The engaged university

Universities play a unique role in society, providing a community of experimentation and innovation. Even so, leaders around the world have had to push for university primacy to retain competitiveness in the global economy. This paper examines efforts taken by universities in the United States to evaluate their contribution to economic development. An emerging role for universities is one of active neighborhood involvement, in which they are engaged in projects with local communities. These projects include providing assistance to local firms and policy advice to state and local government, and getting involved in community outreach. In this role and in an unprecedented manner, universities are engaging on a wide range of topics with local communities, using these communities as labs to test new ideas and find better ways to achieve social and economic goals. This is precisely why it is important to consider the larger role of universities’ in economic and social development.     

Accelerating commercialization: a new model of strategic foundation funding

Venture philanthropy presents a new model of research funding that is particularly helpful to those fighting orphan diseases, which actively manages the commercialization process to accelerate scientific progress and material outcomes. This paper begins by documenting the growing importance of foundations as a source of funding academic research as traditional funding from industry and government sources decline. Foundations are known for their innovative techniques and we consider the evolution of the ways that foundations fund academic research and form partnerships across academia and industry. We examine the example of the Cystic Fibrosis Foundation and the development of the drug Kalydeco^® as a demonstration of the principals of strategic foundation funding. The Cystic Fibrosis Foundation adapted to a venture philanthropy model and took an active role in drug development, stewarding the commercialization process from funding basic scientific work in academic institutions, to making an equity investment in a start-up firm. We conclude by evaluating the advantages and disadvantages to venture philanthropy for the academic researchers, industry partners, foundations, and universities and consider an agenda for future research.     

Where Science Comes to Life: University Bioscience, Commercial Spin-offs, and Regional Economic Development

Biotechnology, rather than being defined as a distinct industry like steelmaking or shipbuilding, is instead a scientific knowledge base—a rapidly evolving technology—that has economically valuable applications in such diverse industries as pharmaceuticals, medical diagnostics, agriculture, bioenvironmental remediation, and chemical processing. Biotechnology has captured the imagination of ambitious scientific investigators and investors seeking high rates of return, as well as state economic development officials who hope to anchor the industry in their locality and reap the industry's economic and employment rewards. Biotech is still at an early stage of its development, and there are many competing hypotheses about its future development. Most importantly, biotechnology involves the commercialization of science resources in which the federal and state governments have made substantial investment. One key question is how to leverage this investment for future economic growth. This article explores the policy issue related to the commercialization of biotechnology, its role as an engine of economic development, and the appropriate public policy response.     

Measuring Civilian Defensive Firearm Use: A Methodological Experiment

Estimates of the incidence of victim gun use from the National CrimeVictimization Survey (NCVS) are consistently lower than are those fromother studies. To examine the divergence, we conducted a survey that gaugedthe impact of methodological differences between the NCVS and the otherstudies. For half of the sample, we asked questions from the NCVS, followedby questions from the other surveys. For the other half of the sample, wepresented the questions in the reverse order. We examined two hypotheses:(1) survey methods account for the divergent results, and (2) the questionscover unrelated activities. The results provided some support for the firsthypothesis, but respondents also reported many more defenses to thequestions from the other surveys than to the NCVS questions. Consistent withthe second hypothesis, this suggests that the NCVS and the other surveysmeasure responses to largely different provocations.     

Regional Corporate Spawning and the Role of Homegrown Companies

This paper presents the results and policy implications of a study that examined the spawning of founders who had previously been employed at large corporations. We found that spawning of founders is positively associated with the parent companies' productivity, innovativeness, and headquarter location. Furthermore, we found that the spin‐off per employee rate is higher in smaller establishments. We also found that the local entrepreneurial culture is significant in explaining local spawning of founders. Finally, we present new empirical evidence on the crucial role of successful homegrown companies in regional cluster development. More specifically, we found that the existence of successful homegrown companies is significantly correlated with the level of the regional entrepreneurial activity. This finding is consistent with the finding of many cluster development case studies. Thus, we argue that successful homegrown companies have a unique role in cluster development. This role can seldom be replaced by nonhomegrown companies. This is related to the notion that prior to the development of an entrepreneurial cluster, some intangible precondition should be realized such as the appearance of local role models and a shift toward a more entrepreneurial culture. In a more general perspective, these results support the notion that knowledge‐based regional development is a complex process that requires a long‐term and continuously adjusting supporting policy rather than being based mainly on attracting established companies' R&D centers to the region.     

Equating U.S. Tax Treatment of Dividends and Capital Gains for Foreign Portfolio Investors

The U.S. tax law equates the tax rate on dividends and long‐term capital gains on stock owned by U.S. citizens and residents. However, the taxation of these two types of rewards in the hands of foreign portfolio investors remains dramatically different from each other, with the capital gain being fully exempt. Several reasons support this article's proposal to no longer exempt these gains. Extending finance theory and prior normative tax research, this article argues that foreigners’ portfolio dividends and capital gains should be taxed in the same manner because they are economically equivalent and emanate from the same source. Three recent empirical developments also support repeal of the foreigner's exemption. First, there is now extensive use by U.S. corporations of stock repurchases—which are taxed to selling shareholders as capital gain—as a form of corporate payout that was in the past primarily accomplished through dividends. Second, foreign ownership of U.S. stocks has continued to increase, with an estimated one‐third of these stocks owned by foreigners. Third, the modern tax compliance environment—including aspects of the Foreign Account Tax Compliance Act that apply to foreigners—reduces past congressional and academic concerns about enforcing the taxation of foreigners’ portfolio gains.