economic impact

This article, written by Leonardo Vasquez and reproduced from the April 2024 issue of NBER Digest, is a summary of NBER Working Paper 31948, prepared by Luisa Gagliardi, Enrico Moretti, and Michael Seranfelli.

The Maryland Technology Development Corporation (TEDCO), created by the Maryland General Assembly in 1998 to facilitate the transfer and commercialization of technology from research universities and federal labs and to help create and grow technology-based businesses, has created nearly $2.7 billion in statewide economic activity as of 2023. Their recently published independent economic impact study shows details of the impacts, as determined by the study authors at the University of Baltimore's Jacob France Institute.

South Carolina Research Authority (SCRA), a public, non-profit corporation chartered in 1983 by the State of South Carolina , had over a $1.19 billion impact on the state’s economy in 2023. Their recently published annual report shows what’s included in the billion-plus-dollar impact, determined by a study conducted at the University of South Carolina Darla Moore School of Business. SCRA provides funding and support to accelerate the growth of academic startups; lab and administrative workspaces; facilitation and funding for partnerships between and among industry, startups, and academic institutions; assistance and funding for the relocation of technology-based companies to South Carolina; and coaching and funding for startups that may also receive investments from its affiliate, SC Launch Inc.

The administration recently announced that seven regional clean hydrogen hubs have been selected to receive $7 billion in Bipartisan Infrastructure Law funding. The hubs are located in California, Delaware, Illinois, Indiana, Michigan, Minnesota, Montana, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Washington and West Virginia.

Every year, inadequate childcare causes the US economy to take a $122B hit, according to a study by an economist at the University of Pennsylvania. This economic hit affects everyone—workers, businesses, and taxpayers. Parents lose income when they miss work to take care of a child. Businesses suffer from lower productivity when employees are absent. Taxpayers end up paying more when parents leave the workforce and generate fewer tax revenues. Future economic growth slows when tax revenues decline.

If a recent forecast from McKinsey & Company is correct, climate change isn’t the only rough ride ahead over the next decade for regional and national economies.

The NIST (National Institute of Standards and Technology) Manufacturing Extension Partnership (MEP), a national public-private partnership initiative within the US. Department of Commerce dedicated to serving small and medium-sized manufacturers through 51 state centers, including Puerto Rico, recently released its Fiscal Year (FY) 2022 Client Impacts data following a survey of more than 9,000 manufacturing-related clients and businesses.  The MEP network reported assisting U.S. manufacturers in achieving the following: creating or retaining over 116,700 jobs; saving $2.5 billion in costs; generating $18.8 billion in new or retained sales; and, producing $6.4 billion in new client investments.

A working paper published in the National Bureau of Economic Research asked the question, “Do large firms produce more valuable inventions, and if so, why?” An excerpt of an analysis of the paper that appeared in the November 2022 issue of the NBER Digest follows with additional consideration from SSTI Vice President Mark Skinner on its implications for technology-based economic development.

The Georgia Research Alliance (GRA) — a nonprofit working to grow Georgia’s economy through supporting research at state universities — recently announced that its portfolio of companies had raised more than over $2 billion in venture capital. These startups also had a high survival rate — 88% were still in business four years after launch, outpacing the national average of 44%. Along with this announcement, GRA released 2021 data on their economic impact on the state, demonstrating growth from the previous year.

A research team including members from MIT and the Federal Reserve Board assessed the Paycheck Protection Program (PPP) to determine if the initiative was able to keep businesses from closing and people from becoming unemployed. The authors present the highlight finding, which has been covered in multiple publications, as indicating that only about 23-34 percent of PPP funds went to workers who would have lost their jobs otherwise. This rate of effectiveness implies a cost of $170,000-$257,000 per job-year[1] of employment. The outcome seems surprising, given the program’s requirement that at least 60 percent of funds be spent on payroll. A dive into the results and policy implications bears lessons for future emergency program design.