international rivals in the increasingly global marketplace. The MEP’s work on process efficiency improvements as well as growth, technology, and innovation strategies is a smart allocation of finite government resources tailored to draw in matching funds from the private sector. As confirmed by dozens of case studies (some described below), the MEP program is often the difference between life and death for small- and medium-sized companies beset with difficult challenges, struggling to survive.

Our economic future depends on the success of these businesses as we move further into the 21^st century, which is why support for MEP and other initiatives that encourage innovation and technology acceleration is a smart choice. Above all, though, an examination of the program’s effectiveness over the past 20 years as it adjusted to new challenges while its leaders learned what worked and what didn’t provides good policy lessons for other Obama administration efforts to boost applied innovation in the coming years.

This essay will examine the history of the MEP program, particularly how it has adjusted to new realities, to understand why it is now poised to play a new role helping small- and medium-sized businesses grow and prosper by tapping new technologies at federal labs—the program’s initial, yet premature, mission 20 years ago but one well-suited to today’s challenges.

The Importance of Manufacturing

Before we examine the MEP program in depth, however, we need to set the macroeconomic stage. The U.S. manufacturing industry plays a key role in the American economy, accounting for 12 percent of gross domestic product as well as 10 percent of U.S. nonfarm employment.^[2] Companies large and small provide jobs for millions of Americans and spur technological innovation and regional development by competing hard in national and international markets.

The vast majority of these manufacturing companies are small- and medium-sized businesses that face the highest hurdles to remain competitive in a global economy. Companies with 500 employees or less account for 95 percent of all manufacturing establishments, half of all manufacturing employment, over half of total U.S. manufacturing value-added, and a wide distribution of high-wage jobs across the United States.^[3]According to the Department of Commerce, 350,000 of these types of companies operate in the United States, and a 2003 study conducted for the National Association of Manufacturers highlights the continued importance of small manufacturers to U.S. economic performance.^[4] The NAM study found that:

• Manufacturing growth spurs more additional economic activity and jobs than any other economic sector. Every $1 of final demand for manufactured goods generates an additional $0.67 in other manufactured products and $0.76 in products and services from non-manufacturing sectors.
• Manufacturing salaries and benefits average $54,000, compared to $45,600 for the private sector overall. The higher pay and benefits and opportunities for advanced education and training that are available in manufacturing are particularly attractive to potential employees.
• Manufacturers are responsible for almost two-thirds of all private sector research and development—$127 billion in 2002.
• Manufacturing productivity gains are historically higher than those of any other economic sector. Over the past two decades, manufacturing averaged twice the annual productivity gains of the rest of the private sector.

Unfortunately, small- and medium-sized manufacturing companies are too often the least able to quickly introduce new products and technology, reduce costs, and increase quality. Indeed, as globalization began to hammer U.S. manufacturers in earnest in the early 1990s many small- and medium-sized manufacturers were the least able to meet the challenge. According to a study conducted by the National Research Council of the National Academy of Sciences in 1993, small manufacturers were often unfamiliar with changing technology, new production techniques, and the latest business management practices. Yet, they were too isolated to learn from market competition to change their ways or seek out good advice, and too small to find the financing they needed to upgrade their operations even if they decided upon an innovative upgrade or shift in their operations.[5]

The Birth of the MEP

Enter the Manufacturing Extension Partnership. The Omnibus Trade and Competitiveness Act of 1988 directed the Secretary of Commerce via the Director of the National Institute of Standards and Technology to establish a manufacturing technology centers program, the precursor to MEP. The centers were to provide small manufacturers with technology developed in NIST labs as a way to improve manufacturing productivity. Labs were to license the NIST-developed technology to state-based centers, which would in turn charge fees to manufacturers who utilized the services provided by the centers.

Congress urged participation from universities, industry, state governments, and other federal agencies. Proposals to establish centers were solicited from qualified non-profit organizations and evaluated based on regional need, technology resources, technology delivery mechanisms, and management and financial plans. Applicants were required to contribute 50 percent or more of these centers’ proposed capital and maintenance costs for the first three years and an increasing share up to 80 percent in the sixth year.

Alas, it soon became clear there was a significant gap between the technology developed in federal labs and the capabilities of many small manufacturers to utilize the technology, even with the help of the manufacturing technology centers. In fact, most small manufacturing companies had more foundational needs—for things like management information technology, financial management systems, and fundamental business processes to improve cost efficiency and profitability. In response, tactical and strategic changes were made during the 1990’s, reorienting the services provided by the centers from technology transfer to more basic productivity improvement assistance, services not dissimilar from basic consulting.

This shift met with success as the number of centers grew from 7 in 1992 to 75 (with 400 satellite offices) in 1996, providing services to all 50 states and Puerto Rico. Helping drive the shift was funding from the Defense Advanced Research Projects Agency’s Technology Reinvestment Project, a $1 billion commercial investment program started in the 1992 fiscal year. One of the largest funding programs in the history of the Department of Defense, the TRP sponsored 133 projects that had military as well as commercial uses, referred to as “dual-use projects.” Small businesses were strongly represented in the projects receiving DARPA funding, with 58 percent of the approved proposals having a small business involved in the project.^[6] DARPA support was integral in the expansion of the manufacturing technology centers as funding for new projects spurred small businesses to seek assistance from the centers.

Additionally, the enactment of the Technology Administration Act of 1998, which eliminated the sunset provision in the initial 1988 legislation, allowed for ongoing federal funding of the centers. This reform was accompanied by the program name change to the Manufacturing Extension Partnership, and a new funding formula that mandated one third of funding would be provided by the MEP Program, one third would come from state, city/town, or nonprofit sources, and one third would be collected as fees from the small manufacturers helped by the program.

This public/private/nonprofit structure is vital to the success of the MEP program, a unique partnership in which each stakeholder contributes its singular resources. The partnerships are built differently from place to place. In some areas, states provide most of the local funding, while nonprofits and city/town governments do not significantly contribute. In other areas, nonprofit organizations such as economic development agencies or entrepreneurship advocacy groups, as well as universities, contribute most of the local funding.

Overall, federal funding (from the MEP) and private funding (from the manufacturers) is important to the overall success of the partnership. However, state, city/town, and nonprofit funding is integral as this funding secures local players as stakeholders in the program, and synergizes with the local economic development plans that are essential for comprehensive regional development.

The MEP Program Today

As mentioned above, the MEP program today consists of 59 manufacturing extension centers and 393 satellite locations throughout the United States and Puerto Rico. Each center works directly with local companies to provide expertise and services tailored to their most critical needs, including employee training, new business practices, the application of information technology, and basic process improvements. Services are delivered through direct assistance from center staff, outside consultants or some combination of both.

