Washington Innovation EconomyProgress Report and Priorities

House of Representative Committee on pCommunity, Economic Development & Trade

Egils MilbergsWashington Economic Development Commission

January 21, 2010

V. 2.21

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Washington’s unemployment rate g p yrose in Dec to 9.5 percent from Nov level of 9.0 percent. 

WA shed jobs at slightly faster rate than the nation…56% of job losses came from the goods producing sector

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Source: Washington State Employment Security Department

Geography of Unemployment (Dec. NSA)

2000sInnovation is key to economic recovery

2000sAdvantage is Innovation

Over half of Fortune 500 and just under half of 2008  Inc. list began during a recession or bear market.

Dane Stangler, Kauffman Foundation

1980s & 1990s

Strategy is 

“Make something new”

Advantage  is Quality

Strategy is1960s & 1970sAdvantage is Cost

Strategy is

“Make it Better”

Strategy is 

“Make it Cheaper”

There is no better time likea downturn to innovate.

A New Innovation Growth Curve

We are hereWe are here

TYRO

SPER

ITPR

TIME

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US is failing to convert potential into progress on global competitiveness—US Chief Technology Officer Aneesh Chopraglobal competitiveness US Chief Technology Officer, Aneesh Chopra

Broadband Telecommunications

Higher Education Attainment

Innovation Trend

…… …

…

Information Technology and Innovation Foundation “The Atlantic Century”

Source: ITIF Report “The Atlantic Century”

• ITIF released a report in February 2009 benchmarking 40 countries on global competitiveness

• U.S. ranked last in the overall rate of change across 16 innovation metrics

Information Technology and Innovation Foundation – The Atlantic Century

Average annual growth of R&D expenditures : 1996–2007

EU = European Union

Researchers in selected regions/countries/economies: 1995–2007

NOTES: U.S. data for 2007 estimated based on 2004–06 growth rate. EU includes all 27 member states. EU = European Union; FTE = full-time equivalent Source: NSF Science and Engineering Indicators 2010

Market shares of computer and office machinery manufacturing: 1995–2007

NOTES: EU = European Union. Asia-9 includes India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam. China includes Hong Kong. EU excludes Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta, and Slovenia.

Source: NSF Science and Engineering Indicators 2010

Trade balance in high-technology goods 1995–2008

NOTES: Asia-9 includes India, Indonesia, Malaysia, Philippines, South Korea, Singapore, Taiwan, Thailand, and Vietnam. China includes Hong Kong. EU excludes Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta, and Slovenia.

Source: NSF Science and Engineering Indicators 2010

Leadership in Energy/Environment-Related Technologies

States and regions can be powerful l i h i iplayers in the innovation economy

• Innovation complexity is too great for any one p y g yplayer, firm or city. 

• States, regions and smaller nations are:h– Large enough to:

• create intellectual capital• build innovation ecosystem(s)• connect globally• respond to innovation opportunities

– Small enough for:g• shared vision and achievable outcomes• trusted personal relationships• effective governanceeffective governance

US States’ GDPs and Corresponding National GDPs

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Source: Christopher G. Caine, Mercator XXI, LLC

Ten Year VisionMake Washington State the most attractive, creative and fertile investment environment for innovation in the world as a means of achieving long term global competitiveness prosperity and economicprosperity and economic opportunity for all the state’s citizens.

We must look over the horizon and…with change occurring at mind-boggling speed, we can’t rest on our laurels, so let’s commit today to grooming a workforce and

We must look over the horizon and prepare for the new economy that will emerge when this recession passes. Simply put, we must re‐build, re‐tool and 

leaders who are agile, creative, and embrace innovation.

Gov. Chris GregoireMarch 10, 2009

re‐invent our national strategies for sustained economic success. 

Commerce Secretary Gary LockeFormer Gov. Washington Stateg

March 18, 2009

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Innovation Policy Framework

TalentEducation

InvestmentEntrepreneurship

GrowthEmployment Prosperity

GSH

Research

EntrepreneursB i

Workforce Skills

Entrepreneurship ProsperityQuality of Life Competitiveness

Innovation Ecosystem

neurs

Associations

Capital

Business

InfrastructureNon‐ProfitsGov’t

Innovation Drivers

Innovation Outcomes

Innovation EcosystemDrivers OutcomesEcosystem

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+WA Innovation Metrics

CompetitiveEmerging

nd

+

•Technology Occupations

•Patents Emerging Technologies 

•Exports per Capita

•GDP‐Per Capita 2007

•8th Grade Science Proficiency

•8th Grade Math Proficiency ositive Tren

•Renewable Energy•8th Grade Reading Proficiency

Below Peers Above Peers

Po

+‐Eroding 

•Technology Jobs Growth

Receding

•Science & Engineering Grads end

•New Companies•Academic R&D

Negative Tre

N

‐ 18Source: GSP ConsultingPeer States: 

Minnesota, Massachusetts, Oregon, Texas  

TALENTTALENT 2010 PrioritiesTALENTTALENT• Implement real time data on 

skills business needs now and in the near futuret e ea utu e

• Retrain dislocated workers• Sustain capacity of higher 

education in high demand

Strategic GoalStrengthen education i li f W hi t education in high demand 

occupations• Align key programs with 

t t

pipeline for Washington residents to develop the skills and competencies 

strategy– Centers of Excellence– Skills panels

needed by business. 

p– ESD labor market analysis– Higher Ed financing

INVESTMENT & INVESTMENT &  2010 PrioritiesENTREPRENEURSHIPENTREPRENEURSHIP • Strengthen technology 

commercialization to overcome “valley of death.”Strategic Goal

• Compete for large Federal R&D projects (e.g. energy systems, health services)

Position Washington at the forefront of science and emerging technologies to

• Recruit STARS for advanced manufacturing and service economy

emerging technologies to form the foundation of new markets, product t i d i d t • Provide operational funds for 

Innovation Partnership Zones• Organize innovation assistance

categories and industry clusters.

