Rhode Island innovates: A competitive strategy for the Ocean State In the fall and winter of 2015–2016, the Metropolitan Policy Program at Brookings worked in association with Battelle Technology Partnership Practice (now TEConomy Partners, LLC) and Monitor Deloitte to advance a new competitive strategy for the state of Rhode Island. This slideshow summary of the project’s final conclusions finds that Rhode Island possesses unique assets for building an advanced economy that works for all but stands weakened by the decline of its core “advanced industries.” Given that erosion, the slideshow asserts that five advanced industry and two “opportunity industry” growth areas hold out solid potential for growth in the Ocean State and recommends that Rhode Island should embark on a three-part strategy to strengthen its advanced industries and improve its statewide platform for growth.

1. January 19th, 2015
#innovateRI
Rhode Island Innovates
Metropolitan Policy Program

2. Slater Mill
1793
The Beginning of the
Industrial Revolution

3. Blurring Distinction
Between
Manufacturing and
Services
Relentless Pace
of Technological
Change
“Digitization of
Everything”
2016

4. R&D-intensive industries that
concentrate the nation’s science,
technology, engineering, and
mathematics (STEM) workforce.
A M E R I C
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
Advanced Industries

5. Pharmaceuticals
Medical EquipmentMotor Vehicles &
Parts
Shipbuilding
Manufacturing
35
Software Computer Systems
Design
Telecommunications R&D Consulting
Services
Services
12
Oil & Gas
Extraction
Electricity
Generation
Energy
3
Advanced Industries

6. 60.0%
8.7%
90.0%
81.2%
17.7%
80.0%
U.S.
GDP
ExportsU.S.
Workers
Private
Sector R&D
PatentsEngineers /
Architects
Concentrate the Assets of the Innovative Economy
Advanced Industries

7. $160
$120
$80
$40
$0
AverageWage(thousands)
Associate’s
Degree
Some
College
Secondary
Diploma
No Secondary
Diploma
$153
$117
$130
$89
$115
$69
$89
$56
$60
$38
$54
$32
$44
$28
$33
$20
Offer a Significant Wage Premium at Every Level of Education
Doctoral
Degree
Professional
Degree
Master’s
Degree
Bachelor’s
Degree
50 percent
of advanced industry jobs
require less than a bachelor’s degree
Advanced Industries

8. Drive Productivity in
Other Industries
Stimulate Local
Economies
Support Long
Supply Chains
Develop Technology that
Transforms Lives
Advanced Industries

9. Rhode Island’s Position
1 2 3
1
2 3

10. Rhode Island rests at the center of a
33 million person
megalopolis with
$2.1 trillion in
output.

11. The state’s labor market has tracked the United States in recent decades …
Employment rate Unemployment rate
Source: Bureau of Labor Statistics
Average wages
50%
80%
0%
20% 50k
25k
0
Rhode Island United States

12. However, the state’s growth capacity deteriorated through the recession.
Real Output Growth (2000-2014)
Source: Bureau of Economic Analysis
New Hampshire
Massachusetts
Rhode Island
Connecticut
Maine
100
110
120
2000 2006 2009 2014

13. A core problem: The advanced industry base has shrunk.
US AI Employment
Rhode Island AI
Employment
100
110
120
1980 2000 20131990
US Employment
RI Employment
Advanced Industry Employment, 1980-2013
Source: Bureau of Economic Analysis

14. Median income still hasn’t recovered from the recession.
Source: St. Louis Fed FRED Database
Real Median Income
2014 U.S. Dollars
$49,000
$54,250
$59,500
$64,750
$70,000
1999 2001 2003 2005 2007 2009 2011 2013
Rhode Island
$58,633

15. Rhode Island lacks sizable high-value growth engines.
✓ Erosion of the state’s advanced industry base and the
failure to nurture new advanced industries has left the
state adrift
✓ Rhode Island needs to build more resilient, future-
oriented industry specializations to secure the next
generation of prosperity