The MEP centers themselves are a diverse network of state-university-based, and freestanding nonprofit organizations. Each center’s size is based largely on an individual center’s ability to match federal funding at the time of the initial award. In fiscal year 2008, ending September 30, 2008, the last year in which complete data are available, MEP served 31,961 manufacturers.

The early shift in philosophy from technology transfer to consulting services, as well as the rapid expansion across the country, proved to be a winning strategy. An independent study of the efficacy of MEP centers in 2007 found that MEP services led to: Improved productivity among 8 in 10 MEP clients; 57,000 jobs created or retained; $10.5 billion in new or retained sales; $2.2 billion in new private investment, and cost savings of over $1.4 billion. The study also found that:

• 91 percent of clients were either satisfied or very satisfied with the quality of services received
• 89 percent of clients were more competitive as a result of services
• 86 percent of clients took actions more quickly with assistance of its local center
• 80 percent of clients improved employee skills
• 79 percent of clients took actions at a lower cost
• 76 percent of clients improved the work environment for employees. ^[7]

The MEP centers achieved this record of success for many different reasons, the study concluded. Predominantly, though, success came through a number of services that helped companies reduce costs to improve competitiveness.

A New Direction

Yet once these companies streamline their production processes, make their workforce and workplace more efficient, and reduce overall costs through business operations improvements, many still do not have the top line growth strategies in place to take their development to the next level. This realization has led to new MEP efforts to guide companies not only toward greater efficiency but also toward developing new products, entering new markets, and integrating innovative technologies. These new growth services are designed to give companies the tools they need to not just survive but thrive in the global marketplace

The core of these new growth programs is the development and implementation of a nationwide technology acceleration system. The acceleration program strives to catalyze manufacturing innovation in products, processes, services, and new business models, building on the increased efficiencies and lower costs cultivated by MEP’s bottom-line services.

These new growth programs, not dissimilar in philosophy from that of the MEP-precursor manufacturing technology centers, connect small manufacturers with sophisticated federal, state, or university R&D labs, with an eye toward boosting manufacturer capabilities and growth opportunities, as well as where manufacturer needs are connected with technology solutions developed at research laboratories.

Two examples highlight the success of these endeavors in helping companies first make important process improvements and then, eventually, helping them embrace technological innovation, grow into new markets, and develop new products.

Process Equipment & Service Company

The New Mexico MEP recently worked on bottom-line improvement strategies with PESCO, a manufacturer of oil and natural gas production equipment, to streamline its product development and general operations. Over the course of a year, PESCO production increased by 25 percent. Since 2002 the company has doubled production while reducing work hours and maintaining the same level of staff.

In addition, the New Mexico MEP helped PESCO reorganize its “cash-to-cash” process (the time from when an order is placed and materials procured to when it is invoiced and paid) and its accounts receivable (the amount of money owed by customers but as yet unpaid), two areas in which companies can easily lose significant sums of money. With the help of the local MEP, PESCO reduced its accounts receivable process to 35 days from 58 days and its “cash-to-cash” cycle to 95 days from 133 days.

Based on recommendations from the MEP, PESCO also developed a trailer system that more efficiently moved a product through the manufacturing process. These efficiency improvements modernized PESCO’s product line, turning it from a 200-hour process into a 150-hour process. With all of these improvements, profit margins increased, boosting wages and allowing for greater employee retention.^[8]

Questech Corporation

The Vermont MEP worked with Questech Corporation, a leading manufacturer of natural stone and metal tile, to discover, build, and develop new technology that would increase revenue and better meet customer demand. In response to internal surveys that showed maintenance as one of the primary problems customers had with Questech’s tile products, the company sought to develop a revolutionary product that addressed these concerns. Vermont MEP “coaches” met with the Questech team during the discovery process to provide general assistance, help with the cultivation of ideas, and keep the team on track.

Within six weeks of the initial MEP consulting session, Questech launched a test of their new tile maintenance product in a large showroom in Albany, New York. The new innovation carries an anticipated yearly revenue increase of $30,000, with the anticipated establishment of Q-Seal (the new product) in New England by spring 2008.^[9]

MEP Partner Programs within Government

MEP also works closely with other government programs and agencies to leverage different expertise, strengths, and resources. MEP has partnership programs with the Department of Labor’s Workforce Innovation in Regional Economic Development, or WIRED program, the Small Business Innovation Research grant program run by various government departments, the Environmental Protection Agency’s Green Supplier Network, National Institutes of Health, the Environmental Protection Agency, the Food and Drug Administration, and the National Science Foundation. These partnerships are integral to the work of the MEP, and to the greater project of building American economic competitiveness.

WIRED has a uniquely effective partnership with the MEP. The WIRED Initiative is a program intended to develop talented high-skill workers as a means of catalyzing U.S. economic growth. The initiative focuses on distressed regions of the country, areas recovering from natural disasters, highly dependent on a single industry, or significantly influenced by outsourcing. The program supports innovative approaches to education and workforce development, preparing workers to better compete both within the United States and globally.

MEP has run pilot programs for WIRED in eight distressed regions, developing best practices for technology transfer and innovation activities that WIRED has implemented across its network. This work has been closely aligned with the new MEP growth strategies focused on implementing innovation and technology in small manufacturers.

Additionally, the MEP works directly with the Small Business Administration’s Small Business Innovation Research and Small Business Technology Transfer programs, helping small manufacturers apply for funding from the SBA as well as assisting SBIR/STTR awardees maximize the money’s impact on operations and efficiency. With more than $2 billion available via the SBIR route yearly, small manufacturing companies are often transformed by the grants, making partnership with the MEP very attractive.

MEP and NIH also have developed a one-year SBIR pilot project in which NIH will provide $375,000 for MEP to work with a number of so-called NIH Phase II awardees, for-profit companies(with potentially commercializable ideas that have passed phase I feasibility studies to establish the scientific/technical merit of proposed research and development efforts. Phase II awardees cannot receive more than $750,000 total for a period not to exceed 2 years. Results of the MEP/NIH SBIR pilot are expected to be used in guiding a larger two-year funded partnership between MEP and NIH to improve the commercialization efforts of their Phase II awardees—a critical issue for NIH and other federal SBIR agencies.

Future Plans

The MEP stands a crossroads. With a wealth of historical wisdom on what works and what doesn’t with respect to small-and medium-sized business development, the MEP is poised to play an essential role in spurring a nationwide economic recovery and building the public-private partnerships that are vital to the stimulation of our nation’s latent innovation capabilities.

