Congratulations to you also for being selected to be a student in such a distinguished university, one of the top five universities in China. It is both a very privileged responsibility and special position for you.

Anhui province is a sister-state to the state of Maryland, an agreement signed twenty years ago. It was a very great privilege for me to welcome Governor Xu in the President's Residence at the University of Maryland about one month ago when a delegation came to celebrate the anniversary of this historic agreement.

These state-to-state partnerships are very important in this global environment, this global new economy - as are business-to-business relationships. And, similarly, university partnerships also play a new role in this global economy too. I thought today that I would like to speak about the responsibilities of major research universities in this process. The university responsibility has changed from what it was a few years ago.

At the beginning of the last millennium, the most powerful person in the World was Genghis Khan, who ruled an empire that extended from Hungary across Asia to Korea and from Siberia to Tibet. At the beginning of the last century, the most powerful person in the world was Queen Victoria of England, who ruled an empire that encompassed 20% of the land and 25% of the people on earth.

At the beginning of this new century, many would say that the most powerful person in the world is William Henry Gates III of Microsoft. Bill Gates' power does not come from his armies, from his land, from his rule over people, or from control of vast natural resources. Bill Gates' empire sits on your desk.

Joseph Stieglitz, the Chief Economist of the World Bank, recently said "Knowledge and information are being produced today like cars and steel were produced a hundred years ago. Those, like Bill Gates, who know how to produce knowledge and information better than others reap the rewards, just as those who knew how to produce cars and steel a hundred years ago became magnates of that era."

As we sit here today, we are experiencing an economic transformation that many economists compare to the Industrial Revolution more than a century ago. The Industrial Revolution changed the United States from an agrarian to a manufacturing economy. But a manufacturing economy is still based on physical resources. As we shift from a manufacturing economy to what has been called a "Knowledge Economy," we are experiencing something that has never happened in world history. For the first time, something we can neither see nor touch -- knowledge and information -- are becoming even more valuable than physical resources like land, gold, and oil.

I want to talk to you today about the critical role that research universities will play in the Knowledge Economy over the next decades. In fact, I claim that the research university powers the knowledge economy in the same way that electricity powered the industrial revolution.

Research universities provide this power in three critical ways. First, by producing basic research in science and technology. In the Unites States this role was delegated to universities 50 years ago. Second, by educating a workforce that can sustain the knowledge industries. Third, by fostering, and participating in, an entrepreneurial culture that is essential to the development of new industries based on Knowledge. This power can be seen by looking at regions of the United States that are powerhouses of the Knowledge Economy.

Stanford University and the University of California, Berkeley anchor Silicon Valley, California, which is the oldest, strongest, and most imitated powerhouse of the Knowledge Economy. The Research Triangle in North Carolina is literally surrounded by the University of North Carolina, North Carolina State University, and Duke University. In Massachusetts, the research companies along highway Route 128 flow out from MIT and Harvard. What is particularly striking is that when any of those regions is mentioned, those universities come to mind as the drivers of that regional economic development.

The State of Maryland also has the potential to become a dominant regional force in the Knowledge Economy. Its assets are considerable. We have very strong, and potentially dominant, research universities in the University of Maryland and The Johns Hopkins University. We have a strong and growing base

of companies based on knowledge in information technology and biotechnology. We also have an extraordinary advantage, I often say our unfair advantage, in the number of government laboratories located in the state. In the Knowledge Economy, repositories of information and new technologies like NASA and the NIH, NIST, FDA and many any others are as valuable as oil was in the industrial revolution.

But Maryland, like many other regions in the United States and world, must build the links between our research universities, government laboratories, and technology companies. This is the era of partnerships connecting expertise of all types. These partnerships are built between the public and private sectors found locally, nationally and internationally. We have not yet forged fully the partnerships that will facilitate Maryland’s full economic development even though at present Maryland has the highest per capita income of any state in the USA. Our international partnerships with institutions in China and other countries _ both university and industrial partnerships _ are keys to our achievements in the new century.

The cover story of the November 1998 issue of Newsweek Magazine — titled the "Hot New Tech Cities" -- was about attempts by various regions around the United States, indeed around the world to create another Silicon Valley. The article named six factors that were critical for doing this. Number one was the need for a major research institution. Virtually every analysis lists major research universities as necessary to economic development. Many people believe that research universities do research, supply workforce and provide market. That’s basically their contribution to economic development. However, that understanding is incomplete.

