SSTI Digest

The U.S. Economic Development Administration’s (EDA’s) annual Build to Scale (B2S) program (previously Regional Innovation Strategies) completed its tenth award cycle this year, with over $270 million in grants across 437 awards since inception in Fiscal Year (FY) 2014. FY 2023 was the largest award cycle, totaling $53 million in federal awards across the Venture and Capital Challenges. Led by the Office of Innovation and Entrepreneurship, Build to Scale is designed to increase regional capacity, strengthening ecosystems that equitably and inclusively support technology-based economic development (TBED) practices. Applicants propose projects designed to support entrepreneurs and/or technology acceleration in the program’s Venture Challenge or to develop and support risk capital initiatives in the Capital Challenge (originally Seed Fund Support). More information on the Challenges and their structures can be found here.   FY 2023 Awards Fifty-three million dollars were distributed across the 60 B2S awards granted in the FY 2023 cycle. EDA awarded approximately $43 million to 40 Venture Challenge grantees, with the remaining $10 million to 20 Capital…

The Kentucky and Mississippi gubernatorial elections were held on Nov. 7, with both incumbents, Andy Beshear (D) and Tate Reeves (R), winning re-election. Legislative elections were also held in Mississippi (where simple majorities were guaranteed for Republicans in both chambers), New Jersey, and Virginia. With all 40-person Senate and 80-person Assembly seats in the New Jersey Legislature up for election, the Democrats not only retained their legislative majority, which they have held since 2004, but expanded it. Meanwhile, Virginia Gov. Glenn Youngkin’s hopes to advance his conservative agenda were dashed as voters kept the state Senate in Democratic hands and flipped the state House blue.  In Michigan, which did not hold a legislative election this year, the Democrats lost their slim majority in the House (as well as its first majority of both chambers in four decades) when voters elected two state representatives as mayors to southeast Michigan communities. Although the twin victories were planned for by leadership, it also means that the Democrats will, at least temporarily, lose their two-seat edge (56 to 54) in the state House of Representatives. The even split…

In Mississippi, the state auditor released a report  in September 2023 that rated academic degrees by whether the degree would lead to a well-paying job. He suggests that Mississippi invest more in programs in the subject areas leading to those high-paying, in-state jobs. Basing appropriations on immediate wage outcomes implies that near-term economic return is the only benefit that matters, and it is a theme that is recurring frequently. In contrast, liberal arts advocates take a more holistic view of the value of higher education. Frederick M. Lawrence, secretary and CEO of the Phi Beta Kappa Society, recently spoke with SSTI about the value of a liberal arts education. He maintained that “education prepares students for the lifelong learning for meaningful lives, for productive lives, and for engaged lives as citizens.” "When we talk about a productive life," said Lawrence, "we talk about the skills of a particularly liberal arts education, such as learning how to think clearly, communicate effectively, analyze, research, and solve problems, work collaboratively, and work creatively." He noted that employers mention all these skills as important in…

The Economic Development Administration (EDA) announced 60 organizations receiving $53 million from the Build to Scale program today. This is the program’s 10th and largest award cycle, following years of consistent appropriations growth from Congress. The Build to Scale program, which includes the Venture Challenge and Capital Challenge, funds the launch or expansion of programs that address regional needs to achieve a more robust innovation economy. SSTI has been a staunch supporter of Build to Scale and participating organizations since it was first formed. EDA's map of the 2023 Build to Scale awardees. Congratulations to all of the SSTI members involved in newly awarded projects, including those led by Ben Franklin Technology Partners of Central & Northern PA, Central Indiana Corporate Partnership, Delaware Innovation Space, eFactory, JumpStart, Louisiana State University, Rocky Mountain Innovation Initiative/Innosphere, University of Oklahoma, and University of Texas Rio Grande Valley. Build to Scale is divided into two challenges, and the Venture Challenge is further divided into Ignite, Build, and…

While there has been increasing public questioning of the value of a college degree, statistics on net worth by educational attainment paint a clear picture. In 2022, the median net worth of those without a high school diploma was approximately $38,000, while those with a college education sat at around $464,000. When looking at averages instead, the difference becomes even more pronounced, with non-high school graduates averaging a net worth of approximately $176,000 compared to college graduates’ $1.92 million. This edition of Useful Stats explores Survey of Consumer Finances (SCF) data from the Federal Reserve, breaking down American’s finances by their educational attainment through a deep dive into the makeup of their assets and debts. Net worth by educational attainment Net worth is equal to a person’s assets minus their liabilities, and is oftentimes used as an indicator of financial health over metrics like income due to it being a constant, holistic measure. Figure 1, below, shows a breakdown of net worth, assets, and debt by educational attainment in the United States for years between 1989 and 2022, where data is available. The median net…

Startup Genome and the Global Entrepreneurship Network recently released a new report offering a fresh perspective on what it takes for a startup to scale. The report draws on an eleven-year study involving 100,000 startups to provide a nuanced look at the factors contributing to startup scalability, offering actionable insights that underscore the importance of networks for entrepreneur support organizations, entrepreneurs, and policymakers.  The report reevaluates the conventional definition of ‘scaleup,’ arguing it falls short when discussing tech startups. It proposes a more straightforward and objective metric: a valuation of $50 million or more, suggesting that such VC investment can be a reliable indicator of a startup’s readiness to scale.  The study initially surveyed more than 100,000 founders of young startups (less than four years old) representing more than 40 different origin countries. The research followed a subset of 10,500 startups who volunteered for extended tracking, using data from Crunchbase, Dealroom, Pitchbook, and other regional databases to determine which startups achieved scaleup status (according to their updated…

