The document provides an overview of four pillars for economic growth and job creation in Washington: talent and workforce, investment and entrepreneurship, infrastructure and regulations, and international business. It summarizes challenges and opportunities in each area, and outlines specific policy priorities around developing skills, fostering innovation, improving infrastructure, and growing exports to accelerate job creation in the state.

1. Four Pillars for Economic Growth
and Job Creation
Making it in Washington
February 1, 2012
Egils Milbergs
Executive Director
Washington Economic Development Commission
www.wedc.wa.gov

2. Commission Members

3. Recovery: Non-farm Employment
Monthly difference with start of recession (Q4 2007)
50
0
Difference with Initial Period Employment
(Thousands of Workers)
-50
-100
-150
-200
-208.1
2001 Recession (3 quarters) Since Q4 2007
-250
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Months of Recovery
Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics

4. Non-farm Employment
Seattle-Bellevue-Tacoma Metropolitan Area
1,500
Line indicates employment level in April 2008 (recent max)
1,480
1,460
-71.2
1,440
-118.9
1,420
1,400
1,380
1,360
1,340
Apr-08
Apr-09
Apr-10
Apr-11
Aug-07
Aug-08
Aug-09
Aug-10
Aug-11
Dec-07
Feb-08
Dec-08
Feb-09
Dec-09
Feb-10
Dec-10
Feb-11
Dec-11
Oct-07
Jun-08
Oct-08
Jun-09
Oct-09
Jun-10
Oct-10
Jun-11
Oct-11
Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics

5. Key Performance Comparisons
(by range, state rank and trend)
Washington’s Rank
Real per capita GDP, 2010 #14 $29,318 $45,464 $63,090 AK, DE, CT
Non-farm employment 1.8% ND, OK, UT
#11 -0.8% 4.9%
growth, Nov ‘11 3mma
Per capita personal
#14 $31,046 $43,564 $54,877 CT, MA, NJ
income, 2010 (current USD)
Gini Coefficient, #19 0.499 0.442 0.411 UT, AK, NH
2005-2009 (Scale in reverse)
Computer and
mathematical occupations, #3 0.8% 4.0% 5.1% VA, MD, WA
as % total workforce, 2010
(More than double 2005)
Patents (all types) per 100k #2 86 VT, WA, CA
4.6
residents WEDC 1.4
106.8
5

6. Non-farm Absolute Gains and Losses, Year-over-Year
Seattle-Bellevue-Tacoma Metropolitan Area, November 2011 (1000s workers)
Largest Gains
Transportation Equipment Mfg 8.63
Computer Systems Design and Related Services 3.73
Software Publishers 1.83
Architectural, Engineering and Related Services 1.77
Administrative and Support Services 1.30
Air Transportation -0.03
Largest Losses
Truck Transportation -0.33
Accounting, Tax Preparation, Bookkeeping and Payroll -0.33
Insurance Carriers and Related Activities -0.33
Credit Intermediation and Related Activities -0.63
Data source: Washington State Employment Security Department.

7. The Good and the Bad
Reasons for Optimism Reasons for Pessimism
• Young, connected, smart people • Global uncertainty
• Strong anchor companies: • Long term unemployed
aerospace, food, information • Skills mismatch
technology, medical, non-profit • Short on engineering talent
• Intellectual property hotspot • Underperforming schools
• Attractive place to live • Poor transport infrastructure
• No income tax • Lagging regions
• Pacific Rim location • Income disparity
• Potential defense opportunities • Cost/complexity to start a new
• Growing entrepreneurial sector business.
• Abundant energy sources
WEDC 1.4 7

8. To accelerate job creation, WA must make
progress on four dimensions
Emphasize career transition, access to learning
Intellect resources and the skills that employers need.
Create innovation ecosystem to foster
Investment new products, start-ups and manufacturing.
Design a 21st century infrastructure, an efficient
Infrastructure regulatory system and align to regional objectives.
International Grow the global presence of Washington’s business.
WEDC 1.4 8

9. Policy Specifics Around the Four Pillars
TALENT and INVESTMENT INFRASTRUCTURE INTERNATIONAL
WORKFORCE and and REGULATIONS BUSINES
ENTREPRENEURSHIP (Exports)
1. Channel talent 1. Assess economic
pipeline to 1. Recruit STARs development 1. Optimize export
industry needs research teams outcomes. services to SMEs
2. Shift focus of UI 2. Provide 2. Create Lean 2. Modernize
to support new operational funds Institute for transportation
career prep. for IPZs regulatory infrastructure for
efficiency freight mobility
3. Retain foreign 3. Turn on FDI
student 3. Align infrastructure 3. Intensify
graduates 4. Enhance tax policy investments to innovation
to close gaps in local priorities collaboration in the
4. Navigate career commercialization Pacific Northwest.
choices with 4. Pilot self financing
personalized of collaborative
information innovation.
SOURCE: Statement of Priorities for Kick-starting Job Creation, Washington Economic Development Commission, Nov 22 , 2011
WEDC 1.4 9

10. Workforce Challenge
Prof
Prof
Technical
Technical
Unskilled
Unskilled
WA Economic Development Commission 10

11. Washington STAR Researchers
Smart Grid
UW
WSU – BSEL Center for Bioproducts and Bioenergy
Hugh Hillhouse
Michael Hochberg Birgitte Ahring
Daniel Kirschen
WSU
Chen-Ching Liu