In the most successful regional economies, the great research universities do more than supply workforce and market, in fact much more. They are sources of new ideas and new technologies, suppliers of creativity, creators of the entrepreneurial drive, and just as importantly, they are partners in economic and social development of the region. It is this partnership and participation that separates the great regions from the good ones because it creates the authentic engagement of the universities with the economy that is necessary for an entrepreneurial culture to flourish in the region over the long term and over the certain transitions in the technologies of highest value and opportunity.

Let me start by convincing you of the strength of the Knowledge Economy. The industries of this economy are information technology and biotechnology and in the future nanotechnology. I will not comment on nanotechnology today but is the next likely technological boom. I will begin with information and return to biotechnology later.

According to a US Commerce Department report, the information technology industry generated one-third of the US economic growth between 1995 and 1998. It predicts that almost half of all American workers will be employed in technology or technology-related industries by 2006 -- that is, 6 years from now.

In case you are not convinced that we are in a new economic age, here are a few more figures:

• In the last three years, high-tech products and services increased 20 percent, while the real GDP increased 1.5 percent.

• The S&P 500 increased 27% last year; but drop out 10 technology stocks and the S&P 490 decreased.

• In the past 20 years, high-tech has almost doubled its share of industry output in the U.S. to 11 percent; tech services, at 5.8 percent, are larger than manufacturing.

• Last year fully 50% of capital expenditure in this country was for technology.

A study by the Milken Institute called "America's High-Tech Economy" analyzed 315 regions in the United States and concluded that high-tech industries were responsible for 65% of their economic growth. An article in the November 1998 issue of Fortune Magazine ranks the top five cities for business, all of which were booming because of high-tech companies.

Americans get their news through the Internet, communicate over e-mail, order books online. Internet advertisements are more common than beer ads on TV during professional football commercial breaks. Soon, our refrigerators will read the expiration dates on our food cartons and dump them automatically.

The former Vice President at Lucent Technologies, Maryland alumna Carly Fiorina who is now President and CEO of Hewlett Packard Corporation, told me that at 3:00pm every weekday, the telephone exchanges across the United States slow down because millions of children come home from school and get online.

I told you earlier that research universities make three major contributions to the Knowledge Economy. The first contribution was advanced research in science and technology.

Would you agree if I noted that the information-technology industry would not exist today if it weren't for research done at universities? Recently, a presidential commission report stated that "Everything from the microchip to the Internet can be traced to fundamental research bankrolled by the government years ago." For the sake of the nation’s economic future, the Commission recommended that the federal government double its funding of advanced university research in information technology over the next five years.

Now let’s consider the second and third contributions of educating the workforce of the Knowledge Economy and fostering the entrepreneurial drive.

What distinguishes the students at a research university from others is that they are surrounded and formed by the research culture. Gerhard Caspar, former president of Stanford University describes this culture as having two characteristics: the Search for Knowledge and the Spirit of Inquiry. The search for knowledge powers the research engine. The spirit of inquiry underpins teaching. Professors use their own research to illustrate advances to their students. They expect the students to participate actively in their own education. And because of this interchange, students find that learning is an act of creation. The dissemination and creation of knowledge, teaching and research, couple inextricably.

Information-technology will continue to progress and change rapidly. Already the focus is shifting from information to communications.

But this new century belongs to biological sciences. And I know you didn't hear that here first. There are at least two reasons why this will be the century of biology in the USA. First, the United States has an aging population, and people increasingly believe that science and technology will prolong good health and increase the quality of life. Second, the frontiers of research in the biosciences are expanding very rapidly. Marvelous achievements are happening, and made public, almost daily. Both the current presidential candidates from the Republican and Democratic parties claim that they will double the support for bioscience and biotechnology within four years. Bioscience research already captures 59% of all federal government appropriations for research.

The future of our thriving biotechnology industry in Maryland depends on our research universities. The biotechnology industry needs universities even more than the info-comm industry does because of essential differences between the two industries.

Two people working out of their garage can create an information-communications company. That is part of its legend. In the late 1930’s Bill Hewlett and Dave Packard conceived Hewlett-Packard Corporation when they played football together at Stanford University. Steve Jobs and Steve Wozniak dropped out to start Apple Computer -- as did Bill Gates to start Microsoft. Bill Gates was writing software for PCs in 1975. The time to market in the ".com" business can be measured in weeks and months, and a modest enterprise can become a multi-million, or multi-billion, dollar corporation. These companies are closely tied to the marketplace, and because the marketplace is volatile, the future of these companies is volatile and their market position is always at risk.

In contrast, a biotechnology company is normally a very expensive and long-term enterprise. It requires teams of exceptionally well-educated and well-trained researchers and state-of-the-art laboratory facilities. The research phase can take years -- even a decade or more of work -- before a product can be brought to market. This means enormous financial risks have to be taken with a delayed payback.

