Economic Impact on Georgia of the Georgia Tech Packaging Research Center Presented at the 2005 Joint...
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Transcript of Economic Impact on Georgia of the Georgia Tech Packaging Research Center Presented at the 2005 Joint...
Economic Impact on Georgia of the
Georgia Tech Packaging Research Center
Presented at the 2005 Joint AEA/CES Conference
Toronto, Canada, October 26-29, 2005
by
Sushanta Mohapatra
Economist, SRI International
Evaluation Team
Dave Roessner, Sushanta Mohapatra, and Quindi Franco
Center for Science, Technology and Economic Development
SRI International
Background
The Microsystems Packaging Research Center (PRC) is an NSF-
supported Engineering Research Center housed within the Georgia
Institute of Technology
PRC is a prime example of a cooperative, federal-state investment in
S&T infrastructure
Established in 1994, PRC received $32.5 million in state funds over
10 years through GA Tech and the Georgia Research Alliance (GRA)
Need for a systematic look at the Center’s impact on the state and
its future outlook
Background
GRA commissioned the study and engaged SRI International.
The question was
What has been the payoff to the taxpayers of Georgia from a decade of state investment in PRC?
Approach and Evaluation Framework
Three distinct but related analyses that capture different
dimensions of PRC impact:
Direct impact of PRC’s existence on Georgia Quantifiable impacts Non-quantifiable impacts
Indirect and induced effects of PRC cash expenditures by
employees of firms that provide goods and services to the PRC
Fiscal impact of PRC’s existence on Georgia’s public budget
NSF support to PRC
PRC member support
Sponsored research
support to PRC
Consulting income to PRC
faculty/staff
Direct Impact of PRC on Georgia’s Economy
License fees and royalty
income from PRC inventions
NSF support to PRC
PRC member support
Sponsored research
support to PRC
Cost savings to GA firms hiring
PRC grads
Jobs created by PRC spin-in companies Value of PRC
workshops and short courses to
GA firms
Pro bono assistance to GA
companies
Jobs created by PRC start-up companies
Other benefits to GA PRC
member firms
Consulting income to PRC
faculty/staff
Direct Impact of PRC on Georgia’s Economy
License fees and royalty
income from PRC inventions
AnalysisExternal Support to PRC
Membership Fees
$7,474,795
In-kind$52,680,910
Workshop spending$389,980
IP$15,000
NSF$34,609,099
Sponsored Research
$55,284,763
Total External Support $150,454,547
Other Sources of Direct Economic Impact
Other benefits$675,000
Technical Workforce$2,410,000
Increased Employment$18,192,723
Total, other sources of direct impact $21,277,723
PRC’s Total Direct Economic Impact on Georgia, 1995-2004
Other Sources of Economic
Impact$21,277,723
12%
External Support
$150,454,54788%
Total Direct Economic Impact $171,732,270
Benefits Realized from PRC Membership SRI Survey of PRC Members, 2002 (N=13)
Benefitper cent
responding
We obtained access to new ideas or know-how. 85
Our R&D agenda was influenced. 69
We were able to provide our customers/suppliers with improved technical information.
69
We improved a product(s) or process(es). 62
We developed a new product(s) or process(es). 46
We hired ERC student or graduate 40
We had more interaction than in the past with other ERC firms.
38
We licensed technology or software developed by the ERC.
15
We patented or copyrighted technology or software we developed as a result of interacting with the ERC.
15
We made unexpected operational changes (e.g., equipment or project additions or cancellations).
8
8.3
33.3
58.3
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
None Some Quite a Bit
Per
cen
tEffect of PRC Participation on Member Firms’ Competitiveness
SRI Survey of PRC Members, 2002 (N=12)
PRC Direct Impacts
Ripple Effect of PRC
Expenditures
Induced & Indirect Impacts
Indirect Impacts: purchases of goods and services from other firms by businesses that directly benefit from PRC-related activities.
Induced Impacts: purchases of goods and services (food, housing, recreation, etc.) by employees whose earnings are derived from PRC-related activities.
The ultimate effects of direct economic
activities as they “ripple” through the
GA economy. Includes:
Direct and Indirect + Induced Economic Impact of the PRC on Georgia
Workforce$2,410,000
1%
Other Direct$675,000
0%
Increased Employment$18,192,723
6%
Indirect & Induced from
External Income
$126,021,24141%
Indirect & Induced from Employment
$8,259,4963%
External Income
$150,454,54749%
Total Economic Impact of PRC: $306,013,008
Georgia Companies Hiring PRC Graduates, 1995-2004
Company
ArdextAnadigicsBell SouthEMSGeorgia TechLucentMCTNational SemiconductorNortelPhilipsRF SolutionsSiemensVerifiber
PRC’s Impact on Employment in Georgia
Direct employment generated due to the presence of PRC PRC Employment – Internships, Research Assistants, Support Staff, etc. Number of jobs created in PRC start-ups: 288 (person-years) Number of jobs created in PRC spin-ins: 108 (person-years)
Employment Induced by PRC’s expenditures in Georgia Total number of jobs created in GA because of PRC expenditures: 197*
For each $1 million spent by PRC, approximately 20.2 jobs are created in GA
*(technically, 1966 “employee-years”)
Fiscal Impacts of PRC
Estimates the impact of PRC activities on Georgia’s public
accounts. Income Taxes paid by PRC and related employees Sales taxes collected from PRC purchases and employee expenditures Etc…
State Fiscal Impact Analysis (SFIA™) model was run by GA
Tech’s Center for Economic Development Services.
SFIA is a detailed Georgia specific fiscal impact model that has
been used extensively in GA.
Summary Table: PRC’s Fiscal Impact on Georgia
Costs and Revenues for PRC Operating At Average Annual Levels
Revenues Costs
General Sales Tax $ 314,235 Educational Costs $ 441,475
Selective Sales Tax $ 112,621 Transportation Costs $ 54,847
Individual Income Tax $ 529,810 Public Welfare $ 232,187
Corp Inc Tax $ 59,622 Public Health $ 71,369
License Revenue $ 31,646 Natural Resource $ 37,969
Intergovernmental Transfers $ 328,434 Public Safety $ 80,050
Fee Revenue $ 280,028 General & Admin $ 33,016
Miscellaneous Revenue $ 4,391 Interest $ 23,014
Total Revenue $ 1,660,787 Miscellaneous $ 73,212
Total Cost $1,047,137
Net Revenue $ 613,650
Economic Impact of PRC
Return on State’s Investment in PRC = 943 %
32.5
0
50
100
150
200
250
300
350
State Support toPRC
Mill
ion
Do
llars
Direct Impact
172.1
Direct + Indirect and Induced Impact
306.9
PRC’s Economic Impact on Georgia
Concluding Observations and a Look at the Future
The PRC’s economic impact on Georgia is substantial, widely
varied in scope, and long-term.
The payoff to Georgia’s taxpayers from public investment in
the PRC is also substantial and long-term, typical of similar
investments by many states that leverage university-based
research.
In assessing the overall economic significance of a research
entity such as the PRC, the variety of impacts is as important
as the magnitude.
Georgia’s investment in the PRC is just beginning to pay off in
several important areas: start-ups, spin-ins, intellectual property, and human capital.
Should the PRC continue to evolve and flourish over the next ten years, there is likely to be substantially increased impacts in these important areas, each of which is likely to lead in turn to substantial direct and indirect economic benefits for the state.
Often in the case of research, education, and technology transfer centers such as the PRC, the longer-term, less quantifiable benefits turn out to be of greater magnitude that those that are more immediate and more easily quantified.