Aligned with the Kaufman Foundation, led by Robert Atkinson a UNC gradThe State New Economy Index uses 26 indicators to assess states’ fundamental capacity to successfully navigate the shoals of economic change. It measures the extent to which state economies are knowledge-based, globalized, entrepreneurial, IT-driven and innovation-based – in other words, to what degree state economies’ structures and operations match the ideal structure of the New Economy.
Research and development inputs: The R&D capabilities that can be commercialized for future state and regional technology growth. The category includes measures such as industrial, academic, and federal R&D, Small Business Innovation Research awards, and the Small Business Technology Transfer program, among others.Risk capital and entrepreneurial infrastructure: The entrepreneurial capacity and risk capital infrastructure of states are the ingredients that determine the success rate of converting research into commercially viable technology services and products. We include several measures of venture capital that capture the amount placed relative to the size of a state’s economy and recent growth. It includes patenting activity, business formations, and initial public offerings.Human capital capacity: Human capital is the most important intangible asset of a regional or state economy. This component includes measures of stocks and flows in various areas of educational attainment. Examples include the number of bachelor’s, master’s, and Ph.D.s relative to a state’s population and measures of specific science, engineering, and technology degrees.Technology and science workforce: The intensity of the technology and science workforce indicates whether states have sufficient depth of high-end technical talent on the ground. Intensity is derived by finding the percent share of employment for a particular field relative to total state employment; it indicates whether potential human capital is being combined with R&D and financial capital and is actually being transformed into a thriving economy. There are three main categories of computer and information science, life and physical science, and engineers. All together there are 18 different occupation categories.The State Technology and Science Index provides a nationwide benchmark for states to assess their science and technology capabilities, along with their ecosystems for converting them into companies and high-paying jobs. There are 79 individual indicators. Each indicator is computed and measured relative to population, gross state product (GSP), number of establishments, number of businesses, and other factors. Data sources include government agencies, foundations, and private sources. The states are ranked in descending order with the top state being assigned a score of 100, the runner-up a score of 98, and the 50th state a score of 2.
Milken NC CO KS KY State Technology & Science Index 2010 13 3 23 47 Human Capital Investment Inputs ($s) and outputs (grads, computers, internet) 26 3 18 45 R&D Inputs Inputs ($s) and outputs (SBIR, NSF) 16 5 40 48 Risk Capital & Entrepreneurial Infrastructure VC, incubators, patents 8 6 22 39 Technology & Science Work Force Engineers, scientists, IT 15 5 16 43 Technology Concentration & Dynamism High tech concentration, growth 11 2 13 47 NC CO KS KY ITIF 24 9 26 44 Knowledge Jobs IT, Educ, Migration 28 11 20 41 Globalization Export, FDI 10 38 32 7 Economic Dynamism Churn, IPOs, patents 30 2 41 44 Digital Economy Online, digital gov 33 14 21 42 Innovation Capacity High tech jobs, scientists, patents, R&D, VC 22 6 30 44
This is not small business vs. large business Differences between small and large businessesSmall BusinessMore flexibleMore risk orientedMore innovativeMore job creationMore job destructionLarge BusinessBetter wages (15-20% higher)Better fringesMore investment More R&D – 75% by firms with more than 1000 employees which make up less than half of total employmentMore traded sectorMore international exportsLess job creationLess job destruction What are the downsides to swing in the pendulum from recruit to grow? 1) Apply recruit policies to grow; 2) Willingness to be sloppy because grow is “cool” 3) A “we have to do something” attitude. Do we?
