Catalyzing Innovation in the Commonwealth of Virginia Prepared for the Virginia Economic Development Partnership June 2008
Jan 10, 2016
Catalyzing Innovation in the Commonwealth of VirginiaPrepared for the Virginia Economic Development Partnership
June 2008
Project Process: Logical Analytical Tasks
Virginia Industry Cluster Analysis
Economic and Innovation Foundations Benchmarking of Virginia
High-Growth Potential Technologies for Virginia
Best Practices from Successful Technology Investment Programs
Strategic Inferences for Virginia’s Economic Development
Virginia Industry Cluster Analysis
Like most states, Virginia’s economy is dominated by service industries:
Education & Government Retail Trade Construction & Real Estate Tourism General & Business Services.
Several technology and knowledge-based sectors stand out for their high levels of employment: Life Sciences & Medicine (336,535 workers) Research & Engineering Services (161,633 workers) IT Services (140,016 workers)
Virginia Industry Cluster Analysis
Several technology and knowledge-based sectors also have high levels of employment concentration in Virginia (compared to the national average): IT Services (2.69) Research & Engineering Services (1.96) Aerospace, Defense, & National Security (1.76) Telecommunications (1.32)
Clusters that have experienced high employment growth rates in recent years (2003-2005) include: Research & Engineering Services (26.6%) Construction & Real Estate (12.4%) Transportation & Logistics (8.1%) Tourism (6.7%) Business Services (6.5%)
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Employment By Cluster State-LevelAnalysis
The largest employer clusters are the labor-heavy service sectors, such as Education & Government, Retail Trade, Tourism, and Construction & Real Estate.
Virginia has high levels of employment (>100,000 workers) in several key technology sectors, including Life Sciences & Medicine, Research & Engineering, and IT Services.
The top 6 clusters account for over 60% of Virginia’s total employment in 2005.
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Several technology clusters are highly concentrated in Virginia, including IT Services, Research & Engineering, Aerospace-Defense-National Security, and Telecommunications.
A few traditional industries are also concentrated in Virginia, although their overall employment levels are quite low: Wood & Furniture, Auto. & Transport. Mfg., and Textiles & Apparel.
The Employment Concentration Ratio is the industry cluster’s share of total employment in the state versus its share in the country. Clusters with a ratio greater than 1.0 are more concentrated in Virginia than in the United States.
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U.S. Average Annual Pay By ClusterState-LevelAnalysis
Wages in technology and knowledge-based clusters far exceed the average annual pay for the nation and for Virginia.
Not surprisingly, less skilled jobs in the service sectors have pay levels that are below the national average.
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Virginia Industry Cluster Analysis
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Industry cluster data and trends were analyzed across
six regions in Virginia.
Regional Cluster Analysis
Common employment trends across all regions:
Retail Trade, Tourism, and Construction & Real Estate are major employment-generating sectors across every region. (typical throughout the U.S.).
Life Sciences & Medicine also dominates in employment, ranking in the top 3 clusters for every region except Northern Virginia. This is driven by its service component (the Health & Medical Services sub-cluster).
Business Services and General Services rank in the top tier of
clusters for employment across every region, but do not have especially high employment concentrations.
Regional Cluster Analysis
Significant variations across state’s regions:
Northern Virginia and Hampton Roads: Technology and knowledge-based clusters – Research & Engineering, IT Services, Aerospace/Defense/National Security.
Southwestern/Southside: Natural resource-based clusters such as Materials & Chemicals and Energy & Environment.
Rural Regions: Traditional industries such as Wood & Furniture (Southwestern, Southside, Valley), Paper (Southside, Valley), and Textiles & Apparel (Southwestern, Southside, Valley). But overall employment is relatively low.
Central region: Financial Services (strong in both employment and employment concentration).
Benchmarking Virginia’sInnovation Foundations
SummaryResults
Weakness Average Strength
FinancialResources
Human Resources
Innovation Resources
Innovation Economy Outcomes
VC investment ($) SBIR awards ($)
STTR awards ($)Small business loans ($)
Industrial R&D expenditures ($)
Academic R&D expenditures ($)
Federal R&D performance ($)Patents
Labor force growth
Real GSP growth
Advanced S&E degrees S&E degrees
NAEP Science & Math Scores
Exports ($)
Entrepreneurs
Business Start-Ups
R&D to GSP ($ ratio)
Tech Fast 500 companies
Academic R&D productivity
Innovation Resources Patentsper Capita
VA ranked last among the benchmark states for per capita patents awarded in 2006.
Innovation Economy OutcomesEntrepreneursPer Capita
Compared to other benchmark states, VA had the 2nd lowest level of entrepreneurs per capita in 2005.
Innovation Economy OutcomesR&D Shareof GSP
In 2004, VA ranked 6th among benchmark states for R&D as a share of GSP, slightly below the national average.