MEP’s strategy to tap private, university, and federal labs for new technology of use to small- and medium-sized manufacturers, especially via the government programs outlined above, is certainly timely today. This technology transfer activity was MEP’s original mandate, and while untenable twenty years ago, it is now widely considered a good template for how to boost American innovation and global competitiveness.

The key to the MEP’s success, however, is and will be its partnerships. Small- and medium-sized manufacturers are a lot more receptive today to these public-private partnership growth strategies than they used to be. Utilizing MEP as a conduit for the transfer of technology from R&D laboratories as well as a consultant on how to maximize the benefits of the technology on efficiency and cost is now less foreign to these manufacturers. Process improvement assistance, while still important, is not going to be as common a MEP strategy as working with their clients on developing new markets, new products, and innovative solutions to complex technology problems. This should help strengthen the small- and medium-sized manufacturers that are the backbone of our entrepreneurial economy and our source of global strength.

Justin Masterman is a Science Progress Intern who recently graduated from the University of Pennsylvania.

Endnotes

^[1] Omnibus Foreign Trade and Competitiveness Act of 1988, 15 U.S.C. § 278k (1988)

^[2] U.S Department of Commerce, Bureau of Economic Analysis. 2007.

[3] Defense Manufacturing in 2010 and Beyond: Meeting the Changing Needs of National Defense, Board on Manufacturing and Engineering Design, Commission on Engineering and Technical Systems (National Research Council, 1999).

^[4] “Securing America’s Future: The Case for a Strong Manufacturing Base,” Prepared for the NAM Council of Manufacturing Associations by Joel Popkin and Company (June 2003).

^[5] NRC Study, 1999.

[6] “A Review of the Technology Reinvestment Project,” Potomac Institute for Policy Studies (January 1999).

^[7] “Delivering Measurable Returns,” Fiscal Year 2007 Results of the MEP program, cited on MEP website: http://www.mep.nist.gov.

^[8] Information from MEP website: http://www.mep.nist.gov.

^[9] Information from MEP website: http://www.mep.nist.gov.

Part of the appeal of this research is that it often involves investigation of how the brain responds to familiar emotional stimuli and social conditions. Yet questions persist about what fMRI can really tell us about how the brain works, and the research has implications for a variety of issues ranging from brain-reading devices to the ethical use of brain enhancement technologies.

Importantly, fMRI is no longer just a medical or academic tool used to diagnose disease or learn about basic cognitive functions in the brain. It is now widely viewed, and many would say mistakenly, as a potential way to solve problems in court and in the interrogation room—by helping discern what individuals are thinking. How we balance the inherent technological drawbacks of fMRI research and the ethical minefields of its application with the potential for profound discoveries about how the mind works promises to be a point of great contention in the future.

fMRI research focused on the relationship between mental states and behavior abounds. A recent study demonstrated that lonely or socially isolated individuals, when shown images of people in pleasant settings, had much lower activation in a reward center of the brain, the ventral striatum, than non-lonely people. And Science recently published an article showing the activation of brain reward centers in subjects witnessing the misfortune of an envied competitor and activation in punishment centers when they saw an envied competitor with a valuable object. The study argued that brain regions responding to feelings of envy and schadenfreude are also those that respond to, respectively, physical pain (envy hurts) and reward/pleasure (schadenfreude feels good).

The most common form of fMRI measures the “blood oxygen level dependent,” or BOLD, signal in the brain, which results from the differing flow of oxygenated and deoxygenated blood through the brain. Brain areas that receive oxygenated versus deoxygenated blood are detected by the MRI scanner because the blood protein hemoglobin has different magnetic properties when it carries oxygen compared to when it does not. Why is it important to know which brain areas are receiving more oxygenated blood than others? Because in a process called the hemodynamic response, blood supplies oxygen to active, “thinking” neurons at a greater rate than to inactive neurons. Using complex statistical methods, researchers can evaluate which areas of brain are consistently receiving more oxygenated blood (a high BOLD signal), therefore revealing which areas of the brain are “active” during the specific thoughts or sensory experiences induced by researchers.

But lately some have challenged the validity of fMRI as a tool for drawing these connections between thoughts/experiences and brain activation. Massachusetts Institute of Technology graduate student Ed Vul recently published a paper called “Puzzlingly High Correlations in fMRI Studies of Emotion, Personality, and Social Cognition.” In it, he argues that a large proportion of fMRI studies in fact utilize spurious and biased statistical processes, resulting in impossibly high correlations between assessments of individual emotional or personality differences and associated brain region activation.

How to Read the Numbers

fMRI is a decidedly indirect measure of brain activity, as it does not measure “thinking” processes or even neural changes directly, but merely oxygenated blood flow. Scientists have even discovered that blood flow through astrocytes, glial cells that are thought to play a largely supportive role in the brain, are the main source of the fMRI signal, not neurons. In other words, the BOLD signal may not be the unquestionably valid representation of cognitive processes that researchers sometimes claim it is.

The dominant methodology utilized in fMRI research involves scouring the brain for statistically significant correlations between the BOLD signal and a specific emotion, behavior, or disease state—envy, loneliness, “right-handedness,” schizophrenia, etc. Researchers divide the brain into tiny three-dimensional pixels called “voxels” and examine them for significant increases in oxygenated blood flow correlated with the stimuli. Those areas that show significant correlations are plotted onto a structural image of the brain as a functional map of the brain-behavior association.

In his paper, Vul highlights a number of issues with fMRI studies, most prominently the existence of misleadingly high, or “voodoo,” correlations between brain signal and individual behavioral differences, like personality and emotion. He claims that these spuriously high correlations are the result of a non-independence error. He explained this error to science writer Jonah Lehrer in Scientific American:

When researchers want to determine which parts of the brain are correlated with certain aspect of behavior, they must somehow choose a subset of thousands of voxels [to study]. One tempting strategy is to choose voxels that show a high correlation with this behavior. So far this strategy is fine.

The problem arises when researchers then go on to provide their readers with a quantitative measure of the correlation magnitude measured just within the voxels they have pre-selected for having a high correlation. This two-step procedure is circular: it chooses voxels that have a high correlation, and then estimates a high average correlation. This practice inflates the correlation measurement because it selects those voxels that have benefited from chance, as well as any real underlying correlation, pushing up the numbers.

In other words, Vul argues that when researchers select voxels that exhibit a high correlation between oxygenated blood flow and response to stimuli, they are choosing both voxels that have a high correlation due to chance along with those that really do exhibit the correlation. The non-independence error results when researchers use these high-correlation voxels to estimate high average correlation across the whole brain. That is, the analysis (Does the brain have a high average correlation with a specific individual difference?) is not independent of the initial selection criteria (Which voxels exhibit a high correlation with a specific individual difference?).

