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

Analysis External Support to PRC Total External Support $150,454,547

Other Sources of Direct Economic Impact Total, other sources of direct impact $21,277,723

PRC’s Total Direct Economic Impact on Georgia, Total Direct Economic Impact $171,732,270

Benefits Realized from PRC Membership SRI Survey of PRC Members, 2002 (N=13)

Effect 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 Total Economic Impact of PRC: $306,013,008

Georgia Companies Hiring PRC Graduates,

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 RevenuesCosts General Sales Tax $ 314,235Educational Costs $ 441,475 Selective Sales Tax $ 112,621Transportation Costs $ 54,847 Individual Income Tax $ 529,810Public Welfare $ 232,187 Corp Inc Tax $ 59,622Public Health $ 71,369 License Revenue $ 31,646Natural Resource $ 37,969 Intergovernmental Transfers $ 328,434Public Safety $ 80,050 Fee Revenue $ 280,028General & Admin $ 33,016 Miscellaneous Revenue $ 4,391Interest $ 23,014 Total Revenue $ 1,660,787Miscellaneous $ 73,212 Total Cost $1,047,137 Net Revenue $ 613,650

Economic Impact of PRC Return on State’s Investment in PRC = 943 % Direct Impact Direct + Indirect and Induced Impact 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.