NCTA Presentation June 17 2011
Dare to CompareHow does NC Stack Up?<br />Presentation to the <br />NC Technology Association<br />Regional Technology Strategies<br />Carrboro, NC<br />June 17, 2011<br />
Topics<br />The North Carolina Economy yesterday & today<br />The Rankings Systems<br />North Carolina by Category<br />Case Studies in State Technology Development Policy<br />A Policy Comment Tangent<br />2<br />
The North Carolina Economy in 1970<br />The Big 3<br />Textiles<br />Tobacco<br />Furniture<br />The Big Three accounted for:<br />2/3rds of Manufacturing Employment<br />1/4qtr of Total Employment<br />And they lost by 2007<br />Textiles 2/3rds of Manufacturing Employment<br />Furniture 2/3rds of Manufacturing Employment<br />Tobacco 60% of Manufacturing Employment<br />3<br />
The North Carolina Economy in 2007<br />The New Big 5 represent 17% of NC GSP<br />Technology<br />Pharmaceuticals<br />Financial Services<br />Food Processing<br />Automotive Vehicle Parts<br />NC in the Connected Age (Walden, 2008)<br />Fastest growing occupation 1970-2005 – Professional & Scientific Workers<br />Per capita income in NC grew faster than US as a whole<br />Percent of population with college degrees approached national average<br />4<br />
North Carolina Economy: Where next?<br />Walden suggests<br />Tourism, retiree migration<br />Port development<br />Air travel and Jack Kasarda’sAerotroplis<br />Others<br />Aerospace with Spirit, Boeing and others<br />Military related industry<br />Green industries (the biotech of the 2010s)<br />What will our panelists say?<br />6<br />
Comparing States: Information Technology & Innovation Foundation (ITIF)<br />The 2010 State New Economy Index<br />Knowledge Jobs<br />Globalization<br />Economic Dynamism<br />The Digital Economy<br />Innovation Capacity<br />7<br />NorthCarolina2010 = 24<br />
Comparing States: Milken Institute<br />State Technology & Science Index 2010<br />Human Capital Investment<br />R&D Inputs<br />Risk Capital and Entrepreneurial Infrastructure<br />Technology and Science Work Force<br />Technology Concentration and Dynamism<br />8<br />NorthCarolina2010 = 13<br />
Comparing States: National Science Board<br />Science & Engineering Indicators 2010<br />Elementary/Secondary & Higher Education<br />Workforce<br />Financial R&D Inputs<br />R&D Outputs<br />Science & Technology in the Economy<br />9<br />
Milken Institute Rankings<br />11<br />North Carolina by Category<br />
ITIF Rankings<br />12<br />North Carolina by Category<br />
Positive Rankings (NC State Rank)<br />13<br />
Negative Rankings (NC State Rank)<br />14<br />
What Does This Tell Us?<br />As the John Prine songs says “Pretty good, not bad, can’t complain” <br />Can you compare the rankings?<br />What do they think is important?<br />Do they place the actual measures into the same categories?<br />Are they measuring inputs or outputs?<br />What are the politics involved?<br />What do we do with it<br />What do you have control over?<br />Are differences significant?<br />15<br />
Innovation and Business Size<br />In the 1960s John Kenneth Galbraith declared that the large industrial firm had won the economic battle and proposed the new industrial state economic policy.<br />In the late 1980s David Birch’s much cited but methodologically flawed analysis claimed that nearly all net new job growth was due to small businesses. Now big business was dead and the entrepreneurial state was proposed.<br />18<br />
The Numbers Battle<br />Politicians proclaim that “90% (or 80% or 92%) of net new jobs are created by small entrepreneurial firms.” Birch originally said 80-85%.<br />The Bureau of Labor Statistics completed the first rigorous analysis of size and net new job growth and they found…<br />19<br />
Net Job Growth 1993-2003<br />Small firms (1-99 employees) created 47%<br />Mid-size firms (100-499) created 17%<br />Large firms (500+) created 36%<br />Recent research tends to say that the age of the firm is the most important characteristic in explaining net job growth<br />20<br />
But What is Really Important?<br />“The different roles taken on by small and large firms together create more technological progress, innovation and growth than either category could have achieved by itself.” William Baumol, Princeton University<br />Small and large firms have a symbiotic relationship<br />21<br />