16. Industry opportunities
1 2 31
2
3

17. Assessment of Line-of-
Sight to Significant Markets
Recommended Target
Growth Areas
Industry Clusters
Identification
Core Competency
Identification

18. Advanced
5
Biomedical Innovation IT, Cyber, and
Data Analytics
Defense Shipbuilding
and Maritime
Design, Food, and Custom
Manufacturing
Advanced Business
Services
Opportunity
2
Arts, Education, Hospitality & Tourism
Transport, Distribution, and Logistics
Growth Areas

19. Biomedical Innovation: Position and Opportunities
31,548
1.8%
2.9%
size of primary industry
total employment (2013)
projected job growth
(2013-2022)
projected output growth
(2013-2022)
Opportunity
Industry-university partnerships at URI,
Brown, with Brown Operational Plan for
Excellence calling for major new
facilities, such as a shared, translational
neuroscience research lab.
Rhode Island Performance in Primary Industry

20. IT, Cyber, and Data Analytics: Position and Opportunities
Opportunity
• Major expansion expected at NUWC
• Projected development at URI
• Brown ranks #5 in applied math and 20th in
computer sciences among research
universities
• New Brown Data Sciences Institute
12,528
2.4%
4.9%
size of primary industries
total employment (2013)
projected job growth
software services, (2013-2022)
projected output growth
software services, (2013-2022)
Rhode Island Performance in Primary Industry
Chuck Hagel
Former Secretary, Department of Defense
“Rhode Island is the
Silicon Valley of
underwater technology”

21. Defense, Shipbuilding, and Maritime: Position and Opportunities
Rhode Island Performance in Primary Industry
Opportunity
• Rhode Island is the most specialized and
fastest growing state in New England in
Marine, Defense Ship Building, Materials
and Machinery.
• Electric Boat’s Quonset Point hull
manufacturing complex is the only site
capable of such work in the U.S.
19,107
-0.6%
2.1%
size of primary industries
total employment (2013)
projected job growth
(2013-2022)
projected output growth
(2013-2022)

22. Advanced Business Services: Position and Opportunities
Opportunity
Advanced Business Services growth in
Rhode Island well outpacing
Massachusetts and Connecticut.
35,232
1.0%
3.6%
size of primary industries
total employment (2013)
projected job growth
finance and insurance, (2013-2022)
projected output growth
finance and insurance, (2013-2022)
Rhode Island Performance in Primary Industry

23. Design, Food, and Custom Manufacturing: Position and Opportunities
Rhode Island Performance in Primary Industry Opportunity
Rhode Island has more than 2 times
the national concentration of Design
and Consumer Products industries.
31,548
1.8%
2.9%
size of primary industries
total employment (2013)
projected job growth
(2013-2022)
projected output growth
(2013-2022)

24. Transport, Distribution, and Logistics: Position and Opportunities
Rhode Island Performance in Primary Industry
Opportunity
Warehousing and Freight Transportation,
while small, are each growing by double-
digits since the economic recovery.
21,322
0.9%
3.6%
size of primary industries
total employment (2013)
projected job growth
(2013-2022)
projected output growth
(2013-2022)

25. Arts, Education, Hospitality & Tourism: Position and Opportunities
Opportunity
Rhode Island is 38% more
concentrated in jobs and generates
13% higher value-added per worker
than the nation as a whole.
Rhode Island Performance in Primary Industry
42,801
1.2%
2.3%
size of primary industries
total employment (2013)
projected job growth
(2013-2022)
projected output growth
(2013-2022)

26. Takeaway: There is no silver bullet.
✓ Rhode Island lacks massive anchors to make strategy
simple.
✓ The state’s task must be to expand multiple intriguing, but
small clusters.

