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Notes from Innovation Policyworks
In the past two weeks, we've seen the awesome potential of nature with a solar eclipse and now a historic flooding event. Here in Brunswick, we also had the Blue Angels flying overhead at the Air Show on the weekend. The former two events were predicted by science; the latter is enabled by technology (and some incredibly skilled pilots). So, it's cool to believe in science and technology right now, after a period where many felt under siege.
One of my cousins (a Texan, by the way), informed me earlier this month that climate change was real, but there was no evidence that humans caused it. For the sake of peace in the family, I didn't quote him chapter and verse of the evidence that has lead 98% of scientists to disagree with him. "Scientists can be wrong," he said. But guess what. They're much more often right. That's the whole point of the scientific method and peer review - to keep getting better at our understanding of what's going on around us.
While we support our fellow citizens in Texas in their time of need (and try to forget that Texans legislators voted against support for the victims of Hurricane Sandy), let's also hope for renewed belief in the importance of science and technology.


R&D as a Strategy for Regional Economic Development 
We often suggest to regions that they try to attract or create a R&D facility to anchor their innovation strategy. It's been well documented that R&D and economic growth are positively correlated. For instance, a new study from the Journal of Urban Economics has found that the clustering of R&D labs in the Boston-New York-DC corridor and in California echoes the deepening concentration of the knowledge economy. That study is HERE.
Creating incentives for R&D to take place in other parts of the country could help foster new creative ecosystems and knowledge hubs. For example, Rhode Island has launched a unique project to build an Innovation Campus to "bridge the gap between university research capacity and the commercialization of that research into new products, businesses and jobs." The Rhode Island Commerce Corporation and the University of Rhode Island have issued an invitation for expressions of interest for projects that could ultimately receive funds allocated form a $20 million bond approved by RI voters. Learn more HERE.
However, just having a R&D entity is not enough. A recent project for regions anchored by colleges and universities prompted a brief look at other college towns and found:
  • For many universities, moving from a model of teaching, research and service to one that more explicitly includes economic development is a long-term evolution. Each of the universities studied was in some stage of this evolution, with most having significant research, technology transfer, entrepreneurial support, and research commercialization activities.
  • The places studied varied in the tightness of the connection between the university and local/regional economic development, with most having a greater relationship in the university's home community and diminishing impact in rural communities farther away.
  • The areas varied considerably in their attention to the issue of inclusion, with two explicitly and prominently seeking to extend economic prosperity to all of its citizens, regardless of their location (urban and rural), and actively seeking ways to connect the poorest to better jobs, higher skills and more supportive neighborhoods. The issue of inclusion is one that is just coming to prominence in the technology community and for universities as well.
The places studied that are doing better seem to have accomplished an integrated approach to economic development that embraces traditional business attraction as well as innovation and entrepreneurship support, workforce development, and place-making. Transportation, excellence in K-12, arts and culture all play a part in the approach. 

Where People Want to Live
For a few years, there's been much consternation in economic development circles about how to entice Millennials and other younger professionals to move to non-urban areas. A new study suggests that this isn't as hard as previously thought. The top three characteristics that professionals seek are affordable housing, job opportunities for spouses and lower commuting time. The bottom three characteristics are business networks, nightlife and alumni networks. Read the whole study HERE.

Innovation and Productivity
For every 10 percent increase in R&D investment per employee, Irish firm productivity increased 12 percent, according to a paper by Do Ubaldo and Siedschlag. R&D to develop new products and more efficient processes increases productivity. Looking at data on 10,000 Irish firms, the authors found that R&D investments have a much larger impact on productivity than investments in "traditional" physical capital, such as new machines or factories. So why do states and localities encourage traditional investments instead of R&D investments? The study is available HERE.
Are Google, Apple, Facebook etc. Oligarchs?

I think it's critical to read the opinions of those you don't normally agree with, so here goes. Joel Kotkin has written a provocative piece that suggests that the tech community, dominated by Google, Apple, Facebook, Amazon and Microsoft, "increasingly resembles the pre-gas crisis Detroit of the Big Three." He goes on to suggest that Silicon Valley is now overwhelming controlled by only a few companies and investors, and rather than expanding opportunity, is controlling it at every turn. He believes that the Big Five are pushing many workers into the gig economy with little chance of upward mobility. He points out that three of the five richest people in the world are from the Big Five, and their management teams dominate the list of billionaires under 40. The Bay Area is now one of the most bifurcated economies in the country, with the richest living alongside a vast homeless population. He concludes that the tech titans could dictate the political and cultural agenda of the country in "ways that J.P Morgan and John D Rockefeller would envy." Read the whole piece HERE.