The paper’s criticism of fMRI studies and their “voodoo correlations” went over well with many in traditional media as well as in the blogosphere. Several writers claimed that Vul’s work finally revealed that the whole field of fMRI was based on false foundations. Sharon Begley of Newsweek wrote that “psychiatrists and social psychologists [are] enamored [by] fMRI and other brain imaging toys . . . like so many researchers in the social sciences, they have physics envy, and think that the illusory precision and solidity of neuroimaging can give their field some rigor.”

In response to Vul’s claims, brain researchers Matthew D. Lieberman and Elliot T. Berkman from the University of California, Los Angeles, and Tor D. Wager from Columbia University published a detailed reply. They wrote that the non-independence error that Vul claims is the cause of spuriously high correlations in a number of studies actually does not occur. In a subsequent interview with Lehrer, Professor Lieberman responded to Vul’s charge of non-independence, explaining that fMRI researchers are not interested in how the whole brain correlates with a measure of individual difference. Instead they are interested in which specific areas, or “voxels,” in the brain show a significant difference in blood flow in response to stimuli:

[Vul suggests] that we might be interested in whether a psychology or a sociology course is harder and assess this [question] by comparing the grades of students who took both courses. In a comparison of all students, we find no difference in scores. But what if we began by selecting only students who scored higher in psychology than sociology and then statistically compared those? If we used the results of that analysis to draw a general inference about the two courses, this [strategy] would be a non-independence error, because the selection of the sample to test is not independent of the criterion being tested. This [practice] would massively bias the results.

Although Vul is absolutely right that this would be a major error, he’s not describing what we actually do [in social fMRI]. Vul’s example assumes that the question that we are interested in is how the entire brain correlates with a personality measure or responds differently to two tasks. Staying with the grades examples, what social neuroscientists are really doing, however, is something closer to asking, “Across all colleges in the country, are there colleges where psychology grades are higher than sociology grades?” In other words, the question is not what the average difference is across all schools, but rather which schools show a difference. There is nothing inappropriate about asking this question or about describing the results found in those schools where a significant effect emerges.

With whole-brain analyses in fMRI, we’re doing the same thing. We are interested in where significant effects are occurring in the brain and when we find them we describe the results in terms of means, correlations, and so on. We are not cherry-picking regions and then claiming these represent the effects for the whole brain.

Vul responded with a rebuttal of his own to the rebuttal above, claiming that his criticism of the non-independence error still applies, so the debate continues. But we should neither blindly accept Vul’s critiques nor Lieberman, Berkman, and Wager’s responses—fMRI is neither a perfect technology, nor is it fundamentally flawed.

fMRI in Court

The utility of this sort of brain research has policy implications because the results of this work might end up in court. Skeptics of the validity of fMRI have expressed their worries about the recent news that for the first time, defense attorneys submitted results from an fMRI lie-detection test as evidence in a trial—although the evidence was withdrawn in late March by the lawyers. No Lie MRI, a private company, scanned the defendant in the juvenile sex-abuse case and claimed that its test revealed that the abuse did not in fact happen because the defendant’s claim of innocence did not show neural patterns consistent with a lie. No Lie MRI uses fMRI to measure changes in blood blow to the ventrolateral area of the prefrontal cortex, a section of the brain in which several studies have identified activity during lying.

Studies on fMRI lie detection have identified lying with accuracies of 76 percent to over 90 percent. However, many people are suspicious of the reliability of this new technology, and are apprehensive about using it in court. Ed Vul said in a comment in Wired: “I don’t think [fMRI lie detection] can be either reliable or practical. It is very easy to corrupt fMRI data. The biggest difficulty is that it’s very easy to make fMRI data unusable by moving a little, holding your breath, or even thinking about a bunch of random stuff. So far as I can tell, there are many more reliable ways to corrupt data from an MRI machine than a classic polygraph machine.”

Hank Greely, Director of the Center for Law and the Biosciences at Stanford University, has also expressed skepticism about admitting such a young and poorly understood technology. He told Wired that “having studied all the published papers on fMRI-based lie detection, I personally wouldn’t put any weight on it in any individual case. We just don’t know enough about its accuracy in realistic situations.”

Concerns about the use of an untested technology like fMRI lie detection to determine the fate of individuals in our legal system are understandable and appropriate. Before we even consider using MRI lie detection in the courts, randomized studies with hundreds of participants must reveal the unequivocal reliability of the techniques. And this has not happened…yet.

However, with respect to Vul’s critiques of the validity of brain imaging in social neuroscience, the mainstream press and the bloggers should not necessarily trash a well-established and useful tool in both medical research and clinical medicine. fMRI studies, though by no means perfect, have provided remarkable and valuable insight into the important and often nebulous connections between the brain and mind, revealing the extent to which our emotional and social lives emerge from specific biological processes.

As brain science continues to advance, it is vital for researchers and the public alike to step back and rigorously examine the basic techniques and assumptions of fMRI, whether the technology is used in social neuroscience, lie detection, or elsewhere. We don’t want to base our science policy, medical judgment, or court decisions on data that is not fully understood, or perhaps even fundamentally flawed. Nevertheless, the proper response to the Vul study and the development of fMRI lie detection technologies is not to throw up our hands in despair, but to respond with reasoned and thoughtful rebuttals like those outlined earlier, firmly committing ourselves to the improvement of imaging techniques, data interpretation, and experimental design through the continued support of neuroscience research.

Justin Masterman is an intern with the Progressive Bioethics Initiative at the Center for American Progress.

A long-secret report by the International Committee of the Red Cross on the treatment of fourteen “high value detainees” held in the secret CIA detention program from the time of their arrest until their transfer to Guantanamo Bay in September 2006 concluded that the behavior of medical professionals overseeing the treatment of the prisoners “constituted a gross breach of medical ethics and, in some cases, amounted to participation in torture and/or cruel, inhuman or degrading treatment.”

The “strictly confidential” report, recently released by journalist Mark Danner to the New York Review of Books, presented testimony from prisoners that medical professionals working for the CIA were present during controversial waterboarding practices. The report also documents that medical professionals were in the room when prisoners were exposed to frigid cells, beaten and slammed into walls, forced to stand naked and shackled to the wall for days at a time, and confined in a small box.

The Red Cross found that in addition to merely being present during the utilization of these interrogation methods—methods which the Red Cross calls “torture”—medical professionals were allegedly often directly involved in the ill-treatment of detainees. For example, the detainees allege that medical professionals monitored the blood-oxygen level of detainees while they were undergoing waterboarding, often directing interrogators to continue, adjust, or stop the treatment. The report claims that the actions of the medical professionals constituted a major breach of medical ethics, and that the entire interrogation program represented an egregious violation of international law.

