Tracking Innovation in NC Patterns and Implications for NC's Eastern Region

1. Tracking Innovation in NCPatterns and Implications for NC's Eastern Region John Hardin, Executive Director NC Board of Science & Technology www.nccommerce.com/scitech May 21, 2014

2. Importance of Innovation • Innovation is the creation & adoption of new products, services, and business models to yield value • Between one‐third to one-half of economic growthin U.S. can be attributed to innovation(Source: U.S. Department of Commerce 2012) • A large source of innovation comes from science (systematic knowledge) & technology (practical application of knowledge) • STEM (science, technology, engineering and math) drives technological innovation

3. Innovation is Economic Engine • US labor force = 66% local services, 10% innovation, 24% other • But jobs in local services are more the effect, than the cause, of growth in other sectors • Innovation has big (5x) multiplier effect(across sectors & skill levels) • e.g., If RTI adds a biologic mfg. job in Greenville → more jobs for waiters, landscapers, store clerks, painters, etc., but not vice-versa • Most important impact of RTI on local labor market is outside high-tech • Best way to create jobs for all is to grow & attract high-tech companiesthat hire highly educated workers, particularly STEM Source: Moretti 2013

4. STEM Jobs Pay More (on average) Source: Georgetown Center on Education and the Workforce

5. STEM Jobs are Increasing Source: Georgetown Center on Education and the Workforce

6. Economic & Innovation Patterns in NC

7. Summarized Today: A small sample (1/4) of key indicators. . .

8. * * * Economic Well-Being & Quality of Life Innovative Organizations (New & Enhanced) Innovative Ideas/ Discoveries Innovative Products & Practices Research & Development Commercialization Education & Workforce • Funding • Policies • Facilities & Equipment • Researchers • Culture & Goals of Research & Development Organizations • Funding • Policies • Facilities & Equipment • Industry-University Nexus • Culture & Goals of Commercialization Organizations • Funding • Policies • K-16 Education System • Industry Training • Culture & Goals of Education/Training Organizations Innovation Ecosystem Ultimate Goal Environment & Infrastructure Support for Education Cost of Living Broadband Access Industry Mix Gap Gap Gap

9. Innovation Index • Comprehensive measurement of ecosystem’s health • Several purposes: • Identify strengths & weaknesses • Inform decisions & policy making • Establish benchmarks & measure effectiveness • A comprehensive & effective index should: • Focus on multiple components of innovation ecosystem • Include multiple indicators for each component • Compare on multiple dimensions – spatially & temporally

10. Index Dashboard Overview Red is bad Green is good Gray is neutral

11. Summary Observations • NC’s innovation ecosystem is moderately healthy (ranks 24th overall) & not improving much • On 27 of 38 measures, NC’s “Percent of U.S. Average Value” is below average, meaning NC underperforms nation overall • Performance across indicators varies widely • Innovation assets & activities are concentrated geographically • (place matters) • Need to understand state as a whole and differences across state • Strong potential for increased innovation & commercialization

23. Source: Dow Jones Venture Source

33. Implications

34. Recommended Actions • Education • Provide public information/exhortation/consultation • Raise core educational attainment of all citizens at all levels • Emphasize STEM skills in education • Commerce • Strategically recruit high-tech/STEM companies • Strategically start and grow new high-tech/STEM companies • Strategically assist existing high-tech/STEM companies • Infrastructure • Expand broadbanddeployment and adoption • Enhance cultural amenities • Link rural regions to close and/or affinity urban regions