Egils Milbergs Presentation Jan 21 2010

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Washington Innovation Economy Progress Report and Priorities House of Representative Committee on Community, Economic Development & Trade Egils Milbergs Washington Economic Development Commission January 21, 2010 V. 2.21

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2

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3 Washington’s unemployment rate rose 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 Source: Washington State Employment Security Department

Geography of Unemployment (Dec. NSA) : 

Geography of Unemployment (Dec. NSA)

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Innovation is key to economic recovery Over half of Fortune 500 and just under half of 2008 Inc. list began during a recession or bear market. Dane Stangler, Kauffman Foundation There is no better time like a downturn to innovate.

A New Innovation Growth Curve : 

A New Innovation Growth Curve TIME PROSPERITY We are here

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7

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

Source: ITIF Report “The Atlantic Century” US is failing to convert potential into progress on global competitiveness—US Chief Technology Officer, Aneesh Chopra Broadband Telecommunications Higher Education Attainment Innovation Trend 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 : 

Average annual growth of R&D expenditures : 1996–2007 EU = European Union

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

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 : 

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 : 

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 : 

Leadership in Energy/Environment-Related Technologies

States and regions can be powerful players in the innovation economy : 

States and regions can be powerful players in the innovation economy Innovation complexity is too great for any one player, firm or city. States, regions and smaller nations are: Large enough to: create intellectual capital build innovation ecosystem(s) connect globally respond to innovation opportunities Small enough for: shared vision and achievable outcomes trusted personal relationships effective governance

US States’ GDPs and Corresponding National GDPs : 

US States’ GDPs and Corresponding National GDPs 15 Source: Christopher G. Caine, Mercator XXI, LLC

Ten Year Vision : 

Ten Year Vision Make 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 economic opportunity for all the state’s citizens. …with change occurring at mind-boggling speed, we can’t rest on our laurels, so let’s commit today to grooming a workforce and leaders who are agile, creative, and embrace innovation. Gov. Chris Gregoire March 10, 2009 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 re-invent our national strategies for sustained economic success. Commerce Secretary Gary Locke Former Gov. Washington State March 18, 2009 16

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Investment Entrepreneurship Talent Infrastructure Growth Employment Prosperity Quality of Life Competitiveness Innovation Drivers Innovation Outcomes Innovation Ecosystem Innovation Policy Framework GSH 17

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Eroding Technology Jobs Growth New Companies Competitive Technology Occupations Patents Emerging Technologies Exports per Capita Renewable Energy Receding Science & Engineering Grads Academic R&D Emerging GDP-Per Capita 2007 8th Grade Science Proficiency 8th Grade Math Proficiency 8th Grade Reading Proficiency Below Peers Above Peers Negative Trend Positive Trend + + - - 18 Source: GSP Consulting Peer States: Minnesota, Massachusetts, Oregon, Texas WA Innovation Metrics

TALENT : 

TALENT 2010 Priorities Implement real time data on skills business needs now and in the near future Retrain dislocated workers Sustain capacity of higher education in high demand occupations Align key programs with strategy Centers of Excellence Skills panels ESD labor market analysis Higher Ed financing Strategic Goal Strengthen education pipeline for Washington residents to develop the skills and competencies needed by business.

INVESTMENT & ENTREPRENEURSHIP : 

INVESTMENT & ENTREPRENEURSHIP 2010 Priorities Strengthen technology commercialization to overcome “valley of death.” Compete for large Federal R&D projects (e.g. energy systems, health services) Recruit STARS for advanced manufacturing and service economy Provide operational funds for Innovation Partnership Zones Organize innovation assistance for small business and entrepreneurs Strategic Goal Position Washington at the forefront of science and emerging technologies to form the foundation of new markets, product categories and industry clusters.

INFRASTRUCTURE : 

INFRASTRUCTURE 2010 Priorities Streamline regulatory process for significant projects Promote next generation broadband Provide necessary financial tools for private sector growth (e.g. TIF) Apply economic development criteria for transportation projects with focus on freight mobility Strategic Goal: Assume a leadership role in the design and construction of smart infrastructure.

Evaluating WA Economic Development Programs : 

Evaluating WA Economic Development Programs 143+ economic development programs inventoried. $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. Some programs are highly aligned to innovation strategy and others have potential to align. Data on highly aligned programs will be updated. Resources inadequate to complete in-depth scientific outcome evaluation. 22

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23 Highly Aligned Economic Development Programs by Drivers (Sampling)

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Aerospace IT, gaming, simulation Biomedical, Incubators Clean Tech, Smart Grid, Biofuels Defense Biotech, Energy Wine, Water Life Sciences, Global Health World’s Largest Innovation Park Food Processing Wind, Solar, Data Centers Marine Food Tourism Marine Energy Agriculture, Composites New Forestry “Twilight” Medical Devices Environment Remediation Electric Cars Clean IT

Summary : 

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 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, access to capital. What is new is the growing role of knowledge, human talent, collaborative relationships, entrepreneurship, speed of technology 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 diversity 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.

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27 Thank you!