It is unclear if the “medical professionals” involved in the interrogations were licensed physicians, psychologists, C.I.A officials trained in basic medical care, or something else altogether. Nonetheless, medical professionals should be expected to uphold, without exception, the widely accepted principles of medical ethics that guide their relationships with patients, including prisoners: beneficence, non-maleficence, and dignity, among others. Monitoring and assisting in the waterboarding, beating, and shackling of detainees is a clear violation of these sacred principles, which are neither optional nor mere guidelines. They are rigid and inviolable axioms that must strictly govern the behavior of medical professionals, whether they work in a private hospital, prison, or CIA detention facility.

While the Obama administration has unfortunately decided to withhold information on some sensitive CIA interrogation tactics, it is promising that the administration has taken steps to halt the perpetration of the gross international law and human rights violations that became all too common over the past eight years. Human rights and national security are not mutually exclusive – in fact, respecting human rights, medical ethics, and international law is likely to make us safer, not more vulnerable, in the long run.

The path from discovery to cure is long, as researchers like stem cell pioneer and Science Progress adviser John Gearhart point out. But with access to federal competitive grant money for responsible, ethical research projects, scientists can continue the work that will help us fully understand human development and fulfill the promise of regenerative medicine. With today’s change in policy, that can happen here in the United States. As we look forward a bright future of scientific discovery, here’s a glance back at some major advances in human embryonic stem cell research around the world over the past few years:

January 20^th, 2009: Researchers produced massive volumes of “universal donor” type O-negative blood from human embryonic stem cells, potentially making blood donation a thing of the past.

December 5^th, 2008: Harvard scientists created spinal motor neurons from hESCs, and were able to replicate the ALS, or Lou Gehrig’s disease, process in a Petri dish.

September 8^th, 2008: Neural cells derived from hESCs showed effectiveness at reducing the clinical systems of multiple sclerosis in animals.

March 15^th, 2008: Scientists developed a way to convert human embryonic stem cells into dopamine-producing nerve cells, holding great promise for therapy for Parkinson’s disease.

February 21^st, 2008: Scientists at Novocell, Inc. created insulin-producing islet cells from human embryonic stem cells that effectively controlled insulin levels in diabetic mice.

January 31^st, 2008: Scientists coaxed hESCs into functional hepatocytes (liver cells) that may be used for treatment of liver diseases.

September 21^st, 2006: Vision was improved in rats suffering from a disease similar to age-related macular degeneration with the injection of human embryonic stem cells into the retina.

July 14^th, 2006: UCLA Aids Institute researchers used hESCs to create lines of mature T-cells that could fight viruses like HIV, which destroys certain types of T-cells.

October 12^th, 2005: Scientists used hESCs to create cancer-killing cells.

September 24^th, 2004: Scientists in Israel derived fully functional cardiomyocytes (heart cells) from human embryonic stem cells, paving the way for hESC-derived pacemakers and heart tissue repair.

For more on a responsible and ethical stem cell research policy, see the Center for American Progress report, “A Life Sciences Crucible.”

Image: Ronald Kalil, University of Wisconsin-Madison

The importance that the Obama administration places on strong government support of these efforts is clear, and reflects an encouraging change from the Bush administration. According to the proposed budget, the Department of Commerce is to receive $295 million for programs that invest in America’s competitiveness and promote innovation, in addition to the hundreds of millions of dollars allocated for similar purposes in the stimulus legislation passed last month.

The budget calls for:

• “$70 million for the Technology Innovation Program, which invests in high-impact research that will address critical national needs and advance innovation”

• “$125 million [to the Hollings Manufacturing Extension Partnership] to enhance the competitiveness of the Nation’s manufacturers by facilitating the adoption of more efficient manufacturing processes”

• “$50 million in regional planning and matching grants within the Economic Development Administration (EDA) to support the creation of regional innovation clusters that leverage regions’ existing competitive strengths to boost job creation and economic growth”

• “$50 million [to launch an] initiative in EDA that will create a nationwide network of public-private business incubators to encourage entrepreneurial activity in economically distressed areas”

Congress should not reduce or eliminate these commitments. Investment in our young businesses and the local and regional innovation structure that supports their creation and development is essential to the short-term as well as long-term health of America. These investments will provide the capital that young companies need in these times of anemic support from institutional investors reeling from losses in the capital markets. The proposed support of innovation clusters across the country will build long-lasting tech-based economies in these regions that can generate new growth and provide jobs to local residents.

American economic geography is changing: to read about how innovation clusters will spur economic development across the new landscape, see our “Regional Centers of Innovation 101.” For more on why business incubator support is a good idea: Incubators Boost Job Creation.

Biological treatments are not drugs—they are difficult to control, and may induce a cascade of unforeseen side effects. As stem cell therapies move into clinical trials here in the United States, it is essential that patients as well as policymakers recognize that tumorigenesis is a potential problem with all pluripotent cells regardless of their source, and that there may be biological barriers inherent in these cells that cannot be overcome.

Nevertheless, we should recognize the great potential of stem cell therapies and focus our attention not on how to restrict stem cell research and therapy development, but on how to develop proper regulations that minimize dangerous side effects and satisfy strict ethical guidelines. As with any powerful disease therapy, like chemotherapy, hormone treatments, or bone marrow transplantation, we must manage the potential deleterious outcomes of stem cell therapies but never forfeit their unique potential to save lives. The authors of the journal article agree:

Stem cell therapy and neural stem cells, in particular, provide hope to patients affected by devastating diseases. However, such innovative treatments also carry substantial risks and the potential for malignant transformation of transplanted cells has been raised . . . Our findings do not imply that the research in stem cell therapeutics should be abandoned. They do, however, suggest that extensive research into the biology of stem cells and in-depth preclinical studies, especially of safety, should be pursued in order to maximize the potential benefits of regenerative medicine while minimizing the risks.

It is important that the FDA and other regulatory agencies take a proactive approach to evaluating the safety of these new therapies, and work diligently to ensure that they are developed and applied safely and ethically. There are going to be many bumps along the road to safe and effective stem cell therapies, but the promise of regenerative medicine is far too great for us to quit now, or to take our eye off the goal of patient safety.

For more on the status of biotechnology regulation around the world, see Richard Hayes’s SP article, “An Emerging Consensus.” For the CAP/Science Progress recommendations on the regulation of stem cell research and innovation, see the report from Michael Rugnetta and Michael Peroski: “A Life Sciences Crucible.”

