SSTI Digest

Uncommon innovation is more likely to be found in high density areas, according to recent research. An article by Enrico Berkes of The Ohio State University and Ruben Gaetani of the University of Toronto, found that high-density areas boast more unusual combinations of prior knowledge, often across technologically distant fields. Their results indicate that geography affects innovation, as high-density areas produce more diverse, original research (i.e. unconventionality) while low-density areas are more likely to produce research within specific clusters.

While the longest economic expansion in modern times in the U.S. continues and fears of a nationwide recession have subsided, there are signs that growth is slowing, and some states may be at risk for a recession. According to projections reported last month from the Federal Reserve Bank of Philadelphia, several states’ economies are forecasted to slide into varying degrees of contraction within the next six months — the most since the financial crisis over a decade ago.

Education, infrastructure and budgets are all on the minds of the governors in this latest review of state of the state addresses. With more than half the governors having completed their outlooks by the end of January, this week we review the speeches through the end of month and find repeated attention to education, energy and budgeting issues, with a statewide lottery being introduced in Alaska, new energy legislation in Illinois, and South Carolina also proposed a funding increase for state universities that do not raise in-state tuition rates. This is the fifth installment of our Tech Talkin’ Govs series, where we comb through the addresses and bring you news of innovation initiatives in excerpts of the governors’ words.

Alaska

Gov. Mike Dunleavy focused on addressing the state’s budget problems:

The old adage, “we become/are what we measure” can push behavior of individuals and organizations into unanticipated negative space when the selected key performance indicators take on too much importance — sometimes amazingly negative space that becomes common practice and potentially damaging for the entire industry.  Counting life science startups created through the licensing work of technology transfer offices (TTOs) at the nation’s research universities appears to be the latest example of KPI (key performance indicator) pursuit potentially going bad, based on a recent Nature Biotechnology article.

The Federal Communications Commission (FCC) announced last week that it has approved the Rural Digital Opportunity Fund which will provide $20.4 billion over two phases to help expand broadband networks throughout rural communities. Phase one will provide $16 billion for use in communities that are currently unserved by broadband services with minimal download speeds of 25 megabits per second (Mbps) and 3 Mbps upload speeds. The remaining funds will be used in phase two which will target underserved communities after a more extensive and focused analysis has been completed to better define “underserved” areas.

A recent survey of millennials by professional services firm Ernst and Young (EY) provides insights into how the generation is aging — and bucking some long-held assumptions. Evaluating the generation’s trends in living arrangements, lifestyle and career preferences, financial health, and social perspectives, EY found that some of the assumptions about millennials are not holding.

What holds people back from starting a business? How does lifting financial constraints help promote entrepreneurship? A recent article by Vyacheslav Mikhed of the Federal Reserve Bank of Philadelphia Consumer Finance Institute,  Sahil Raina of the University of Alberta, and Barry Scholnick of University of Alberta and Federal Reserve Bank of Philadelphia Consumer Finance Institute, explores these questions, and how lifting these economic constraints affected entrepreneurial and self-employed business ventures in Canada from 2002-2016. By comparing lottery winnings to new business endeavors, they found that entrepreneurs face greater financial constraint when starting a business than those who are self-employed.

Building on SSTI’s recent analysis of county-level GDP by industry, this edition moves beyond a single year and examines the changes in real — adjusted for inflation — county GDP and the changes in industry-specific contributions to county GDP for the 10-year period from 2009 to 2018. As shown in the interactive map below, the total 10-year growth rate for counties averaged approximately 21 percent.

All 10 of the counties that experienced the greatest percentage increases in total GDP between 2009 and 2018 are in Texas. The increases for these top 10 counties ranged from 709 percent to more than 3000 percent. The growth in most of these counties was driven by dramatic increases in the mining industry and related activities such as transportation and utilities.

The Federal and State Technology Partnership (FAST) is intended to increase innovation-based small business awareness and participation in the SBIR and STTR programs in places and populations that are underrepresented in the programs’ award portfolios.  Through FAST, the Small Business Administration (SBA) makes small, matching one-year awards to state programs on a competitive basis. The most recent class of 24 FAST winners was announced in August 2019.  First funded in 2001, FAST has become the cornerstone for funding many states’ initiatives intended to help SBIR applicants become involved in the federal SBIR/STTR programs. But does the program work?

A new, independent study prepared by Summit Consulting and funded by the SBA, suggests favorable findings along several performance indicators for FAST awards made during the FY 2015-2017 period (old enough that SBIR outcomes could be assessed but young enough that most of the companies are still trackable).

The economy, workforce and climate change continue to surface in governors' state of the state addresses. While today’s strong economy allows most governors to reflect on how the states have grown, preparing for the next downturn continues to be a point of concern. As SSTI continues to review the addresses for news of new innovation-related initiatives, we find Delaware proposing increased investment in its economic infrastructure, while renewable energy standards are at play in states like Delaware, Hawaii, and Maine. And Wisconsin’s governor pledged to create a commission to focus on rural prosperity and another to consider redistricting across the state. Those and more innovation initiatives are excerpted from the governors’ remarks below.

Delaware

Gov. John Carney outlined his priorities for strengthening Delaware’s economy as he starts his fourth year as governor:

More states are employing different efforts to boost their workforce and to seek the best solutions to workforce dilemmas. The National Governors Association (NGA) recognized that governors are exploring ways to guide development and expansion of youth apprenticeship programs and has issued a white paper that explores three strategies governors can use to expand on such programs. In a separate effort, the National Skills Coalition has selected coalitions from 10 new states to join SkillSPAN, a national network of state coalitions expanding access to skills training through state policy changes that support all workers.

A recent report from the Organization for Economic Cooperation and Development (OECD) focuses on increasing participation in entrepreneurship from underrepresented and disadvantaged groups such as women, immigrants, youth, seniors, the unemployed, and people with disabilities. The Missing Entrepreneurs 2019 report notes that addressing market and institutional failures that prevent equal opportunities in entrepreneurship “is an important requirement for achieving a new type of growth that is more inclusive, sustainable and people-centered.” The report recommends policies to increase opportunities for these groups, such as including entrepreneurship models in science-based programs in higher education to increase awareness about the potential of entrepreneurship for students, especially young women.