policy recommendations

Expanding the federal research tax credit and making it permanent could help generate $10 billion per year in research activity, according to a report from the U.S. Department of Treasury's Office of Tax Policy. Treasury also suggests that the enhanced credit could expand use of the credits, which already generate a one-to-one match in research spending and help support almost one million jobs. The current credit, which has been reauthorized temporarily 14 times since its introduction in 1981, is set to expire at the end of the year. Recently, a bipartisan group of House members began advocating for expanded, permanent credits, a policy that the Obama administration has incorporated into its last two budget proposals. The current budget debate, however, could derail that effort since the credits would cost the federal government an estimated $106 billion in tax revenue over the next ten years.

Recruiting bioscience faculty to universities and investing in R&D infrastructure tops the list of strategies recommended for Iowa to capitalize on a growing bioscience economy. A report commissioned by Innovate Iowa also finds that while significant progress has been made in growing the state's bioscience industry over the last 10 years, declining state funds to build research capacity and provide seed and venture capital remains a challenge for bioscience companies and entrepreneurs to compete regionally and globally.

Three recent reports from Maine provide insight into the challenges of fostering an innovative economy in a rural state. Overall, the research suggests that Maine has done well in its efforts to support startups, but could do more to help those startups expand and find new markets. By encouraging innovation-based businesses to expand to markets outside of Maine and by offering mentoring services, the state could overcome the stagnation that can occur when companies and states focus on local markets.

Sixteen percent of all high-impact, high-tech companies include at least one immigrant, according to a new report by the Center for Technology Innovation at Brookings. They survey and consequent case studies found significant trends among immigrant entrepreneurs in the high-tech field. Respondents were found to be heavily rooted in the U.S. — 77 percent of them have become American citizens and almost 75 percent have lived in the U.S. for more than 15 years. In comparison to their domestic peers, immigrant entrepreneurs have much higher educational achievement (almost twice as likely to hold a doctoral degree). These individuals have a similar amount of work experience to their successful domestic counterparts (roughly 10 years). Finally, the number of immigrant entrepreneurs is roughly equal to the total immigrant population (13 percent). However, since 1990 the number of immigrants with a bachelors degree or above in a STEM related field has increased significantly.

With the fears of rising state deficits and high unemployment, states must make tough decisions regarding their economic development efforts in the coming years. Researchers at the Brookings Institute contend that states should focus on regional economic clusters because it provides a "low-cost means" to reignite innovation, entrepreneurship and job creation. "Organic" job growth should be the focus of state economic development, according to the report — Job Creation on a Budget. The researchers say, "Some 95 percent of all job gains in a year in an average state come from the expansion of existing businesses or the birth of new establishments (i.e., organic factors of job growth)." These efforts also take significantly smaller financial commitments by the state and provide a more streamlined approach to achieve meaningful job growth than other more conventional economic development efforts.