We need to encourage growth in the regions and cities that are best positioned to compete in the coming decades: the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them—places like Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle. Whatever our government policies, the coming decades will likely see a further clustering of output, jobs, and innovation in a smaller number of bigger cities and city-regions. But properly shaping that growth will be one of the government’s biggest challenges. In part, we need to ensure that key cities and regions continue to circulate people, goods, and ideas quickly and efficiently.

An interesting graphic included with the article documents the changing patent geography in the country since 1975, providing a glimpse at the regional clusters of innovation that power American economic competitiveness. As the country has progressed from a manufacturing economy to one based on scientific and technological products, patent activity has been increasingly focused in a handful of innovation centers, such as Silicon Valley, Boston, and Raleigh-Durham. Additionally, most of the innovation clusters have sprouted up around major research universities, indicating the essential role that educational institutions play in spurring innovation.

The Obama administration would be wise to take Richard Florida’s message to heart. The current economic crisis has sparked a fundamental shift in the economic geography of the United States, a geography that is more than ever reliant on the collaborative networks between universities, companies, and financiers that are the foundation of our most innovative cities and regions. Supporting the development of these networks and the cities that grow along with them should be a top priority for our new government.

For more on why place matters, see Maryann Feldman’s recent article for Science Progress. For a comprehensive discussion of innovation clusters: Regional Centers of Innovation 101.

This overconfidence of judges and jurors in the reliability of forensic science, the “CSI Effect” as the NAS study calls it, is only one of several much more serious problems in the field. Some of the key findings of the report:

• There is no nation-wide regulation of forensic science, leading to large disparities between local, state and federal forensic methodologies and inter-reliability.
• Forensic science facilities are often woefully lacking in quality equipment, skilled labor, and funding.
• With the exception of nuclear DNA analysis, little evidence has been published that indicates the rigorous reliability of forensic techniques used in the courtroom.
• Judges do not often enough insist on a clear presentation of forensic information from experts, leading jurors to overlook elements of human interpretation involved in the science.

The study calls for the creation of a new agency, the National Institute of Forensic Science, which would be responsible for the overhaul of the national forensic science community, working to solve the problems highlighted by the NAS.

An op-ed by UCLA law professor Jennifer L. Mnookin in the Los Angeles Times concurs that the creation of a forensics agency is a good idea, but indicates that in the meantime judges should do more to ensure that individuals aren’t incarcerated on the basis of unreliable evidence passed off as irrefutable. If the United States is going to ensure “equal justice under law” for all of its citizens, then the first step must be to make certain that the forensic evidence in our courtrooms is presented responsibly and is held up to the highest standards of peer-review and scientific rigor.

One potential component of such an effort will require effective communication between the science and law enforcement communities. For more on that relationship, see the analysis researchers from the Federation of American Scientists, the FBI, and AAAS published here in Science Progress: “How Scientists View Law Enforcement.”

At the moment, the United States has no existing federal policies on a host of reproductive technologies, including techniques at the center of bioethical debates, from reproductive cloning to preimplantation genetic diagnosis. The latter is a technology that made news last week when a Los Angeles reproductive clinic, Fertility Institutes, announced that it will soon offer services that will allow parents to choose some of an embryo’s physical traits like eye color, hair color, and complexion.

Richard Hayes, of the Center for Genetics and Society, surveyed human biotechnology policies around the world for Science Progress last year, and this map captures his research on regulations in place across the planet:

It suffices to say that the United States has fallen behind the rest of the world in its regulation of reproductive biotechnologies. Many peer nations, including England, France, Japan and Australia, socially prohibit sex selection technologies. However, there are currently no U.S. federal regulations on this controversial technique. In fact, a 2006 survey by the Genetics and Public Policy Center at Johns Hopkins University found that 42 percent of 137 clinics in the United States that offer preimplantation genetic diagnosis also offer a gender-selection service. The United States does not even have any regulation in place governing inheritable genetic modification in humans, a technique used in animal experimentation that determines phenotypic traits passed on to children. Dozens of industrialized countries in Europe and Asia strongly prohibit the technology.

The science behind these biotechnologies is moving fast. It’s time for the policy to catch up.

[Note: The map above displays data available in the Center for Genetics and Society’s BioPolicyWiki as of October 28, 2008.]

iBridge Network…lets institutions share information about inventions and research tools developed by their faculty members. It also includes features that allow scientists or companies to sign up for alerts about new developments in certain fields. In some cases, they will be able to license rights to technologies listed on the site with the click of a button.

A networking system like this could help spur the commercialization process of federally funded research.

Networking is important, but so is place. For an overview of how innovation clusters drive economic development, see: “Regional Centers of Innovation 101.”

John Gearhart, Science Progress advisory board member and director of the Institute for Regenerative Medicine at the University of Pennsylvania, appeared last week on NPR’s On Point to discuss the past, present, and future of stem cell research and policy. Federal funding of human embryonic stem cell research has been profoundly anemic, Gearhart argues on the show:

If we look at the funding of the past eight years through the Bush administration, only about 3 percent out of a $4 billion budget on stem cell research has been allocated to the study of human embryonic stem cells. That number is simply too low to make an impact. Dreams without resources are just hallucinations. We’ve got to get out in education, outreach, and really make the public understand what this science is all about.

The point is important not just because access to resources can support future research. Conservatives have consistently argued that research on adult stem cells and induced pluripotent cells is sufficient, ignoring the fact that hES cells are still the gold standard for pluripotency.

For a full explanation of the importance of federal support of ethical human embryonic stem cell research, see the CAP report “A Life Sciences Crucible”. For a look back at the events that shaped stem cell policy history, see: “Timeline: A Brief History of Stem Cell Research.”

Image: University of Wisconsin-Madison

The study found that incubators are: “More effective than roads and bridges, industrial parks, commercial buildings, and sewer and water projects. In fact, incubators provide up to 20 times more jobs than community infrastructure projects (e.g., water and sewer projects) at a cost of $144 to $216 per job compared with $2,920 to $6,872 for the latter.”

The current stimulus plan includes billions of dollars in infrastructure improvements, “shovel-ready” projects that promise to send America back to work building bridges, mass transit, highways, and the like. These infrastructure investments are critically important to stimulate our rapidly deteriorating economy, but helping business incubators help emerging growth companies can also create key long-term jobs in high-tech infrastructure, according to the study.

Considering the best way to stimulate the economy, studies like this one that highlight innovative ways to create jobs are important for legislators to take to heart. Pulling the country up by its boot straps will take more than investing in projects with definite time horizons. Congress needs to heed the advice of the EDA study and other research that advocates for investments in business incubators and concomitant innovation clusters, both of which will help boost our nation’s long-term economic competitiveness. Science Progress recently profiled one such incubator, the Pittsburgh Life Sciences Greenhouse, as part of our continuing policy work to promote regional centers of innovation around the nation.