Biotech companies are usually clustered near universities because they must have the sustained research commitment and long time horizons that only research universities in the US can support. The Chancellor of UC Berkeley is fond of pointing out that 30% of the biotechnology companies in the entire world are located within 30 miles of a University of California campus. There are 500 biotech companies in San Francisco and 70 biotech companies are located between MIT and Harvard.

Not surprisingly the Maryland biotech industry is comparably strong given the substantial strengths of Johns Hopkins University and increasingly the University of Maryland. I made a commitment last year to expand Maryland’s commitment to the bioscience fields. This means strengthening biology and biochemistry, of course, but also building upon our highly ranked programs in engineering, computer science, mathematics, agriculture and psychology. There will be no major research university in the next century that is not strong in biosciences and biotechnology -- none.

It is important to understand that research in the biosciences now goes far beyond biology and medicine. It includes biochemistry, biophysics, bioengineering, neurosciences, mathematics, computer science, psychology, and so on. It is broader than the Health Sciences for we must include the animal and plant sciences. It is highly dependent on technologies of various types. And many argue that only universities with broad strength across many disciplines can participate in the most advanced research in the biosciences. It extends well beyond the capacity of traditional medical schools as we know them, which will likely become less and less responsible for bioscience and biotechnology in the next century.

We have in Maryland a research backbone with the University of Maryland in College Park at one end and at the other end is The Johns Hopkins University in Baltimore and the many other universities located there. The backbone has a complementary balance of strengths with Johns Hopkins leading nationally in biomedicine and Maryland in information technology. Along the backbone there are many powerful government laboratories, businesses and other universities too.

And along the research backbone, we also have major federal and private-sector ribs. The alphabet soup of government labs -- NIH, NASA, NSA, FDA, USDA (to name only a few)); major companies like Lucent and Northrup-Gruman; and start-ups with names that no one knows now but could be the next CISCO or AOL.

And the corporations and universities along the backbone connect to partnerships internationally and nationally to expand the expertise brought to key issues. And the state also connects in sister state relationships as with Anhui Province to facilitate growth and prosperity.

Professor Michael Porter of Harvard Business School lists six ingredients required for an "entrepreneurial cluster" to come to life: (1) high-tech talent; (2) infrastructure (people, roads, suppliers, etc.); (3) financial support (venture capitalists, angels, investment bankers, etc.); (4) research centers; (5) success stories; and (6) an entrepreneurial culture (image, attitude, expectation, risk-acceptance mentality). These ingredients are facilitated greatly by the partnerships described earlier.

The challenge for any state is to create an entrepreneurial culture for the new, high-tech economy.

In order to do so the state needs to:

• Identify and exploit its advantages in info-comm and biotechnology;

• Recognize that the new economy is built around research universities and centers;

• Recognize that it is more realistic to build and move companies than it is to build and move universities;

• Recognize that high-tech research parks (anchor tenants, small start-up companies, VC’s, investment bankers, etc.) located essentially next to research universities are a necessary ingredient for creation of an entrepreneurial culture;

• Recognize that universities participate in the development of the economy as partners in addition to being sources of workforce and market.

The challenge for universities is to create a vision for the entrepreneurial culture. To do so universities should:

• Help the state to create a culture that will attract and retain high-tech companies and workforce to a regional cluster through partnerships, participation, facilities and programs;

• Take a leadership role in the high-tech economic development of the state because only research universities can represent what they do;

• Increase outreach to business and other economic sectors in the state, nation and world by fostering partnerships and participation;

• Increase visibility of the research university and the high-tech economy in promotion of the entrepreneurial culture of the state;

• Focus on achieving and maintaining top standing in both the information-communication and bioscience-biotechnology sectors to attract top faculty and students who will contribute to the health and welfare of the region and to attract new technology companies to make the region their homes.

Closing Remarks

So in closing let me note that we all live together in a global village, and when we talk about an entrepreneurial culture built on partnerships we are speaking about our global village. The partnerships will connect expertise to problems wherever they lie: nationally, regionally, or internationally.

For these reasons the University of Maryland is interested in building partnerships with the University of Science and Technology of China and other key universities and corporations around the world. It is in our self-interest as you can see. It is necessary that the university succeeds in it’s mission if is to serve the state of Maryland.

I thank you for your invitation to speak to you today and for your very polite attention. I wish the University of Science and Technology of China every success in its contributions to the new economy and I look forward greatly to our working together in appropriate ways.