Berkeley and the Educational Industrial Complex
People, especially outside the US, always ask ‘What makes
America great?’ A popular answer is America’s private sector, with its capacity
for innovation and entrepreneurship. A second answer is American universities,
especially at the graduate level. Others will argue that it is its legal system
that allows fast transactions and enforces contracts. I believe that all these
factors contribute to America’s greatness and I’m very excited about the educational-industrial
complex [EIC]. Namely, the transfer of knowledge and expertise between universities
and companies that benefit from supporting legal frameworks and is behind much
of the success of California, Massachusetts and other states in the
biotechnology and information science sectors. I will present some of the main
features of the EIC, and then present how it is manifested in different ways in
Berkeley.
Innovations are new ways to do things or new products and are
frequently the result of research-based discoveries. The transformation to
commercial products requires significant investment in upscaling, testing,
development of industrial patents, production, and marketing. Many innovations
are originated by practitioners in the private sector, but the university is
very good at coming up with new research discoveries especially ones based on the
advanced sciences of genetics, molecular biology, nanotechnology, electronics,
etc. Most of the ideas don’t result in commercial products; and
commercialization is very expensive and therefore private sector resources are
needed to invest in it. People have frequently asked me why the state shouldn’t
invest in developing new technologies. History and theory suggest that states
are not very good at picking winners but have relative advantage in writing and
enforcing rules. At the same time, the private sector is not good at
self-regulating. In addition, tax revenues are limited and probably have better
use in providing public goods and enhancing welfare. So, we reach a
complementary arrangement where the state finances public goods research and
establish regulations while the private sector commercializes and scales
innovations.
For private individuals to invest in development of
innovations, they need some assurance that they will have exclusive benefits
from it, which is why we have patents. One result is the establishment of university-based
Offices of Technology Transfer [OTT] that sell the rights to a technology to
the private sector. Since federal money supports much of university research,
the Bayh-Dole Act of 1982, which gives universities the right to patents that
originated with federal monies and the OTT is issuing patents, finding buyers
to license university patents, and enforcing them and collecting revenues.
Obviously, the performance of the OTT can always be improved, but they have played
an important role in enhancing university-industry linkages and building
American industry. OTT
revenues are divided among researchers, departments, and the university. While
OTTs revenue provide a very small fraction of university’s revenue (maybe less
than 2%), it is a very important contributor to support research in certain
fields. But, technology transfer through the OTT and other means, have been
crucial for the development of many industries.
While major corporations seem to be the natural potential
buyer for university patents, in many cases that doesn’t happen. In some cases,
it was because research divisions within companies felt that university innovations
were competitors and that university innovations were not ‘invented here’. In
other cases, university innovations resulted in the introduction of something
new. Frequently, universities sold the rights to patents to startups, which frequently
involved university professors, and these startups might have then further
developed the technology. These startups were sometimes taken over by major
companies or grew into major companies themselves. For example, major
biotechnology companies in California, such as Genentech, Amgen and Chiron (now
part of Novartis), started and were led, to a large extent, by scientists from
UC and Stanford. Calgene and Agrocetus were agbiotechnology startups that were
taken over by Monsanto. Technology transfer from university to industry has
many channels, including educational and training, contracts by the university,
publications, etc. Thus companies like Google, Apple, Intel, Qualcomm, etc.
benefited immensely from the various mechanisms of transfer from the university.
As you can see from Figure 1 in 2004, over 1000 companies relied on UC Research
and Table 1 has a partial list of some of the companies that were originated in
the university in the agricultural area.
Table 1: Startups associated with UC campuses
Figure 1: Location of companies using UC research
Much of the growth was supported by contracts, mostly from
government, to conduct research that contributed to many priorities, including
national security, sustainability, improved infrastructure and communication,
etc. As I understand it, the University of California has a contract with the
Federal government to manage the research at Lawrence Berkeley National Lab.
Present and past contracts with the government to manage the national labs
(like LBNL and Lawrence Livermore National Lab) have
provided resources to support research that expanded human knowledge in
physics, biology, information sciences, and chemistry, among others.