Image: flickr.com/thinkpublic

For decades, Japan and Europe have deployed high-speed rail systems, which consist of trains that average over 125 mph. The closest we come to such a network in the United States is Amtrak’s Acela Express service, a train with an average speed, 86 mph, that is dwarfed by that of many international competitors, like France’s TGV trains, which average 173 mph.

Several states have recently announced, or are in the process of building, high speed rail lines. The federal government should embrace these projects and support them financially, recognizing that they can play an important role in sustaining the innovation and business networks that serve as the bedrock of the 21^st century American economy. Here are a few proposed around the country:

An $18 billion to $20 billion project envisions 200-mph trains running throughout the “Texas T-Bone,” from Dallas/Fort Worth to Austin, San Antonio, and Houston. According to the Secretary of the Texas High Speed Rail and Transportation Corporation, “this system will create thousands of permanent jobs and attract a significant amount of investment, helping to ensure the continued growth of Texas’ economy.”

On election day this past November 4^th, California voters approved a ballot proposition that authorized $9 billion in bond funding for an 800-mile intercity high speed rail network that will carry passengers from San Francisco to Los Angeles in 2 hours and 38 minutes. A report released in 2008 by the Bay Area Council Economic Institute found that “the high-speed train service can help Bay Area businesses expand their markets within California by providing more efficient access throughout the state.”

In the research and development phase, the Ohio Hub is a proposed 860-mile high speed rail network that will connect the major Ohio commercial centers of Cincinnati, Columbus, and Cleveland with southern Ontario, Detroit, and other smaller cities. A report evaluating the economic impact of the proposed network found that “in the communities linked by the system, the project will create a new business environment that will be attractive to ‘New Economy’ (high tech mobile industry, frequently related to computer, telecommunications, and professional services businesses).”

A 2000 Florida referendum authorized funding for the phased development of a statewide HSR network, although a later referendum repealed that funding. A 2007 Florida State University study estimated that the “benefits of a statewide high speed rail program could range from $39 to $51 billion,” primarily by encouraging business connections between centers of industry.

For more on innovation clusters and tech-based economic development, see our “Regional Centers of Innovation 101.”

American hospitals inject the radioisotope technetium-99 into 20 million patients annually as a radioactive tracer for imaging the brain, thyroid, lungs, liver, gallbladder, kidneys, skeleton, blood, and tumors. Those hospitals rely on the Canadian reactor for the production of molybdenum-99, which decays into technetium-99, to meet the needs of their patients. The majority of American hospitals purchase molybdenum-99 from U.S. corporations like Bristol-Myers Squibb, which in turn buy their supplies from Canadian distribution companies like MDS Nordion, which controls the distribution of the Chalk River isotopes.

The isotope crisis has revealed both the extent to which American medical care is dependent on international supplies and the companies and government entities that control the distribution of these supplies. With America so reliant on foreign imports of important radioisotopes, it is unacceptable that the time and money hasn’t been spent to develop sufficient radioisotope production facilities on U.S. soil. But medical centers around the globe are feeling the impact of the shutdown: the Chalk River reactor produces 50 to 80 percent of the world’s supply of molybdenum-99.

Advanced Medical Isotope Corporation Chief Science Officer Dr. Robert Schenter has recognized this fundamental problem and pledged to engage his company in developing a solution. The company is finalizing agreements with two universities to further production capabilities addressing the need for domestic production of isotopes. The corporation is also developing a linear accelerator in Washington that it expects will be fully operational and delivering isotopes by early 2008.

It is far more dangerous to rely on foreign imports for important medical supplies than to deal with the security and environmental concerns that attend the development of sufficient domestic nuclear facilities. The health of patients depends upon these supplies.

The report highlights a number of severe problems plaguing the government agency, an organization that regulates over $1 trillion in consumer products annually. Among many others, the report highlights the following problems plaguing the FDA and hindering the fulfillment of its mission:

• A lack of a coherent vision and structure for the organization.
• A depleted staff, which despite a huge growth in agency responsibilities, is about the same size as it was 15 years ago.
• A workforce with far too few scientists who understand emerging biotechnology
• An “inadequate” and “obsolete” information-technology system.

The report found that most of the problems in the agency stemmed from the interplay of two main factors: the rapidly increasingly demand put on the FDA and the fact that the agency’s resources, financial and intellectual, have not risen to meet the increasing demand. If the discrepancy between the responsibilities placed on the FDA and the resources the FDA has to successfully uphold these responsibilities is not rectified, then the organization will stand in an increasingly precarious position that is dangerous for the American consumer and the American economy.

Fixing the problems afflicting the FDA is essential to the health of this country. As a nation, we must realize that if America is to continue to be a player on the world stage and an example for other countries, our important government agencies must be brought up to par. The experts that wrote this report should be commended for their effort, but their dedication will mean nothing if their recommendations are not taken seriously and if policy makers do not act on them. It is the right time for the FDA to catch up to the science that it purports to evaluate in a sophisticated and impartial fashion.

The report summarizes its plea to the FDA:

We recognize that adequate resources — human and financial — alone will not be sufficient to repair the deteriorating state of science at FDA, which is why we also recommend significant restructuring. But without a substantial increase in resources, the Agency is powerless to improve its performance, will fall further behind, and will be unable to meet either the mandates of Congress or the expectations of the American public. This will damage not only the health of the population of the US, but also the health of our economy. Currently each American pays about a penny and a half a day for the FDA; an increase to three cents daily would not, in our view, be a great price to pay for the assurance that our food and drug supply is, indeed, the best and safest in the world.

In its National Innovation Agenda, the Center for American Progress calls for increased funding for the FDA and other governmental scientific groups.

UPDATE: The Senate Health, Education, Labor and Pensions Committee will hold a hearing on food safety at 10:30 a.m. this morning. Webcast available here.

Kanzius’s technique proved highly effective in early preclinical trials at the University of Texas M.D. Anderson Cancer Center. In lab experiments, two lines of liver cancer cells and one pancreatic cancer cell line were completely destroyed after being injected with nanotubes and exposed to radiofrequency energy. Carbon nanotubes are hollow cylinders of pure carbon that measure about a billionth of a meter, or one nanometer, across. A similar technique called radiofrequency ablation has been used for a number of years to treat tumors in the body. However, the novel technique developed by Kanzius makes radiofrequency cancer treatment much less damaging to surrounding tissue.

