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Innovation 2.0A Winning Strategy for Driving Growth
A Policy Reset in Time of Fiscal Constraint
Prepared for:Washington Economic Development Association
Winter Legislative ConferenceFebruary 15, 2011
Egils Milbergs Executive Director
Washington Economic Development Commissionwww.wedc.wa.gov
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Summary
This generation’s “Sputnik moment.” New global and national economic realities challenge Washington State to start, nurture and transform industries driven by innovation.
Innovation has been a focus of Washington’s high-tech industries. The focus needs to be broadened to all people, industries and geographies of the state to expand our overall ability to provide high value jobs.
Washington possesses substantial assets and initiatives related to innovation, but the state is far from reaching its potential.
A comprehensive economic growth strategy focused on innovation and catalyzing “bottom-up” collaboration among industries, universities, laboratories, regions, etc., can transform Washington into a model 21st century innovation economy.
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“one small ball in the air”
1957
1985
2011Sputnik Moments
“this is our generations’ Sputnik moment”
President’s Commission on Industrial Competitiveness
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The World is Changing“not your father’s economy”
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Innovation
Our Goal: Make Washington the most attractive, creative
and fertile environment for innovation in the world by 2020
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2010 New Economy Index Overall Scores
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Source: ITIF
26 indicators in five categories:1. Knowledge Jobs2. Globalization3. Economic Dynamism4. Digital Economy5. Innovation Capacity
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Soaring R&D in China
Knowledge-based Competition China is now the world’s second largest economy
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Peak to trough job losses
1981-82:
2.9% of labor force
This time:
5.5% of labor force
We are in tough hole ……..
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The Great Reset
FROM• Public Sector Jobs
• Shovel Ready
• Expand Safety Net
• Consumption
• Debt
• Competing Regions
• Top-down macro strategies
TO• Private Sector Jobs
• Innovation
• Upgrading Skills
• Investment
• Exports
• Collaborating Regions
• Bottom-up cluster strategies
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WEDC Innovation Strategy
World Greatest Innovation Ecosystem
Business Performance
Public Impact
Talent & Workforce
Investment & Entrepreneurship Infrastructure
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Regional Innovation
Clusters
EducationResearch
Start-ups
Associations
Non-Profits
Defense
Military
Gov’t
Capital
Business
Workforce
Innovation Clusters Matter
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• New industries and JOBS• Grow faster• Pay higher wages• More spin-off and start-up
opportunities• Offset advantages of low
wage competition• Attract talent and
investment• Solve social, energy,
environmental problems• Maintain defense and
homeland security
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Defense Technology
Medical Devices
Value-AddFood
Freight Mobility
Electric Car
Environment Technology
NanoPhotonics
Global Health
Health Services
Bio-Fuels
Advanced Manufacturing
Cloud Computing,
Data Centers
Smart GridClean Tech
Advanced Materials
Marine Technology
Wine, Water
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Designated Innovation Partnership Zones
Bellingham Innovation Zone
Aerospace Convergence Zone
Sequim, North Olympic Innovation Partnership Zone
Tri-Cities Research District
South Lake Union Life Science Innovation Partnership Zone
Spokane University District Innovation Partnership Zone
Bothell Biomedical Manufacturing Corridor
Central Washington Resource Energy Collaborative
Grays Harbor Sustainable Industries
Pullman Innovation Partnership
Discovery Corridor Innovation Zone: Steinmueller Innovation Park
Walla Walla Innovation Partnership Zone
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Whidbey Island Naval Air
Puget Sound Naval Shipyard
Joint Base Lewis McChord
Madigan Medical Center
Naval Submarine Base Bangor Spokane
Fairchild AFB US Coast Guard
WA Nat’l Guard
US Army, YakimaUS Marine Corps
Major WA Military Installations
191,000 jobs$12.2 billion in output
$10.5 billion in labor income$5.2 billion in defense contracts
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Intelligence, Surveillance, and Recon
Special forces and special operations
Network-centric operations
Cyber security
Composite materials
Unmanned systems – both air and sea
Energy efficiency and alternatives
Health care for veterans
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Naval Station Everett
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Key Policy Strategies
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TALENT: New Pathways for Learning
• Protect training capacity for high demand occupations
• Increase production of science & engineering and innovation graduates
• Expand use of on-line education
• Reduce K-12 drop-out rate
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INVESTMENT: Accelerate Commercialization
• Compete aggressively for Federal R&D funds
• Double recruitment of STARS and EIRs
• Double start-ups by access to expertise and entrepreneurial capital
• Make permanent R&D tax credit
• Clean Energy Public-Private Partnership
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Infrastructure & Regulations
• Expand local infrastructure financing tools (e.g. TIF)
• Define infrastructure to include “intangible” capital
• Build-out broadband(wired & wireless)
• Create mechanism for self-financing of industry clusters
• Reduce regulatory barriers and uncertainty
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Seize Global Markets
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• Implement Governor’s export assistance initiative
• Invest in freight mobility & infrastructure
• Focus trade promotion on competitive clusters, not national markets
• Improve foreign market intelligence and on-line tools
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World’s Greatest Innovation ParkCollaboration across regional boundaries
• Provide operational funding for IPZs
• Strengthen links with defense and mfg. sectors
• Pursue Federal funding of regional innovation clusters
• Create mechanism for self-financing of industry clusters
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Brand “Decade of Innovation”
• Utilize media to promote how WA innovates
• Leverage the 2012 World’s Fair Anniversary
• Define metrics to track trends, inputs & outcomes
• Launch innovation “X” Prize
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PNWER Region (GDP/Pop.) State/Prov. GDP* Population
Wash. 311,270 6,468,424Alberta 259,900 3,585,000 Oregon 158,233 3,790,060B.C. 150,412 4,310,305Idaho 51,149 1,523,816 Sask. 40,340 1,008,697Alaska 44,517 686,293Montana 34,253 967,440 Yukon 1,767 32,714Total 1,051,841 22,372,731
*2007 population & GDP in $US Million
Innovation ecosystem is even bigger….
If Pacific Northwest Economic Region were a separate country, it would rank
13th in total GDP
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Setting Priorities…..
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Reduce Create
Eliminate Invest
ToughChoices
Economic Development
Programs
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The risks inherent to starting a thriving enterprise in today’s troubled waters are immense, but the rewards have never been greater.
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