recent research

The final part of this series explores the tactics and strategies associated with increasing exposure to innovation and broadening economic opportunity.

This article is part one of a two part series focused on the intersection between economic opportunity and the economic development practice.  

Venture-backed startups generate nine times the knowledge spillovers (e.g., patenting activity and citations) when compared to that produced by R&D investment of established companies, according to recent research.

By its very nature, economic dynamism can unsettle local economies. As businesses dissolve, jobs are lost. Technological shifts can drastically alter – or even replace – companies, occupations and entire industries. As these ripple effects move throughout communities, it is easy to focus on the negative impacts, but this loses sight of the importance dynamism has on national economic health.

In a market economy, what people are willing to pay determines something’s value. Airline tickets are a good example. For most of the major airlines, the price to purchase a seat the day of a flight seems to be some multiple of how much the airline thinks they can get away charging versus any drive to actually see the seat used. This supply-demand principle falls apart though with valuations set for startup companies funded by equity investors, such as angels or venture capitalists. In the risk capital business, a number of possible factors influences a startup company’s value – most tied to future markets, comparables, or dreams of big exits. Recent research from the University of British Columbia and Stanford University suggests just how surprisingly risky – and overly optimistic – this approach is.

Much has been written – both here and elsewhere – about the role of trade and automation in declining U.S. manufacturing employment. Recently released preliminary research published by the U.S. Census Bureau’s Center for Economic Studies finds U.S. multinationals were responsible for a disproportionate share of manufacturing employment declines from 1993 to 2011. These results underscore the challenges facing economic development in deindustrializing regions, particularly those reliant on the branch plant economy.

A popular development strategy at the state and regional level, incubators seek to support economic growth by providing entrepreneurs with business assistance, access to capital, and networking. As of 2012, approximately one-third of the 1,250 business incubators in the United States were connected with universities, up from one-fifth in 2006, according to International (formerly National) Business Incubation Association data featured in The New York Times. Despite the proliferation of these programs at universities, there have been relatively few conclusions to date on the impacts of these incubators beyond anecdotes. Recent research from faculty at the University of Central Florida (UCF), however, finds evidence that firms in university incubators experience positive growth in number of employees and sales at a statistically significant rate compared to non-university incubated firms. On average, the authors find that university incubated firms were responsible for 3.965 more jobs than non-university incubated firms.

Sixty percent of students drop out or transfer from science, technology, engineering and math (STEM) fields, and more than 50 percent of students pursuing STEM in community colleges never graduate, according to new research from researchers at the University of Missouri (UM) and other partner institutions.

When the U.S. government made their R&D tax credit permanent in December 2015, it made a long-term commitment to using incentives to entice private firms to invest in research and development, joining many countries around the world. Although most studies find that R&D tax incentives promote R&D, there is little consensus on the extent of this effect. A recent firm-level analysis from the United Kingdom finds some of the strongest evidence to date on the effectiveness of R&D tax credits in incentivizing innovation. At the same time, however, other studies suggest other elements of a national economy such as education and infrastructure may be more important.

In 2012, the President’s Council of Advisors on Science and Technology (PCAST) released Engage to Excel – a five point strategy to increase the STEM pipeline by an additional one million workers. To achieve this goal of one million additional STEM workers, PCAST highlighted the importance of freshman research experiences for STEM students.