My presentation to the NC Technology Association\'s annual leadership conference on how North Carolina compares to other states on innovation and technology.

1. Dare to CompareHow does NC Stack Up? Presentation to the NC Technology Association Regional Technology Strategies Carrboro, NC June 17, 2011

2. Topics The North Carolina Economy yesterday & today The Rankings Systems North Carolina by Category Case Studies in State Technology Development Policy A Policy Comment Tangent 2

3. The North Carolina Economy in 1970 The Big 3 Textiles Tobacco Furniture The Big Three accounted for: 2/3rds of Manufacturing Employment 1/4qtr of Total Employment And they lost by 2007 Textiles 2/3rds of Manufacturing Employment Furniture 2/3rds of Manufacturing Employment Tobacco 60% of Manufacturing Employment 3

4. The North Carolina Economy in 2007 The New Big 5 represent 17% of NC GSP Technology Pharmaceuticals Financial Services Food Processing Automotive Vehicle Parts NC in the Connected Age (Walden, 2008) Fastest growing occupation 1970-2005 – Professional & Scientific Workers Per capita income in NC grew faster than US as a whole Percent of population with college degrees approached national average 4

5. But People Keep Showing Up! 5

6. North Carolina Economy: Where next? Walden suggests Tourism, retiree migration Port development Air travel and Jack Kasarda’sAerotroplis Others Aerospace with Spirit, Boeing and others Military related industry Green industries (the biotech of the 2010s) What will our panelists say? 6

7. Comparing States: Information Technology & Innovation Foundation (ITIF) The 2010 State New Economy Index Knowledge Jobs Globalization Economic Dynamism The Digital Economy Innovation Capacity 7 NorthCarolina2010 = 24

8. Comparing States: Milken Institute State Technology & Science Index 2010 Human Capital Investment R&D Inputs Risk Capital and Entrepreneurial Infrastructure Technology and Science Work Force Technology Concentration and Dynamism 8 NorthCarolina2010 = 13

9. Comparing States: National Science Board Science & Engineering Indicators 2010 Elementary/Secondary & Higher Education Workforce Financial R&D Inputs R&D Outputs Science & Technology in the Economy 9

10. Comparing States: Conexus Indiana 2011 Manufacturing & Logistics Report Manufacturing Health Logistics Health Diversification Global Reach Venture Capital PC Productivity & Innovation Tax Climate Benefit Costs Human Capital 10 NorthCarolina2010 = B

11. Milken Institute Rankings 11 North Carolina by Category

12. ITIF Rankings 12 North Carolina by Category

13. Positive Rankings (NC State Rank) 13

14. Negative Rankings (NC State Rank) 14

15. What Does This Tell Us? As the John Prine songs says “Pretty good, not bad, can’t complain” Can you compare the rankings? What do they think is important? Do they place the actual measures into the same categories? Are they measuring inputs or outputs? What are the politics involved? What do we do with it What do you have control over? Are differences significant? 15

16. Case Studies Colorado – ranks highly (3rd Milken, 9th ITIF, “A” Conexus Indiana) Kansas – ranks middle (23rd Milken, 26th ITIF, “C” ConexusIndiana) Kentucky – ranks low (47th Milken, 39th ITIF, “D” Conexus Indiana) 16

17. Let’s Take a Little Tangent 17

18. Innovation and Business Size 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. 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. 18

19. The Numbers Battle Politicians proclaim that “90% (or 80% or 92%) of net new jobs are created by small entrepreneurial firms.” Birch originally said 80-85%. The Bureau of Labor Statistics completed the first rigorous analysis of size and net new job growth and they found… 19

20. Net Job Growth 1993-2003 Small firms (1-99 employees) created 47% Mid-size firms (100-499) created 17% Large firms (500+) created 36% Recent research tends to say that the age of the firm is the most important characteristic in explaining net job growth 20

21. But What is Really Important? “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 Small and large firms have a symbiotic relationship 21

22. Regional Technology Strategies, Inc. Chris Beacham - cbeacham@rtsinc.org http://www.rtsinc.org