SSTI Digest

The boost in federal R&D funds as a result of the 2009 stimulus package had a significant impact on local economic development, according to a new working paper from researchers at the University of Michigan. In “Local Fiscal Multiplier on R&D and Science Spending: Evidence from the American Recovery and Reinvestment Act” (ARRA), authors Yulia Chhabra, Margaret Levenstein, and Jason Owen-Smith look at changes in county-level employment in response to increased federal spending on R&D as a result of ARRA. The authors estimate causal effects of the ARRA R&D funding on local economic development, and find that, all else equal, every $1 million in new R&D spending due to the stimulus in a county led to 27 new jobs, with 25 of those being in the private sector. The authors estimate that the cost per each job-year was about $15,000, which is less than the reported costs of other types of federal stimulus programs.

Working with public and private-sector partners across the U.S., the EDA invested approximately $289.1 million in 815 locally-driven economic development projects in FY 2017, according to its most recent annual report. The report provides examples of the projects it funds in each state, to help show the breadth and diversity of the programs and projects it funds. It also provides an interactive map detailing the summary and case studies of investments for any given state or territory.

While the bulk of the grants were provided for Public Works and Economic Adjustment Assistance construction projects ($136.4 million), the EDA noted in the report that it has “worked hard to solidify our Regional Innovation Strategies (RIS) program to foster greater entrepreneurship all across America in both urban and rural communities.”

The White House Office of Management and Budget released Delivering Government Solutions in the 21st Century, a plan for reorganizing federal agencies. On topics related to innovation, the wide-ranging plan would make changes to education, workforce, economic development, small business and more. Some of the suggestions could advance with administrative actions only, while many will require congressional support. As with previous initial proposals from the administration, this document does not provide many of the details necessary to evaluate the real intention and opportunity of each proposal. The actual effects of implementation for many suggestions could range from reduced administrative overhead to funding reductions totaling billions of dollars, for example depending on the interpretation of “consolidate.” These four ideas from OMB have the greatest potential to impact support for innovation economies.

Real personal income — a measure of purchasing power that connects income to costs — has grown within states at an average rate of 1.5 percent per person since 2012, according to data from the Bureau of Economic Analysis. The average American’s experienced income growth, however, appears to vary wildly depending on location. A person’s state could mean experiencing as little as a 0.0 percent or as much as a 2.8 percent annual increase, while living in a metro area could mean losing 1.0 percent in annual income growth or gaining 3.4 percent relative to in-state peers living in non-metro areas. In terms of 2016 dollars, living in an average state’s metro area means an additional $4,169 in real person income.

The above figure displays these average year-over-year growth rates in real per capita income from 2012-2016. (The picklist at the top left controls the data displayed for the states, while options on the top right controls the data displayed for the top 100 metros.)

As part of the country’s single biggest investment in science in 40 years, the UK unveiled a new investment in UK talent and skills aimed at growing and attracting the best in science and innovation. Last week, UK business secretary Greg Clark outlined a £1.3 billion ($1.72 billion) investment for British universities and businesses to develop the next generation of entrepreneurs, innovators and scientific leaders. The money will help ensure the UK invests 2.4 percent of GDP in R&D by 2027 and “becomes the most innovative economy by 2030,” the government press release stated.

Clark also announced £900 million ($1.19 billion) to be disbursed over 11 years for the UK Research and Innovation Future Leaders Fellowship Scheme, with six funding competitions and at least 550 fellowships awarded over the next three years.

In an effort to move technologies into the commercial sector more quickly, Air Force Research Laboratory (AFRL) has introduced a one-stop shopping experience called Express Licensing. Interested innovators and entrepreneurs can visit a website featuring AFRL-developed technologies that are available for license and learn about pre-negotiated terms and pricing, eliminating the need for lengthy contract negotiations. The innovative approach was inspired by work done by the U.S. Navy, which has had success with this type of licensing model. 

There are currently 36 AFRL Materials and Manufacturing Directorate-developed technologies available for Express Licensing, with more expected to be added in the near future.

While many state startup capital ecosystems have a healthy density of early-stage startups, few states have developed strong late-stage ecosystems, according to a new report from PitchBook – 2Q 2018 PitchBook Analyst Note: VC Ecosystems. PitchBook researchers contend that one potential factor leading to these underdeveloped late-stage ecosystems is the limited number/size of exits coming from those ecosystems. They contend, however, that healthy early-stage startup density could indicate the potential for future growth in many state VC ecosystems, if those ecosystems increase the number of companies with exits. Via this new report, PitchBook outlines a proposed framework for the evaluation of venture ecosystems in the United States. The framework is comprised of three key indicators:

As economic development efforts try to keep up with changing demographics, many states, regions, metros, and other local governments face difficulties trying to cultivate, attract and retain a 21^st century workforce. Three recent reports look at the strategic steps that states and regions must play to create strong workforce development organizations.  While these reports, from the Urban Institute, the National Skills Coalition (NSC), and the Western Governors’ Association (WGA), look at broad workforce development strategies for public-sector agencies to employ, several states and cities have launched specific efforts to reimagine or strengthen their workforce development efforts.  

American Made Solar Challenge is seeking teams of creative individuals and entrepreneurs to compete for prize money and strategic support in accelerating ideas and solutions. In a three-part series of contests, $3 million will be awarded in cash prizes and up to $525,000 in vouchers, which can be used at national laboratories and other voucher facilities to develop, test and validate ideas in the energy marketplace.

The challenge is intended to accelerate the cycle of innovation from years to weeks, while creating partnerships connecting entrepreneurs to the private sector and the network of DOE’s national labs. The National Renewable Energy Laboratory (NREL) is the prize administrator of the challenges and is working with the U.S. Department of Energy on the contests. Another 16 national laboratories will be serving as technical partners, along with other fabrication and manufacturing facilities. The DOE can leverage last year’s Agreement for Commercializing Technology (ACT) to enable flexible financial arrangements between industry and national labs.

A new report from the U.S. Census Bureau shows that while postsecondary education enrollment has increased overall between 1955 and 2015, it has increased and decreased during this long-term period of increase, reflecting changes in the economy. In particular, the Great Recession of 2007 to 2009 influenced significant changes in American postsecondary education enrollment, according to the report.  The number of students enrolled in college in the U.S. increased during the recession, and then fell during the post-recession years of 2012-2015. However, from 2006 to 2011, total college enrollment grew by 3 million, contributing to the overall growth of postsecondary enrollment during the Great Recession period.

Other findings in the report detail additional changes in enrollment surrounding the recession, including: 

Part 1 of this series on SAFEs (simple agreements for future equity) focused on the investment vehicle and its pros and cons, and can be found here.

In this second article in a series on SAFEs, we examine how the investment contracts may be used by venture development organizations (VDOs), entrepreneurial support organizations, and other investment-focused economic development entities. These public/nonprofit capital providers may increasingly face exposure to SAFEs from the changing private market as their region’s private accelerators, super angels, and other private investors shift from convertible notes to SAFEs during the early-stage investment process.

Economic development was the most prevalent policy issue across mayoral speeches in 2018, according to State of the Cities 2018 from the National League of Cities (NLC). This is the fifth straight year that economic development issues were are the forefront of mayoral speeches with NLC reporting 58 percent of  state of cities speeches including “significant coverage of economic development issues.” However, this year marked a shift from mayors focusing their speeches on job creation and business attraction strategies in previous years to primarily focusing on driving downtown development, supporting innovation, and enhancing local art scenes. For those mayors that did discuss job creation, the speeches focused primarily on developing more inclusive strategies that create equitable access to economic opportunities for all members of their respective communities.