Incorporating systems thinking into economic development planning could lead to better solutions to potential and pressing problems, says a Quarterly Research Brief from the National Economic Research and Resilience Center (NERRC). The paper emphasizes that systems, or integrated planning, is essential when writing a Comprehensive Economic Development Strategy (CEDS). The authors mention that the Economic Development Administration CEDS Content Guidelines require that the strategies ensure the economies are resilient, and cite EDA’s definition of resilience, saying, “In the face of challenges that global uncertainties, natural disasters, climate change, socio-economic disparities, and technological disruptions pose, resilience strategies are essential tools to equitably and sustainably build prosperity over time. In the economic development context, resilience aims to better prepare regions to anticipate, withstand, and bounce back from any type of shock, disruption, or stress it may experience." Economic development practitioners using a systems approach can build resilience through integrated planning, broader collaboration, and leveraging data and technology…

The Biden Administration issued an executive order earlier this week that provides guidance on the safe, secure, and trustworthy development and use of Artificial Intelligence (AI) in the U.S. The EO includes guidance for agencies to work to provide new opportunities for small businesses and entrepreneurs in AI and other directives. NSF is directed in section 5.2 (iii) (b) to launch a pilot program implementing the National AI Research Resource (NAIRR). The program is intended to "pursue the infrastructure, governance mechanisms, and user interfaces to pilot an initial integration of distributed computational, data, model, and training resources to be made available to the research community in support of AI-related research and development.” The EO also calls for NSF to “fund and launch at least one NSF Regional Innovation Engine that prioritizes AI-related work, such as AI-related research, societal, or workforce needs.” Section 5.3 focuses on promoting competition. The EO names the Department of Commerce as the agency responsible for promoting competition and innovation in the semiconductor industry, noting that “semiconductors power AI technologies…

Despite a $4.1 trillion increase in annual output since 1987, manufacturing industries in the United States have been declining in both their labor productivity and share of output. The Bureau of Labor Statistics’ labor productivity (output per hour) index, tied to 2012 values, for manufacturing industries has dropped by nearly five points since its all-time high of over 101 in Q2 2013. This edition of Useful Stats explores the Bureau of Labor Statistics’ (BLS) Office of Productivity and Technology (OPT) data on industry productivity, focusing on manufacturing industries. First, the total industry output in millions of USD is examined, then a labor productivity (output per hour) index breakdown of manufacturing industries.   Manufacturing output falls behind wholesale and retail trade. Recent SSTI coverage of the manufacturing sector using World Bank data found that while value added was increasing steadily over time, its proportion added to GDP has been on a downward trend. The following data explores a major component of value added: output. Although the monetary value of manufacturing output has significantly increased over the past 35…

Not all publicly traded companies use savings from tax cuts the same way, NBER researchers James Cloyne, Ezgi Kurt, and Paolo Surico report in “Who gains from Corporate Tax Cuts?  While changes in marginal tax rates and investment tax credits (ITC) can have significant effects on the behavior of publicly traded C-corporations, manufacturers and goods producers are much more likely to recirculate the savings into additional capital expenditure and employment than firms in the service sector.  Publicly traded service sector companies typically use the proceeds from a tax cut to increase dividends to current investors in the firms.  The researchers found that a cut in the marginal tax rate can increase capital expenditure. An increase in ITC also increases capital expenditures, but at a lower rate than a cut in the marginal tax rate. In addition, the paper discusses findings from previous research that indicated tax policy can impact macroeconomic trends in GDP, investment, and employment rates. Further, these macroeconomic impacts can affect microeconomic trends, such as firm-level capital and labor demand when viewed in the aggregate. Distinguishing types…

By April of 2023, state legislatures had filed 99 anti-ESG bills, according to Reuters. Many of these bills are motivated by the perception that investors who prioritize environmental, social, and governance (ESG) compliance by companies in which they are investing are imposing their political beliefs on others. Furthermore, some believe that ESG considerations inhibit investors and thus hurt returns. On the other hand, some critics of these bills argue the opposite: that it is restricting ESG investing that jeopardizes investment returns. In fact, Research from Pitchbook found ESG investing can have as big a return as investing in non-ESG-driven investments. The term “ESG” was coined by a joint initiative of financial institutions which were invited by United Nations Secretary-General Kofi Annan to “develop guidelines and recommendations on better integrating environmental, social and corporate governance issues in asset management, securities brokerage services.” The participating institutions presented ESG as a superior investment approach in the publication, Who Cares, Wins: Connecting Financial Markets to a Changing World. Their recommendations marked the beginning…

Three states are holding gubernatorial elections this fall, with voters in one of those states (Louisiana) having already chosen a new governor to replace a term-limited incumbent. In the remaining states, Kentucky and Mississippi, elections will be held next week (Nov. 7), with the incumbents facing tough opponents in their reelection bids. Six states (Colorado, Maine, New York, Louisiana, Ohio, and Texas) will vote on 36 statewide ballot measures this fall. Of those measures, 30 of the 36 measures are legislatively referred constitutional amendments or statutes, while the other six are citizen initiatives. Many of this year’s measures are focused on taxes and state funds. At the same time, state legislative elections will be held in Mississippi, New Jersey, and Virginia. Ballot Measure Initiatives      Six states (Colorado, Maine, New York, Louisiana, Ohio, and Texas) will vote on 36 statewide ballot measures this fall. The following states’ measures are of note. Colorado Proposition HH: Property Tax Changes and Revenue Change Measure would enact changes to state property taxes and revenue limitations, including reducing…