Washington Innovation Economy

Progress Report and Priorities

House of Representative Committee on 
p
Community, Economic Development & Trade

Egils Milbergs
Washington Economic Development Commission

January 21, 2010

V. 2.21
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 Washington’s unemployment rate 
g p y
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
3
Geography of Unemployment (Dec. NSA)
Innovation is key to economic recovery
2000s
Over half of Fortune 500 and just under half of 2008  Inc. 
list began during a recession or bear market. Advantage is Innovation
Dane Stangler, Kauffman Foundation

Strategy is 
“Make something new”
1980s & 1990s
Advantage  is Quality

Strategy is
Strategy is
1960s & 1970s “Make it Better”
Advantage is Cost

There is no better time like
Strategy is 
a downturn to innovate.
“Make it Cheaper”
 A New Innovation Growth Curve

We are here
We are here
ROSPERITTY
PR

TIME
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 US is failing to convert potential into progress on 
global competitiveness—US Chief Technology Officer, Aneesh
global competitiveness US Chief Technology Officer Aneesh Chopra
Innovation Trend Broadband Higher Education
Telecommunications Attainment

… …
…

Information Technology and Innovation Foundation – “The

The Atlantic Century
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

Source: ITIF Report “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 
players in the innovation economy
l i h i i
• Innovation complexity is too great for any one 
p y g y
player, firm or city. 
• States, regions and smaller nations are:
– Large enough to:
h
• 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 governance
effective governance
US States’ GDPs and Corresponding National GDPs

Source: Christopher G. Caine, Mercator XXI, LLC

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 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- We must look over the horizon and 

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
g
March 18, 2009

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 Innovation Policy Framework
Talent
Education

Research

Workforce Growth
Skills
Investment Employment 
Entrepreneurship B i
Business
Entrepre
neurs
Prosperity
GSH
Innovation
Ecosystem Quality of Life 
Associations Competitiveness
Capital

Non‐
Infrastructure Gov’t Profits

Innovation  Innovation  Innovation 

Drivers Ecosystem Outcomes
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 WA Innovation Metrics
+
Emerging Competitive

nd
ositive Tren
•GDP‐Per Capita 2007 •Technology Occupations
•8th Grade Science Proficiency •Patents Emerging Technologies 
•8th Grade Math Proficiency •Exports per Capita

Po
•8th Grade Reading Proficiency •Renewable Energy

‐ Below Peers Above Peers +
Receding Eroding 
end
•Science & Engineering Grads •Technology Jobs Growth
Negative Tre

•Academic R&D •New Companies
N

Peer States: 
Minnesota, Massachusetts, Oregon, Texas   ‐ Source: GSP Consulting
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 TALENT 2010 Priorities
• Implement real time data on 
skills business needs now and 
in the near future
t e ea utu e
Strategic Goal • Retrain dislocated workers
Strengthen education  • Sustain capacity of higher 
pipeline for Washington 
i li f W hi t education in high demand
education in high demand 
residents to develop the  occupations
skills and competencies  • Align key programs with 
needed by business.  strategy
t t
– Centers of Excellence
– Skills panels
p
– ESD labor market analysis
– Higher Ed financing
 INVESTMENT &  2010 Priorities
ENTREPRENEURSHIP • Strengthen technology 
commercialization to overcome 
Strategic Goal “valley of death.”
Position Washington at the  • Compete for large Federal R&D 
forefront of science and  projects (e.g. energy systems, 
emerging technologies to
emerging technologies to  health services)
form the foundation of  • Recruit STARS for advanced 
manufacturing and service 
new markets, product  economy
categories and industry 
t i di d t • Provide operational funds for 
clusters. Innovation Partnership Zones
• Organize innovation assistance 
Organize innovation assistance
for small business and 
entrepreneurs
INFRASTRUCTURE 2010 Priorities
• Streamline regulatory process 
for significant projects
Strategic Goal: 
Strategic Goal:
• Promote next generation i
Assume a leadership  broadband
role in the design and 
g • Provide necessary financial tools 
Provide necessary financial tools
construction of smart  for private sector growth (e.g. 
infrastructure. TIF)
• Apply economic development 
criteria for  transportation 
projects with focus on freight
projects with focus on freight 
mobility
Evaluating WA Economic Development Programs
Evaluating 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.
• Some programs are highly aligned to innovation 
S hi hl li d t i ti
strategy and others have potential to align.
• Data on highly aligned programs will be updated.
Data 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
Programs by Drivers (Sampling)
b Di (S li )
Talent Investment & Entrepreneurship Infrastructure

