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Notes from Innovation Policyworks
This month, I want to share a blog written by a dear friend of mine, Kerem Durdag. In case you don't have the priviledge of knowing Kerem, he's a brilliant thinker, leader and serial entrepreneur, and, by the way, a Muslim and an immigrant. Born in Turkey, reared in Pakistan, and educated in the US, Kerem's most recent blog is a must read, because it accurately captures the insanity of the current public discourse about Islam and Muslims.

I share Kerem's passion about this topic for several reasons. First, diversity is one of the most important predictors of innovation and creativity, and is therefore essential to continued economic growth. Second, freedom, including the freedom to practice one's own religion (or lack thereof), is also essential to innovation and creativity - see Deming's quote to the right. Lastly, the fear of change that underlies a large amount of the current rhetoric, is exactly the thing we need to change the most. There is no going back....only forward. Thanks, Kerem, for the reminder of what it means to be an American.

The World's Most Innovative Universities

Many people think that it's hard to measure innovation, and so they avoid using quantitative metrics to assess their progress. Reuters recently identified ten different metrics to measure the innovativeness of the world's universities, including academic measures like papers published, and patents filed, among others. The top ten universities in this list are: Stanford, MIT, Harvard, University of Washington, University of Michigan, Northwestern, University of Texas and University of Wisconsin. The most innovative university in Europe, Imperial College London, ranked eleventh. 
Big Business Dominates State Economic Development Incentives

Even as we in the innovation and entrepreneurship community document the economic growth than emanates from young businesses, the traditional economic developers continue to shower large businesses with significant incentives to affect their location decisions. A new report from Good Jobs First shows that 90 percent of the dollars associated with 4200 economic development incentives studied went to big business, with a value of more that $3.2 billion. Good Jobs First calls this "wasteful and ineffective economic development policy" and recommends that states narrow eligibility for these incentives to exclude large recipients. An alternative is to put caps on dollars per deal, dollars per job and dollars per company. Read MORE.
In a related post, Alan Greenblatt, writes about the new privatized organizations that now control incentives and traditional economic development in many states. Hailed only a few years ago as the solution for economic development, it now appears that in some states these organizations have created the same, large incentive deals as their public brethren, but with far less oversight and accountability. And, there is an increasing suggestion that privatization allows favoritism and sweetheart deals. JobsOhio, Wisconsin Economic Development Corp, and potentially the New York Development Corporation are all under scrutiny at this writing.
There is some good news on this front, with new disclosure rules coming into effect  for fiscal years that start after Dec 15, 2015, mandated by the Government Accounting Standards Board (GASB). 
Texas Wind Energy Soars

One day in October, Texas hit a new record for wind power, with 37 percent of its grid-wide demand for electricity was met with wind power. On that day, wind energy usage exceeded 11,400 megawatts, with 67 percent from wind farms in West Texas and the Texas panhandle. And, coastal Texas wind farms, which produce at different times than the ones in West Texas, enable the grid managers to balance the grid's operations. It's ironic that a state so well known for oil should become a leader in wind. MORE.

Prescription for a Vibrant Entrepreneurial Ecosystem

Connections among various players, including entrepreneurs, support organizations and others, creates an ecosystem that makes a difference to the effectiveness of innovation and entrepreneurship as economic drivers. A new Kauffman Foundation study of 355 US metro areas shows the factors with a positive correlation to a strong ecosystem. Their guidelines:
  • Build on existing ingredients, don't copy another city.
  • Convene entrepreneurs and organizations to facilitate learning.
  • Encourage diverse participation, including women, minorities and immigrants.
  • Strengthen local education and increase graduation rates
  • Listen to local entrepreneurs.
  • Streamline business licensing and permitting.
  • Simplify local tax codes.
  • Champion local entrepreneurs and the ecosystem in general.
  • Measure, measure, measure.

Large Companies Game H-1B Visa Program

One way to get highly qualified immigrants to the US in through the H-1B Visa program. However, a new report in the New York Times finds that since the H-1B visas are given out through a lottery, giant global outsourcing firms flood the system with applications, significantly increasing their chances of success. The outsourcing firms use the system to bring their employees to the US for large contracts that take work away from American businesses. Of the 20 companies that received the most H-1B visas in 2014, 13 were global outsourcing operations. These include Tata, Infosys and Wipro, all based in India, Cognizant and Accenture. MORE.

Income Disparity and Internet Adoption

I attended a recent discussion about Internet speeds in Maine, and while there is a demonstrable dearth of high-speed Internet, we also talked about the issue of demand for Internet services. New census data sheds light on this problem, showing that income has the biggest effect on Internet adoption.  While 92.1 percent of households earning $75,000 or more had a broadband subscription, only 46.3 percent of households earning under $10,000 a year had one.  The interesting question is: which way does the causality go? Are folks low income at least partially because they lack Internet access? To what extent is this correlated with low availability of (affordable) broadband in regions that also are poor, e.g., rural areas? MORE

Good News on Entrepreneurship Education

A 2015 study conducted by Junior Achievement USA found that entrepreneurial education efforts at the state level have increased substantially since 2009. Whereas in 2009, only 19 states reported K-12 standards, guidelines or proficiencies in entrepreneurship, 42 reported them in 2015. Only 5 states required that entrepreneurship education courses be offered in high school in 2009; by 2015 this was the law in 18 states, mostly concentrated in the southwest and Midwest. MORE.

In This Issue - December 2015

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Quote of the Month 
"The source of innovation is freedom. All we have - new knowledge, invention - comes from freedom. Discoveries and new knowledge come from freedom. When somebody is responsible only to himself, [has] only himself to satisfy, then you'll have invention, new thought, now product, new design, new ideas."

Advanced Technologies,
Manufacturing and Innovation

Deloitte  and the Council on Competitiveness have just released an important new study called the Advanced Technologies Initiative. Read it HERE. Among their findings:
"The US Manufacturing industry, increasingly propelled by advanced technologies, comprises a large portion of the economy, and drives economic prosperity through higher levels of productivity, output, high value exports and higher income jobs than other industries.
"21st century manufacturing competitiveness has fully converged the digital and physical worlds where advanced hardware combines with advanced software, sensors, big data and analytics results in smarter products, processes, and more closely connected customers, suppliers and manufacturers. "

Surprising Stats on Main Street Business

The Kauffman Foundation's new look at Main Street focuses on established small businesses (more than five years old, with less than 50 employees). Among their surprising findings:
* High growth in micro-enterprises (more than 5 years old, less than 10 employees), 3.6 percent from 2014-2015, compared to 1.2 percent growth overall;

* Decline overall in small business ownership from 7.8 percent to 6 percent.

* Men are more likely to be owners (8.2 percent compared to 3.9 percent).

* Twenty percent of all small businesses owned by immigrants, and 28 percent owned by African-Americans, Latinos or Asians.

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Innovation Policyworks enables economic development officials at state, regional and local levels make better, data-driven decisions by providing expert research, analysis and recommendations. Our clients see innovation and entrepreneurship as critical elements of their economic development strategy, and are developing new programs or policies, and/or evaluating existing ones. 

Dr. Catherine S. Renault has been delivering innovation-based economic development results in rural states for 25 years, most recently as science advisor and Director of the Office of Innovation for the State of Maine. Cathy is starting a new project with the Newton-Needham Chamber of Commerce to develop a vision and plan for the N2 Innovation District,  in partnership with Camoin Associates. 
For a list of selected projects, see www.innovationpolicyworks.com/projects.