DOE's Grid Study Released: Renewables NOT a Threat to Grid

Given the political beliefs of the President and the Secretary of Energy Rick Perry, it's amazing that the DOE's recently released Grid Study was as factual and rational as it was. No one in the power sector was surprised by the findings that low natural gas prices are driving the retirement of older (read coal-fired) power plants, or that renewables do not threaten grid reliability. However, some groups such as the Sierra Club called the report "an effort to pressure" grid operators, FERC and utilities "to bail out aging coal and nuclear plants by forcing electricity customers to pay more for their expensive electricity." Read the Report and reaction HERE.
FY2019 Federal R&D Budget Priorities
The White House has issued budget guidance to agencies, suggesting that "federal funding of R&D programs and research infrastructure can play a crucial supporting role" to national security, economic growth and job creation. The priority areas identified are: American military superiority; American security; American prosperity (focus on basic research); American energy dominance (fossil, nuclear and renewables); and American health. The priority practices are: increasing government accountability and efficiency; supporting innovative early-stage research; maximizing interagency coordination; developing a future-focused workforce and modernizing and managing research infrastructure. You can review this guidance HERE. (P.S. I think the guys who wrote this still work there, but who knows.)

See you at SSTI in Washington DC 
September 13-15, 2017
I hope you will join me at SSTI's annual conference and engage those involved in the innovation economy in a dynamic exploration of the advances and challenges facing our community. It's an opportunity to meet your peers and to help build solutions in the face of uncertain funding and other roadblocks, and to share practices that strengthen science, tech, innovation and entrepreneurship. At the conference you will meet other national, state and regional leaders of science, technology, innovation and entrepreneurship from across the US. The conference attracts policymakers, stakeholder and practitioners working at all levels in the innovation economy. Lend your voice and help build those bridges for a better future.  Register HERE.

In This Issue - September 2017

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Quote of the Month 
"The most beautiful thing we can experience is the mysterious. It is the source of all true art and all science. He to whom this emotion is a stranger, who can no longer pause to wonder and stand rapt in awe, is as good as dead; his eyes are closed."  

The Power of Regional Food System Investments to Transform Communities
For those of you in rural areas, the St. Louis Fed just released a great book called Harvesting Opportunity. To quote from its foreword, 

"We have learned that regional food systems represent a promising avenue for economic growth for both rural and urban communities through the creation of new or the enhancement of existing jobs and businesses. We also learned that, with appropriately targeted policies and support, the attendant opportunities can advance the economic and financial security of LMI households and communities. What is especially interesting about this work is that the approaches that support the development of regional food systems not only contribute direct economic benefits to the community, but can also open the door for improved access to healthy food and other positive outcomes that could result in improved community health and a more productive workforce."

The book is HERE.

How Traditional Industry Definitions are Becoming Irrelevant
Those of us who make our living out of studying regional economies know from first-hand experience that traditional industry definitions, especially those rooted in NAICs codes and other federal data, are increasingly unhelpful in describing what's happening in real life. This is in large part because technology is causing the boundaries of industries to become fluid. For instance, with Amazon buying Whole Foods and focusing (potentially) on home delivery of grocery items, is Whole Foods still a grocery store or is it something else entirely? Ford is now calling itself a "mobility company" and Starbucks is offering digital content. McKinsey has developed a view of the new ecosystems that may be useful to sort this out. They say that adopting an ecosystem mindset is a critical priority, as is following the data, build ties to your customers and look for more and different kinds of partners. The McKinsey report is HERE

Metrics Book Now Available at iNBIA

At long last, my book on evaluating entrepreneurial programs, written for the International Business Innovation Association (iNBIA), is available on their website. Check it out HERE.

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135 Maine Street, Suite A-183 · Brunswick, ME 04011 · 207.522.9028

Innovation Policyworks enables economic development officials at state, regional and local levels make better, data-driven decisions by providing expert research, analysis and recommendations. Our clients see innovation and entrepreneurship as critical elements of their economic development strategy, and are developing new programs or policies, and/or evaluating existing ones. 

Dr. Catherine S. Renault has been delivering innovation-based economic development results in rural states for more than 25 years, most recently as science advisor and Director of the Office of Innovation for the State of Maine.
  For a list of selected projects, see www.innovationpolicyworks.com/projects.