Organize innovation assistance for small business and entrepreneurs

INFRASTRUCTUREINFRASTRUCTURE 2010 Priorities• Streamline regulatory process 

for significant projectsi

Strategic Goal: • Promote next generation broadband

• Provide necessary financial tools

Strategic Goal: 

Assume a leadership role in the design and  Provide necessary financial tools 

for private sector growth (e.g. TIF)

gconstruction of smart infrastructure.

• Apply economic development criteria for  transportation projects with focus on freightprojects with focus on freight mobility

Evaluating WA Economic Development ProgramsEvaluating WA Economic Development Programs

• 143+ economic development programs inventoried.p p g• $3 billion in annual funding, multiple agencies.• Only 1% of funding has explicit focus on innovation.• Task force established for screening  program relevance and intersection with innovation.S hi hl li d t i ti• Some programs are highly aligned to innovation strategy and others have potential to align.

• Data on highly aligned programs will be updatedData on highly aligned programs will be updated.• Resources inadequate to complete in‐depth scientific outcome evaluation.

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Highly Aligned Economic Development P b D i (S li )Talent Investment & Entrepreneurship Infrastructure

Education & Training Program Dept of Associate Development Organizations Capital Programs Dept of Commerce

Programs by Drivers (Sampling)

Education & Training Program‐Dept of Commerce

Associate Development Organizations‐Dept. of Commerce

Capital Programs‐Dept. of Commerce

Labor Market Info. (LMEA)‐ESD Business Loan Portfolio‐Dept. of Commerce

Community Development Block Grand‐Dept. of Commerce

Workforce Investment Act ‐ ESD Innovation Partnership Zones‐Dept of  Energy Policy & Economic Development p pCommerce

gy y p– Dept. of Commerce

Office of Apprenticeship – L&I Targeted Programs (WMS, WTC, CINTRAFOR)‐Dept. of Commerce

Local Infrastructure Financing Tool (LIFT) –Dept. of Commerce

Job Skills Program‐SBCTC SBIR/STTR‐PNNL, Spokane ll h

Main Street Program – Dept. of Intercollegiate Research Commerce

Industry Skills Panel‐Workforce Training and Education Coordinating Board

Centers of Excellence‐SBCTC Small Communities Initiative‐Dept. of Commerce

Building Taxonomy for other education programs: Early Learning Health

Innovation Research Teams (STARS) –WEDC HECBWSU UW

Disadvantaged Business Enterprise Supportive Services‐OMWBEprograms: Early Learning, Health 

Science & Services, Career & Readiness, Even Start Literacy, Second. Career & Tech. Education, Adult Basic Education, Customized Training, Postsecondary Technical, Volunteer Literacy, Worker 

WEDC, HECB,WSU, UW Supportive  Services‐OMWBE

Small Business Development Centers‐SBCTC, WSU

Washington Public Ports

Access to Capital/Facilities/Ideas – WTC WSU Extension Agriculture Programs‐WSU

Retraining, Workfirst Program, Workforce High Demand, Entrepreneurial Law Clinic, UW Commercialization Grants… 

WSU

Research & Technology Development Projects‐WTC

Public Transportation Consolidated Grants Program  ‐ Dept. of Trans.

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Innovation Inputs Innovation Performance

Talent InvestmentEntrepreneurship Infrastructure Business 

PerformancePublic Impact

R&DPersonnel

R&D Intensity

TransportationNew Products

& Services State GDP

STEM Proficiency

InnovationCommercialization Broadband Productivity Employment 

Growth

Education Pipeline

Business Start‐ups Energy Exports Standard 

of living

Workforce Quality

Capital Access

Business Climate

Profitability Income Distribution

Lifelong Learning

InwardInvestment

SustainabilityMarket 

CapitalizationState 

Revenues

World’s Largest Innovation ParkMarine

Food TourismMarine Energy

Agriculture,Composites

AerospaceIT, gaming, simulation

Biomedical, Incubators“Twilight”

Defense

Life Sciences, Global Health

Food ProcessingMedical Devices

Environment

Wind, Solar, Data Centers 

RemediationClean IT

New ForestryElectric Cars

Clean Tech SmartWine, Water

Clean Tech, Smart Grid, BiofuelsBiotech, Energy

Summary• Nations, states and regions are giving innovation priority policy 

attention as the driver of future growth and jobs.• No one factor independently leads to superior economic 

performance rather it is the interaction of policies andperformance‐‐rather it is the interaction of policies and processes that lead one region to outperform others.  

• Many are well known—sound fiscal and monetary conditions, regulatory efficiency, flexible labor markets, quality of life, g y y, , q y ,access to capital.

• What is new is the growing role of knowledge, human talent, collaborative relationships, entrepreneurship, speed of technology commercialization and importance of dynamictechnology commercialization and importance of dynamic innovation ecosystems. WA policymakers can influence and leverage these factors. 

• Innovation ecosystem(s) can be built bottom up to connect the y ( ) pdiversity of the state’s unique innovation assets.

• Result: Collectively come out of the “Great Recession” with high job creation potential and a stronger, competitive and prosperous state.

ThankThank you!you!

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