SSTI Digest

As the most ambitious innovation initiative that Europe has ever undertaken, the European Union (EU) recently launched the European Innovation Council (EIC) with a €10 billion (about $11.7 billion USD) fund that will provide both non-dilutive grants to and direct equity investments in innovative startups within the union. After a successful three-year pilot, the EIC is merging with the current Executive Agency for Small and Medium-sized Enterprises, and has already launched its first official program with a call for proposals worth €1.5 billion (approximately $1.8 billion USD).

The Federal Communications Commission (FCC) estimates that nearly one-fourth of the rural population —14.5 million people — lack access to broadband services. In tribal areas, nearly one-third of the population lacks access. Even in areas where broadband is available, approximately 100 million Americans still do not subscribe to services. The problem, often referred to as the digital divide or broadband gap, has seen renewed policy interest from governors and legislators since the world has turned more to virtual learning and business during the pandemic. One way policymakers have attempted to connect rural America is through public grants or dedicated funds. Just in 2021, proposals at the state level to expand broadband have included:

Facing current challenges and a changing economy, Oregon is turning to innovation-based economic growth. Their new 10-year Innovation Plan focuses on ensuring a competitive position through four means — traded sector industries that constantly innovate; a robust entrepreneurial ecosystem; financial capital markets that are open to investing in innovative firms and entrepreneurs; and promoting itself as a place to start and grow in innovative company.

The state’s first plan was created in 2006, and the new plan, commissioned by Business Oregon and facilitated by TEConomy Partners, notes that while progress has been made, “access to opportunities in innovation-oriented fields has been unequal,” and calls for a focus on engaging all citizens. “We believe that economic justice is a fundamental precursor to achieving an equitable outcome for all segments of our population,” it says. And in order to drive change in the state’s economy, efforts to address broadband accessibility and affordability, a thriving talent base and robust R&D enterprise are needed, it notes.

Over the course of 2020, Americans reported a total of $4.2 billion in losses due to internet fraud and cybercrime, an increase from the $3.5 billion reported in 2019. In addition, the Federal Bureau of Investigation’s Internet Crime Complaint Center experienced a record number of reports surrounding cybercrime and internet fraud: 791,790 total complaints were filed throughout 2020, a 69 percent increase from 2019. The FBI Internet Crime Complaint Center’s recently released Internet Crime Report 2020 also finds that the COVID-19 pandemic has presented new targets for internet criminals as both individuals and businesses reported online financial crimes surrounding the CARES Act stimulus funds, including the Paycheck Protection Program and unemployment insurance fraud.

The R&D performed at colleges and universities is an important driver for the innovation economy — generating new knowledge, spurring invention, training STEM talent, and supporting economic development. This edition of SSTI’s Useful Stats analyzes metropolitan-level data for 2019 from the National Science Foundation on higher education R&D (HERD) expenditures and personnel. Nearly 981,000 individuals in higher education across the U.S. were classified as R&D personnel in 2019. As shown by the green shading in the interactive map below, the metropolitan areas with the greatest total number of HERD personnel in 2019 were Baltimore, Maryland* (44,323); New York-Newark-Jersey City (43,103); Los Angeles-Long Beach-Anaheim, California (35,796); Boston-Cambridge-Newton (35,587); and Philadelphia-Camden-Wilmington (27,147).

Last week not only marked the anniversary of the COVID-19 pandemic, but also the release of updated employment data from the U.S. Bureau of Labor Statistics (BLS). The monthly data shows that the pandemic had a very unusual effect on workers, experienced both as a uniquely-chaotic period of labor force participation, but also as an unprecedented immediate drop in employment. The graphic captures just how chaotic the last year has been. Compared against the trends of the past two decades, it is clear that the COVID-19 recession has, thus far, affected workers very differently than either the brief 2001 recession or the Great Recession.

Several more State of the State addresses were delivered already this month, leaving just a few states yet to go and the pandemic and recovery from the pandemic, not surprisingly, continue to feature heavily in governors’ plans. Energy opportunities, tax cuts, broadband and shifts in the model for higher education are in play in this week’s review of addresses from California, Florida, New Hampshire and Wyoming.

Having interdisciplinary teams of scientists and relationships with “star” entrepreneurs are factors that can influence the chances for academic discoveries to reach the commercialization stage. While proximity to capital has traditionally been viewed as the core stimulus for academic commercialization, a recently released working paper by the National Bureau of Economic Research reexamines the variables that play a role in the commercialization of academic sciences, and provides new insight into the importance of team composition throughout the commercialization process.

In their approach, authors Matt Marx and David H. Hsu control for “latent commercializability” and technology differences to provide a more level field for analyzing the roles of variables such as munificent financial environments and team composition. By studying over 20,000 ‘twin’ discoveries, pairs of academic research that resulted in similar findings, the authors were able to explore what variables led to successful commercialization while balancing out the influence of the latent commercializability of the research.

While the overall rate of new entrepreneurs experienced an increase throughout 2020, the share of those who created their business out of choice instead of necessity declined during the past year, reflecting the national economic instabilities caused by the COVID-19 pandemic. These trends, along with the levels of startup early job creation and startup early survival rates, are explored within the recently released National Report on Early Stage Entrepreneurship in the United States: 2020 by the Kauffman Foundation.

The rate of new entrepreneurs was higher in 2020 (.38 percent) than in 2019 (.31 percent), due in large part to the instability within the traditional work environment caused by the pandemic. The report notes that there was also an increase in the rate of new entrepreneurs during the Great Recession, but it was much smaller (.32 percent in 2008 and .34 percent in 2009).

While the Appalachian region began the 21st century by expanding the reaches of its fossil fuel industries, clean energy development and carbon emission reductions are not yet out of reach for Pennsylvania, Ohio and West Virginia. A set of reports developed by the University of Massachusetts’ Political Economy Research Institute (PERI) present opportunities available to these states for the advancement of clean energy technologies within the region while also detailing the economic and employment benefits of potential climate stabilization programs.

Manufacturing activity has rebounded sharply from the depths of last year’s slowdown due to the pandemic and global recession, according to the National Association of Manufacturers (NAM) first quarter outlook survey. The survey marked the third straight quarter of increased optimism among respondents, with 87.6 percent of manufacturers saying they felt either somewhat or very positive about their company’s outlook. Compare that to the 33.9 percent who responded positively in the second quarter of 2020, which was the worst since the Great Recession.

Despite the positive outlook, challenges remain. Rising raw material costs was the top business challenge cited (76.2 percent), followed by the inability to attract and retain talent, which dropped to second place (65.8 percent) after holding the top spot in 11 of the past 13 quarters prior to this one. The full report on the survey is available here.

A recent Economic Commentary from the Federal Reserve Bank of Cleveland reviews the early research surrounding the effects of the pandemic on education and examines three specific areas of concern: the spread of the virus through in-person school settings; the impact of K-12 school closures on labor force participation; and, the effects of virtual schooling on student outcomes.