Education & Training Program‐Dept of 
& Training Program Dept of Associate Development Organizations‐
Associate Development Organizations Capital Programs Dept of Commerce
Capital Programs‐Dept. of Commerce
Commerce Dept. of Commerce
Labor Market Info. (LMEA)‐ESD Business Loan Portfolio‐Dept. of  Community Development Block Grand‐
Commerce Dept. of Commerce
Workforce Investment Act ‐ ESD Innovation Partnership Zones‐Dept of 
p p Energy Policy & Economic Development 
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Commerce – Dept. of Commerce
Office of Apprenticeship – L&I Targeted Programs (WMS, WTC,  Local Infrastructure Financing Tool (LIFT) 
CINTRAFOR)‐Dept. of Commerce –Dept. of Commerce
Job Skills Program‐SBCTC SBIR/STTR‐PNNL, Spokane  Main Street Program – Dept. of 
Intercollegiate Research
ll h Commerce
Industry Skills Panel‐Workforce Training  Centers of Excellence‐SBCTC Small Communities Initiative‐Dept. of 
and Education Coordinating Board Commerce
Building Taxonomy for other education  Innovation Research Teams (STARS) – Disadvantaged Business Enterprise 
programs: Early Learning Health
programs: Early Learning, Health  WEDC HECB WSU UW
WEDC, HECB,WSU, UW Supportive Services‐OMWBE
Supportive  Services‐OMWBE
Science & Services, Career & Readiness, 
Small Business Development Centers‐ Washington Public Ports
Even Start Literacy, Second. Career & 
SBCTC, WSU
Tech. Education, Adult Basic Education, 
Customized Training, Postsecondary 
Access to Capital/Facilities/Ideas – WTC WSU Extension Agriculture Programs‐
Technical, Volunteer Literacy, Worker 
WSU
Retraining, Workfirst Program, 
Workforce High Demand, 
Research & Technology Development  Public Transportation Consolidated 
Entrepreneurial Law Clinic, UW 
Projects‐WTC Grants Program  ‐ Dept. of Trans.
Commercialization Grants…  23
 Innovation Inputs Innovation Performance

Investment Business  Public 

Talent Entrepreneurship
Infrastructure
Performance Impact

New Products
R&D R&D  State GDP
Transportation & Services
Personnel Intensity

STEM  Innovation Productivity Employment 

Broadband
Proficiency Commercialization Growth

Education Business  Exports Standard 

Pipeline Start‐ups
Energy of living

Workforce  Capital  Business  Income 

Profitability
Quality Access Climate Distribution

Lifelong  Inward Market  State 

Sustainability
Learning Investment Capitalization Revenues
 Marine
Agriculture, World’s Largest Innovation Park
Food Tourism Composites
Marine Energy
Biomedical, 
“Twilight” IT, gaming,  Incubators
Aerospace simulation

Life Sciences,  Medical  Food Processing

Global Health Devices
Defense Environment
Remediation
Clean IT
Wind, Solar, 
Data Centers 

Electric Cars
New Forestry

Wine, Water
Clean Tech, Smart 
Clean Tech Smart
Biotech, Energy Grid, Biofuels
 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
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, 
g y y, ,q y ,
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
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 
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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.
Thank
Thank 
you!

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