12. Faces of Emerging Industries
Entrepreneurs-in-Residence
Lars Johansson Henry Berg David Kaplan Lewis Rumpler Kevin Petersen Chris Leyerle
Ronald Berenson Stephanie Amoss David Croniser Bryan Zetlan Karen Fleckner
Terri Butler Ken Myer Thomas Schulte Peter Quinn Jeff Canin

13. Startup Weekend
WA Economic Development Commission 13

14. Opportunities in Defense Technology
191,000 jobs
Whidbey Island $12.2 billion in output
Naval Air
$10.5 billion in labor income
Naval Station $5.2 billion in defense contracts
Naval Submarine Everett
Base Bangor Spokane
Fairchild AFB
US Coast Guard
Intelligence, Surveillance, and Recon
Special forces and special operations
WA Nat’l Guard Network-centric operations
Puget Sound Cyber security
Naval Shipyard Composite materials
Joint Base  Unmanned systems – both air and sea
Lewis McChord
 Energy efficiency
Madigan Medical Center
Environmental stewardship
Health care for veterans
US Army, Yakima
US Marine Corps
14

15. Transforming Infrastructure
Leave oil
before it
leaves us!
Post “ICE” Age?
Internal Combustion Engine
WA Economic Development Commission 15
15

16. Innovation Partnership Zones
Bellingham Innovation Zone
Aerospace Convergence Zone
North Olympic IPZ
Tri-Cities Research District
South Lake Union Life Science IPZ
Spokane University District IPZ
Bothell Biomedical Manufacturing
Corridor
Central Washington Resource
Energy Collaborative
Grays Harbor Sustainable
Industries
Pullman –Clean Tech Industries
Walla Walla IPZ
Interactive Media and Digital Arts
King County Financial Services
Collaborative
Urban Clean Water Technology
Zone

17. Washington’s Global
Health Ecosystem
WA Economic Development Commission 17

18. •University based research centers
Innovation •National Labs (gov’t)
•Corporate Labs
Ecosystem R&D Assets •Inventors (patent owners)
Not just ingredients but the •Entrepreneurs
relationships
•Start-ups
T •Incubators
•Technology Development Initiatives
Transformers
•Industry University Collaborations
•Government Policies/Programs/Incentives
•Venture Capital
S •Angel/Seed Networks
•Corporate R&D
T Funders
•IPOs
•Regional Innovation Clusters
•Talent pool
S Support
•Professional (Legal, Accounting, HR , Mentors)
•Marketing and Branding
WA Economic Development Commission Adapted from Navi Radjou, Forrester Research
18

19. Innovation Ecosystems Evolve
Transformational
Innovation
Growth
Triggers
Emerging
Many nodes
Dense linkages
Accelerated
Talent Region to Region
Nascent collaboration
Next generation
IPZs Many linkages
STARS Attraction of firms
Few to many firms
EIRs Fast growth
Patents Some linkages
None or few firms
Incubators Growth potential
Tax
R&D
Incentives
Gap
Funding SBIR
WA Economic Development Commission 19

21. Fiscal constraints require new priorities
Some difficult choices for economic development
Jobs
Reduce Create
Income
Distribution
Economic
Development
Tough Per capita GDP
Outcomes
Programs Trade-offs
growth
Eliminate Invest Quality of life
Tax revenues
WEDC 1.4 21

22. Current Economic Development System
Many pieces, but how do they work together?
Governor’s Office
Dept. of
Strategic Reserve Account
Defense
Dept. of Social &
Dept of Commerce WSDOT Dept. of Agriculture Federal
Health Service
18 Programs 2 Programs 5 Programs Labs
3 Programs
Federal Programs
Employment SBA
OSPI /Early Workforce Training
Security WA SBCTC
Learning Board
Department 10 Programs
3Programs 2 Programs
15 Programs Dept. of
Agriculture
Washington State Recreation &
University of WA Innovate WA
University Conservation Office
6 Programs 8 Programs
5 Programs 14 Programs SBIR/STTR
36 other state economic programs
Dept of
Commerce
Business and Local Economic Development Organizations
Associate Economic Innovation
City & County
Development Development Trade Associations Partnership
Government
Organizations Councils Zones
WEDC 1.4 22

23. Pacific Northwest is an innovation powerhouse
PNWER Region (GDP/Pop.)
State/Prov. GDP* Population
Wash. 322,778 6,549,224
Alberta 291,300 3,735,086
B.C. 191,006 4,551,853
Oregon 161,573 3,782,991
Idaho 52,747 1,545,801
Alaska 47,912 686,293
Sask. 41,296 1,049,701
Montana 29,885 974,989
If PNWER were a NW Terr. 4,124 41,464
If PNWER were a
separate country,
separate country,th in Yukon 2,026 34,157
it would rank 14
total 14th
it would rankGDP in Total 1,144,647 22,901,559
total GDP
*2009 population & GDP in $US Million
Data provided by PNWER – Pacific Northwest Economic Region
WA Economic Development Commission 23

24. WA Economic Development Commission 24