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

 

 

OUTLINE

Background

Analytical Approach and Evaluation

Framework

Analysis

Conclusion

 

 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.