27. Rhode Island Innovates
1 2 31 2
3

28. ✓ A proliferation of individually very
small industries argues against
narrow targeting.
✓ However, the interrelatedness of
the state’s small industries and
clusters recommends “platform
strategies” that broadly address
the fundamentals of industry
growth and key growth areas.
The industry analysis suggests the needed strategy.
Brookings/Battelle Network Analysis of
Patent Citations in Rhode Island

29. Execution
Business Climate
Innovation
TalentPlace

30. Business
environment
problems
Shaky core
competitiveness
drivers
Splintered
business-civic
leadership
Problems

31. Rhode Island
Competes
Rhode Island
Innovates
Rhode Island
Acts
Responses

32. Rhode Island
Competes
Rhode Island
Innovates
Rhode Island
Acts

33. Licenses, patents and startups per $10 million
of university research expenditures
Rhode Island and U.S. average, 2013
0.0
0.2
0.4
0.6
0.8
1.0
1.2
United States Rhode Island
Licenses Patents Startups
Recruit and support the work of
commercially-oriented impact faculty.
Sponsor a Rhode Island Global
Innovation Challenge to accelerate early-
stage startups.
Launch a Rhode Island Entrepreneurs in
Residence program.
Responses

34. Licenses, patents and startups per $10 million
of university research expenditures
Rhode Island and U.S. average, 2013
0.0
0.2
0.4
0.6
0.8
1.0
1.2
United States Rhode Island
Licenses Patents Startups
Responses
Create industry-university-laboratory tech
collaboration centers focused on AI.
- Cleveland’s Global Cardiovascular Innovation Center

35. State Bachelor's degree Rank
ME 38% 1
PA 32% 2
VT 31% 3
OR 31% 4
MN 30% 5
MA 30% 6
DE 29% 7
NH 27% 8
CT 27% 9
RI 25% 10
Share of All Degrees Granted in STEM
Establish state as national leader in
STEAM education and training.
Expand the Wavemaker Fellowship to
encourage graduates to stay and work in
Rhode Island.
Responses

36. State Bachelor's degree Rank
ME 38% 1
PA 32% 2
VT 31% 3
OR 31% 4
MN 30% 5
MA 30% 6
DE 29% 7
NH 27% 8
CT 27% 9
RI 25% 10
Share of All Degrees Granted in STEM Responses
Launch RI Codes, a statewide coding
initiative to prepare more Rhode
Islanders for careers in tech.
- General Assembly New York City

37. Rhode Island
Competes
Rhode Island
Innovates
Rhode Island
Acts

38. Fix underperforming R&D tax credit by
raising the cap on deductions and
making the credit refundable.
Assemble and prepare more large pad-
ready commercial/industrial sites.
Responses
45th
CNBC 2015
Top States for
Business
Rankings
Tax Foundation’s
2016 State Business
Tax Rankings
48th
46th
Forbes 2015
Business Climate
Rankings
Rhode Island lags its competitors on numerous
assessments of business environment
Reform unemployment insurance by
reducing its incidence on young and
growing firms.

39. Pursue a regulatory streamlining
campaign to signal that the state is
sophisticated, forward-thinking, and
entrepreneurial.
Responses
45th
CNBC 2015
Top States for
Business
Rankings
Tax Foundation’s
2016 State Business
Tax Rankings
48th
46th
Forbes 2015
Business Climate
Rankings
Rhode Island lags its competitors on numerous
assessments of business environment
- Chicago’s Small Business Center Web Portal

40. Commuter Rail Service Between Major
Northeastern Cities
Trains
Daily
Average
Rush Hour
Travel Time
Providence and Boston 37 1:15
Stamford and Manhattan 204 0:50
Wilmington and
Philadelphia 37 0:48
Baltimore and Washington 76 0:57
Begin development of new express
commuter rail service between Providence
and Boston and expanded intercity rail
service.
Responses
Spearhead the development of a new
app-based Rhody Pass ticket option
that reduces fares.

41. Rhode Island
Competes
Rhode Island
Innovates
Rhode Island
Acts

42. Rhode Island lacks a high-level
business-civic organization that
can deliver decisively on
transformative initiatives.
Partnership
for
RI
Response

43. January 19th, 2015
#innovateRI
Rhode Island Innovates
Metropolitan Policy Program