WA Economic Development Commission 1

Innovation 2.0A Winning Strategy for Driving Growth

A Policy Reset in Time of Fiscal Constraint

Prepared for:Washington Economic Development Association

Winter Legislative ConferenceFebruary 15, 2011

Egils Milbergs Executive Director

Washington Economic Development Commissionwww.wedc.wa.gov

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SummaryThis generation’s “Sputnik moment.” New global and national economic realities challenge Washington State to start, nurture and transform industries driven by innovation. Innovation has been a focus of Washington’s high-tech industries. The focus needs to be broadened to all people, industries and geographies of the state to expand our overall ability to provide high value jobs.

Washington possesses substantial assets and initiatives related to innovation, but the state is far from reaching its potential. A comprehensive economic growth strategy focused on innovation and catalyzing “bottom-up” collaboration among industries, universities, laboratories, regions, etc., can transform Washington into a model 21st century innovation economy.

“one small ball in the air”

19571985

2011Sputnik Moments

“this is our generations’ Sputnik moment”

President’s Commission on Industrial Competitiveness

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The World is Changing“not your father’s economy”

Innovation

Our Goal: Make Washington the most attractive, creative and fertile environment for innovation in the world by 2020

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2010 New Economy Index Overall Scores

Source: ITIF

26 indicators in five categories:1. Knowledge Jobs2. Globalization3. Economic Dynamism4. Digital Economy5. Innovation Capacity

Soaring R&D in China

Knowledge-based Competition China is now the world’s second largest economy

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Peak to trough job losses

1981-82:

2.9% of labor force

This time:

5.5% of labor force

We are in tough hole ……..

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The Great Reset

FROM• Public Sector Jobs• Shovel Ready• Expand Safety Net• Consumption• Debt• Competing Regions• Top-down macro

strategies

TO• Private Sector Jobs• Innovation• Upgrading Skills• Investment• Exports• Collaborating Regions • Bottom-up cluster

strategies

WEDC Innovation Strategy

World Greatest Innovation Ecosystem

Business Performance

Public Impact

Talent & Workforce

Investment & Entrepreneurship Infrastructure

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Regional Innovation

Clusters

EducationResearch

Start-ups

Associations

Non-ProfitsDefenseMilitary

Gov’t

Capital

Business

Workforce

Innovation Clusters Matter• New industries and JOBS• Grow faster• Pay higher wages• More spin-off and start-up

opportunities• Offset advantages of low

wage competition• Attract talent and

investment• Solve social, energy,

environmental problems• Maintain defense and

homeland security

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Defense Technology

Medical Devices

Value-AddFood

Freight Mobility

Electric Car

Environment Technology

NanoPhotonics

Global Health

Health Services

Bio-Fuels

Advanced Manufacturing

Cloud Computing,

Data Centers

Smart GridClean Tech

Advanced Materials

Marine Technology

Wine, Water

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Designated Innovation Partnership Zones Bellingham Innovation Zone

Aerospace Convergence Zone

Sequim, North Olympic Innovation Partnership Zone

Tri-Cities Research District

South Lake Union Life Science Innovation Partnership Zone

Spokane University District Innovation Partnership Zone

Bothell Biomedical Manufacturing Corridor

Central Washington Resource Energy Collaborative

Grays Harbor Sustainable Industries

Pullman Innovation Partnership

Discovery Corridor Innovation Zone: Steinmueller Innovation Park

Walla Walla Innovation Partnership Zone

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Whidbey Island Naval Air

Puget Sound Naval Shipyard

Joint Base Lewis McChord

Madigan Medical Center

Naval Submarine Base Bangor Spokane

Fairchild AFB US Coast Guard

WA Nat’l Guard

US Army, YakimaUS Marine Corps

Major WA Military Installations

191,000 jobs$12.2 billion in output

$10.5 billion in labor income$5.2 billion in defense contracts

Intelligence, Surveillance, and ReconSpecial forces and special operations Network-centric operations Cyber security Composite materials Unmanned systems – both air and sea Energy efficiency and alternativesHealth care for veterans

Naval Station Everett

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Key Policy Strategies

New Pathways for Learning

Accelerate Commercialization

Modernize Infrastructure &

Regulations

Seize Global Markets

Network Regional Clusters

Brand “Decade of Innovation”

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TALENT: New Pathways for Learning

• Protect training capacity for high demand occupations

• Increase production of science & engineering and innovation graduates

• Expand use of on-line education

• Reduce K-12 drop-out rate

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INVESTMENT: Accelerate Commercialization

• Compete aggressively for Federal R&D funds

• Double recruitment of STARS and EIRs

• Double start-ups by access to expertise and entrepreneurial capital

• Make permanent R&D tax credit

• Clean Energy Public-Private Partnership

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Infrastructure & Regulations• Expand local infrastructure financing

tools (e.g. TIF)• Define infrastructure to include

“intangible” capital• Build-out broadband(wired & wireless)• Create mechanism for self-financing of

industry clusters• Reduce regulatory barriers and

uncertainty

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Seize Global Markets• Implement Governor’s

export assistance initiative• Invest in freight mobility &

infrastructure• Focus trade promotion on

competitive clusters, not national markets

• Improve foreign market intelligence and on-line tools

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World’s Greatest Innovation ParkCollaboration across regional boundaries

• Provide operational funding for IPZs

• Strengthen links with defense and mfg. sectors

• Pursue Federal funding of regional innovation clusters

• Create mechanism for self-financing of industry clusters

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Brand “Decade of Innovation”

• Utilize media to promote how WA innovates

• Leverage the 2012 World’s Fair Anniversary

• Define metrics to track trends, inputs & outcomes

• Launch innovation “X” PrizeThe Next

Fifty

PNWER Region (GDP/Pop.) State/Prov. GDP* Population

Wash. 311,270 6,468,424Alberta 259,900 3,585,000 Oregon 158,233 3,790,060B.C. 150,412 4,310,305Idaho 51,149 1,523,816 Sask. 40,340 1,008,697Alaska 44,517 686,293Montana 34,253 967,440 Yukon 1,767 32,714Total 1,051,841 22,372,731

*2007 population & GDP in $US Million

Innovation ecosystem is even bigger….

If Pacific Northwest Economic Region were a separate country, it would rank

13th in total GDP

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Setting Priorities…..

Reduce

Create

Eliminate Invest

ToughChoices

Economic Development

Programs

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Economic Development

Strategy

• Collaborating for extraordinary results

Local

State

• Aligning hundreds of programs and billions of $$

FederalFederal

Private Sector

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The risks inherent to starting a thriving enterprise in today’s troubled waters are immense, but the rewards have never been greater.

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Thank You