Industry is becoming a growing source of support of
university research. There has been quite a lot of concern that industry-funded
academic research is less accessible and useful to others, but Brian
Wright and his collaborators present data from the UCs showing that this is not
the case. UC Berkeley has signed agreements with major companies. A
pioneering effort was the agreement between the University and Novartis on
pursuing frontiers in plant biology[1]. More
recently, about ten years ago, Berkeley was competing with other universities
on a large contract with British Petroleum for research on biofuels and other
areas of interest to the company. A coalition between Berkeley, the University
of Illinois, and LBNL won the contract that led to the establishment of the Energy Biosciences Institute
[EBI]. Despite the financial troubles of BP resulting from Deepwater Horizon,
the extensive contract lasted for about 8 years and paid the EBI close to 400
million dollars. The contract with BP continues at much lower scale today. But
the EBI continues and recently signed a 5-year contract with Shell Oil. The EBI
is
evolving and is now starting an incubator program for startups and
education programs for entrepreneurship among students.
I had the privilege to be a part of the EBI and found it to
be an amazing arrangement. It had a steering committee comprised of university
and BP representatives and an executive committee, which set rough priorities for
research. University researchers were asked to provide research proposals in
major areas of research that the EBI was interested in, but consistent with
their own expertise. This is no different than research supported by the
government, which identifies major areas of research and researchers submit
proposals. Representatives of the companies were a part of the team that
reviewed the proposals and most of them addressed basic research problems and
issues. What I found amazing is that this was a real multidisciplinary
endeavor, where I as an economist, could interact and collaborate with chemical
engineers, biologist, etc, and I gained a lot from these interactions. The EBI
allowed support for much of the social science research in areas of
biotechnology, biofuel and in some cases identified some of the weaknesses of
biofuels and was critical of many policies that were aimed at supporting it.
At the same time that the EBI was started, Jennifer Doudna
and her team came with the breakthrough
that provided the capacity for gene editing. The excitement of this
innovation led to the establishment of an institute called the Innovative Genomics Institute [IGI].
This institute is dedicated to research, taking advantage of new gene editing
technologies and applications in medicine, agriculture and material sciences.
It is centered in Berkeley but involves scientists from other campuses. Some of
the funding for the IGI is from donors like the Moore Foundation, which is
leveraged by matching contributions. It is also supported by funds from
companies and government agencies. I am a minor part of the IGI, looking at the
potential economic and environmental impact of some of its applications,
especially in agriculture under alternative policies. The IGI research is
addressing ethical challenges of gene editing both in medicine and agriculture
and considering mechanisms and regulation that prevents abuse. What I find
unique about this multidisciplinary effort is that we have a team that
recognizes how the application of modern breakthroughs in the life sciences and
other disciplines can be used to address issues of disease control, food
security, climate change and other global issues, as well as how to apply these
technologies safely.
The EBI and the IGI are two examples of complementary institutions
that I believe will be imitated elsewhere. The EBI serves as a bridge between
university and industry. It looks to establish contractual arrangements with
companies and other entities (including environmental NGOs) that can address
many topics that require high quality, university knowledge that are of interest
to our partners. We don’t expect companies to ask universities to solve
immediate problems (even though it may happen), but rather to gain basic
understanding of the sciences behind solving the challenges of the future. The
IGI emphasizes one area and goes into new depths in pushing it forward. It is
built on taking advantage of disruptive breakthroughs. Gene editing will change
medicine, agriculture, chemistry and materials science, and will expand the
capacity of the bioeconomy. The resources provided by both arrangements enhance
university research capacity. It is not only in terms of dollars and cents, but
university faculty get access to the knowledge and perspective of professionals
in the field.
I have been studying technology for years. In the beginning I
was a skeptic of industry and university collaboration. But what I have come to
realize is the incredible complementarity of the two. While university
scientists have relative advantage of understanding new frontiers, industry
people understand constraints and applications of the technology, and have the
capacity to accelerate the upscaling and development of, say, a new plant variety
or machinery, and can provide insight that can prevent leading to dead ends. Of
course, society must be vigilant in making sure that university discoveries are
not entirely captured by industry; but this constraint should not stifle
cooperation. Most importantly, it is crucial that private sector support for
university research continues and be enhanced. However, it won’t be enough. The
story of technology transfer in the United States is that public research
provides the base of key innovations, which leads to startups and changes in
industry that are behind the creative destruction that keeps the economy
competitive and fresh.
[1] An excellent background on
the contract and the economic principle behind the contract design is in Rausser,
Gordon, Holly Ameden, and Reid Stevens, eds. Structuring Public–Private
Research Partnerships for Success: Empowering University Partners. Edward Elgar
Publishing, 2016.
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