One problem, unfortunately, is that scientists don’t have an accurate method for targeting cancer cells. Researchers are currently in the process of searching for acceptable molecular targets in the tumor tissue onto which the nanotubes can bind. It has been difficult to find targets unique to cancer cells and researchers must resolve this issue before the nanotube technique can live up to its promise of being an effective and noninvasive procedure. For these reasons, the scientists believe that clinical trials are still three to four years away.

Stem cell research is currently in the spotlight, but this new technique reminds us both of the promise of other treatments under development, as well as the potential for nanotechnology in the medical sciences. The treatment, even though still at the preclinical stage, is evidence that even far-fetched scientific ideas can and do become successful.

The company claims to be able to assess an individual’s risk of developing 17 diseases: Age-related macular degeneration, Asthma, Atrial fibrillation, Breast Cancer, Celiac Disease, Colorectal Cancer, Exfoliation Glaucoma XFG, Inflammatory Bowel Disease, Multiple sclerosis, Myocardial Infarction, Obesity, Prostate cancer, Psoriasis, Restless legs, Rheumatoid arthritis, Type 1 Diabetes, and Type 2 Diabetes.

DeCODEme describes the service on its website:

Over the past decade, we at deCODE have analyzed the genomes of hundreds of thousands of people—more than any other research organization in the world. Through deCODEme we are putting this expertise to work for you. We will analyze your genetic information, store it securely and provide you with updates on your genetics profile as new knowledge becomes available in the field.

This service comes as the first in a series of expected announcements from other so-called “personal genomics” companies offering to sequence your genome. 23andMe and Navigenics plan to announce services like deCODEme in the near future, and each has received millions of dollars in venture capital support.

Personal genome sequencing services are not without their problems. The development of these full-scale genetic mapping services raises a wealth of potential ethical, legal, and security issues. The companies all provide significant disclaimers about the proper use of their services, and assurances of the privacy of customers’ personal genetic information. Some of the companies even have constructed ethics boards that are involved in the everyday decisions of the company.

However, many people are still concerned about the overall safety and necessity of these genomic services. Much of the research linking individual genetic differences to specific diseases is far from clear and is certainly incomplete, so it may be dangerous for these companies to make recommendations on unverified science. Also, many bioethicists have expressed concern over the possibility that people with certain genetic predispositions uncovered by these genomic mapping services may be forced to pay higher premiums levied by insurance companies against at-risk individuals. Such concerns are only the tip of the iceberg as this infant industry gains traction and picks up speed.

The deal is set to cover about 47,000 sets of plaintiffs, with the average plaintiff receiving just more than $100,000 before legal fees, which can amount to as much as 30 percent of the actual settlement sum. To receive settlements, plaintiffs will not need to prove that Vioxx caused their heart attacks or strokes. But they will have to provide evidence that they did suffer a heart attack or a stroke, that the heart attack or stroke occurred less than two weeks after they last took Vioxx, and that they had taken Vioxx for at least one month.

The agreement may reflect a new strategy for businesses defending themselves against lawsuits. Instead of agreeing to a quick, early settlement, Merck aggressively defended itself in more than 20 Vioxx civil trials over the past few years, successfully convincing juries of its innocence in the majority of the cases. Playing hardball paid off for the company, with its settlement a mere fraction of what analysts had predicted years earlier.

In a country with an underperforming health system and the average consumer more vulnerable than ever to the whims of insurance companies and financially strapped medical centers, news of corporations like Merck going to bat against the American public and winning is not inspiring news. If we are serious about improving the health of our nation, steps need to be taken to ensure that companies like Merck cannot expect to get away with settlements that do not reflect the irreparable harm caused by its actions.

The release of the report coincided with the publication of research from the American Cancer Institute and other large health organizations that death rates from cancer have been dropping by about 2.1% a year recently in the United States. The positive progression is thought not to be the result of miraculous medical breakthroughs but improvements in prevention, early detection and treatment of some of the leading causes of cancer death. Prevention, early detection and lifestyle improvements continue to be the best weapons we have against many of the most deadly cancers.

In addition to the cancer risk associated with excess body fat, the WCRF-AICR study offered 10 lifestyle recommendations to help ward off cancer, including limiting red meat consumption and excessive drinking, exercising daily, avoiding processed meats such as bacon and ham, and eating a diet rich in fruits, vegetables and whole grains. The research synthesizes many individual reports that have found similar lifestyle-cancer connections for specific cancers.

Over 10 million new cases of cancer are diagnosed each year worldwide, and the study claims that the lifestyle changes it advocates could prevent about 3 million of those cases. Experts think the other two-thirds of the cancer cases are caused by factors including genetic predisposition, ultraviolet light, chemical pollutants, and smoking.

The WCRF-AICR report summarizes its public health recommendations:

Most cancer is preventable. The risk of cancers is often influenced by inherited factors. Nevertheless, it is generally agreed that the two main ways to reduce the risk of cancer are achievable by most well informed people, if they have the necessary resources. These are not to smoke tobacco and to avoid exposure to tobacco smoke; and to consume healthy diets and be physically active, and to maintain a healthy weight. Other factors, in particular infectious agents, and also radiation, industrial chemicals, and medication, affect the risk of some cancers.

The Centers for Disease Control and Prevention recently reported that 25 to 30 percent of the U.S. population carries the staph bacteria methicillin-resistant Staphylococcus aureus, which was for responsible for more than 94,000 life-threatening infections and 19,000 deaths in 2005. MRSA is resistant to drug treatment and is responsible for more deaths in the United States each year than AIDS, according to CNN.

Healthy people can also carry the bacteria, which lives on their skin or in their noses. Most drug-resistant staph cases are mild skin infections, but severe infections can enter the bloodstream and become deadly.

Close on the heels of the CDC report came the announcement of the tragic death of 12-year-old Omar Rivera. The incident, along with the CDC findings, has prompted the health community to re-evaluate how individuals develop the deadly staph infections and how to better treat and manage the infections.

In response, Senator Charles Schumer (D-NY) called for the creation of a national reporting system for the drug-resistant staph infection. Schumer said on October 28 that he wants to develop legislation that will require hospitals and other institutions to keep more rigorous records of the frequency of MRSA infections. He also expressed that he is working to promote research into the overuse of antibiotics, which may lead to the developments of dangerous drug-resistant bacteria. Other government officials have called for similar legislation this week, including Virginia Governor Tim Kaine and Connecticut Governor M. Jodi Rell.

The CDC report found that “about 85 percent of all invasive MRSA infections were associated with health care settings, of which two–thirds surfaced in the community among people who were hospitalized, underwent a medical procedure or resided in a long–term care facility within the previous year,” according to the press release. It went on to note: “The 2005 rates of invasive infection were highest among people 65 years of age or older. Black people were affected at twice the rate of whites, which could be due to higher rates of chronic illness among blacks.”