High Growth Potential Technologies for VA
High Growth
Potential Technologi
es
Virginia’s
Economic Base
Industry Transformi
ng Technologi
es
Virginia’s Existing
R&D Assets
Unique Factors
to Virginia
Suitable for Targeted
Policy Interventio
ns
Resources for R&D and technology
development are limited. Determining
where scarce
resources should be
deployed is a critically important
task.
Screening Criteria:
Industry Cluster Industry Sub-Clusters
Current Industry
Base
Growth Potential
Existing R&D Assets
Other Factors
National Security and Aerospace
Aerospace
National Security
Agriculture and Food
Agriculture and Processed Food
Biomedical and Health Care
Health Care
Biomedical Sciences
Chemicals and Materials
Chemicals
Materials
Energy and Environment
Energy
Environment
Information and Communications
IT Services Telecom
Electronics Transportation and Logistics
Transportation and Logistics
Technology Industry Selection
High Growth Potential Technologies
Technology-Based Industry Cluster
High Growth Potential Technologies
Biomedical Sciences andHealth Care
Point of Care Diagnostics
Computational Technologies
Information Technology Services
Health IT
Cybersecurity
Chemicals and MaterialsNanomaterials
Biopolymers
Clean Energy and Environment
Fuel Cells and Distributed Hydrogen
Carbon Capture and Storage
Transportation and Logistics
Radio Frequency Identification
“Smart” Roads
Biomedical Sciences and Health Care
Information Technology Asset Map
Materials and Chemicals Asset Map
Energy and Environment Asset Map
Transportation and Logistics Asset Map
Case Studies
Enhancing Research Excellence at Universities
Georgia Research Alliance University of Texas Eminent Scholars Program Ohio Third Frontier (Wright Mega-Centers)
Enhancing Collaboration Across Sectors/Disciplines
NY Centers for Advanced Technology MD Industrial Partnerships Program CA Industry-University Coop. Research Program NC Research Triangle
Enhancing Entrepreneurship and Access to Capital
MD Venture Fund GA Advanced Technology Development Fund PA Ben Franklin Technology Partners
Lessons Learned
Highlight collaboration as a central component of all programs.
Utilize industry and technology experts as key players in decision-making.
Seek to leverage multiple sources of funding.
Incorporate key economic development objectives and milestones.
Introduce and maintain strong systems of accountability.
Include flexibility to allow for corrections and to support longevity.
Measure innovation progress.
Summary Assessment
Global and national economic realities challenge forward-looking states to expand industries driven by technology and innovation.
Many of Virginia’s high-tech industries serve the Federal market. While important, this narrow focus limits the state’s diversity and overall ability to provide high value jobs.
Virginia possesses important assets and initiatives related to innovation, but the Commonwealth has not reached its potential.
An initiative to stimulate innovation and catalyze collaboration among industries, universities, laboratories, etc., can transform Virginia into a model innovation economy.
Engaging Private Sector Collaboration Across Sectors And Disciplines
Catalyzing Innovation
Strategic Focuses for Virginia
Recommended Approach for Virginia
Overall Strategic Goal:Virginia will become a Model
Innovation Economy- Crafted and directed by business,
government and university communities
Implementation Mechanism:
Virginia Innovation Alliance (VIA)- Public/Private Partnership- A structure to power collaboration- Catalyzes Virginia’s assets, addresses
liabilities- Introduces a seamless innovation
value chain
VIA Governance and Funding
Governance: Governing board (15-20) with a majority
industry leaders. Membership from government,
universities, research labs, etc. Advisory committees for technology
platforms. Small management unit.
Budget: Source & level to be decided Stable and sustained multi-year funding. Initial core funding from the
Commonwealth, with major support from industry.
To be successful it will require matching funds.
Monitoring Innovation Progress
Overall Progress in the Commonwealth: Scorecard or index to measure
performance of Virginia’s innovation enterprise.
Research outputs (patents, citations, outside funding, etc.).
Economic results (startups, VC funding, spinoffs, employment concentration, sector growth, etc).
Performance of specific VIA programs: Metrics to monitor program
performance. R&D and economic outcomes. Participants will be required to report
on progress.
Action Plan:→ Develop program structure, governance, and participants→ Identify prototype market for public/private collaboration
Target: TBD
Next Steps
PrivateSectorReview
Administration Review
StakeholderReview
Completed
11 CEOs→ Presented Overview→ CEOs were supportive
Review with Stakeholders:→ Economic Developers→ Universities→ Legislators
Target: September 2008
In ProgressCompleted
Reviewed with:→ Secretary of Commerce→ Secretary of Finance→ Secretary of Technology→ Secretary of Education→ Governor
OutlineActionPlan
In Progress