Transcript Research & Engineering Services

Catalyzing Innovation in the
Commonwealth of Virginia
Prepared for the Virginia Economic Development
Partnership
June 2008
Project Process: Logical Analytical Tasks
Virginia Industry Cluster Analysis
Economic and Innovation Foundations
Benchmarking of Virginia
High-Growth Potential Technologies for Virginia
Best Practices from Successful Technology
Investment Programs
Strategic Inferences for Virginia’s Economic
Development
Virginia Industry Cluster Analysis
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Like most states, Virginia’s economy is dominated
by service industries:
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Education & Government
Retail Trade
Construction & Real Estate
Tourism
General & Business Services.
Several technology and knowledge-based sectors
stand out for their high levels of employment:
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Life Sciences & Medicine (336,535 workers)
Research & Engineering Services (161,633 workers)
IT Services (140,016 workers)
Virginia Industry Cluster Analysis
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Several technology and knowledge-based sectors
also have high levels of employment concentration
in Virginia (compared to the national average):
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IT Services (2.69)
Research & Engineering Services (1.96)
Aerospace, Defense, & National Security (1.76)
Telecommunications (1.32)
Clusters that have experienced high employment
growth rates in recent years (2003-2005) include:
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Research & Engineering Services (26.6%)
Construction & Real Estate (12.4%)
Transportation & Logistics (8.1%)
Tourism (6.7%)
Business Services (6.5%)
State-Level
Analysis
Employment By Cluster
 The largest employer clusters are the labor-heavy
service sectors, such as Education & Government,
Retail Trade, Tourism, and Construction & Real
Estate.
600,000
300,000
 Virginia has high levels of employment (>100,000
workers) in several key technology sectors,
including Life Sciences & Medicine, Research &
Engineering, and IT Services.
200,000
 The top 6 clusters account for over 60% of Virginia’s
total employment in 2005.
400,000
100,000
Paper
Electronics
Utilities & Waste Mgmt
Textiles & Apparel
Ind & Comm Equip Mfg
Wood & Furniture
Auto & Transport Mfg
Media & Design
Energy & Environment
Telecommunications
Agriculture & Agribusiness
Materials & Chemicals
Aero, Defense & Nat Sec
Transport & Logistics
Wholesale Trade
IT Services
Research & Engineering
Financial Services
General Services
Business Services
Life Sciences & Medicine
Construction & Real Estate
Tourism
Retail Trade
0
Education & Gov't
# of Employees in 2005
500,000
Employment Concentration Ratio
By Cluster
State-Level
Analysis
Employment Concentration Ratio in 2005
3.00
 Several technology clusters are highly concentrated in Virginia,
including IT Services, Research & Engineering, Aerospace-DefenseNational Security, and Telecommunications.
2.50
 A few traditional industries are also concentrated in Virginia, although
their overall employment levels are quite low: Wood & Furniture, Auto.
& Transport. Mfg., and Textiles & Apparel.
2.00
1.50
U.S. Average
1.00
0.50
Electronics
Ind & Comm Equip Mfg
Wholesale Trade
Life Sciences & Medicine
Materials & Chemicals
Energy & Environment
Business Services
Media & Design
Paper
Transport & Logistics
Financial Services
Agriculture & Agribusiness
Tourism
Education & Gov't
Retail Trade
General Services
Textiles & Apparel
Auto & Transport Mfg
Utilities & Waste Mgmt
Wood & Furniture
Construction & Real Estate
Telecommunications
Aero, Defense & Nat Sec
Research & Engineering
IT Services
0.00
The Employment Concentration Ratio is the industry cluster’s share of total employment in the state versus its share in the country.
Clusters with a ratio greater than 1.0 are more concentrated in Virginia than in the United States.
$30,000
Tourism
$50,000
Retail Trade
General Services
Textiles & Apparel
Wood & Furniture
Agriculture & Agribusiness
Transport & Logistics
Education & Gov't
Construction & Real Estate
Ind & Comm Equip Mfg
Life Sciences & Medicine
Utilities & Waste Mgmt
$60,000
Materials & Chemicals
$70,000
Business Services
$80,000
Paper
$90,000
Auto & Transport Mfg
Media & Design
Wholesale Trade
Electronics
Telecommunications
Aero, Defense & Nat Sec
Energy & Environment
Research & Engineering
Financial Services
IT Services
U.S. Average Annual Pay in 2005
U.S. Average Annual Pay By Cluster
State-Level
Analysis
 Wages in technology and knowledge-based
clusters far exceed the average annual pay for the
nation and for Virginia.
 Not surprisingly, less skilled jobs in the service
sectors have pay levels that are below the
national average.
VA Average
$40,513
$40,000
US Average
$39,004
$20,000
$10,000
$-
Virginia Industry Cluster Analysis
Industry cluster data and trends were
analyzed across six regions in Virginia.
Northern VA
Valley
0.68
0.64
Central VA
0.86
0.51
Southwestern VA
0.30
Southside VA
Hampton Roads
Regional Cluster Analysis
Common employment trends across all regions:
 Retail Trade, Tourism, and Construction & Real Estate are
major employment-generating sectors across every region.
(typical throughout the U.S.).
 Life Sciences & Medicine also dominates in employment,
ranking in the top 3 clusters for every region except Northern
Virginia. This is driven by its service component (the Health &
Medical Services sub-cluster).
 Business Services and General Services rank in the top tier of
clusters for employment across every region, but do not have
especially high employment concentrations.
Regional Cluster Analysis
Significant variations across state’s regions:
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Northern Virginia and Hampton Roads: Technology and
knowledge-based clusters – Research & Engineering, IT
Services, Aerospace/Defense/National Security.
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Southwestern/Southside: Natural resource-based clusters
such as Materials & Chemicals and Energy & Environment.
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Rural Regions: Traditional industries such as Wood &
Furniture (Southwestern, Southside, Valley), Paper (Southside,
Valley), and Textiles & Apparel (Southwestern, Southside,
Valley). But overall employment is relatively low.
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Central region: Financial Services (strong in both
employment and employment concentration).
Benchmarking Virginia’s
Innovation Foundations
Weakness
Financial
Resources
Summary
Results
Average
Strength
Small business loans ($)
STTR awards ($)
VC investment ($)
SBIR awards ($)
NAEP Science & Math Scores
Human
Resources
Advanced S&E degrees
S&E degrees
Labor force growth
Patents
Innovation
Resources
Federal R&D performance ($)
Academic R&D expenditures ($)
Academic R&D productivity
Industrial R&D expenditures ($)
Business Start-Ups
Innovation
Economy
Outcomes
Tech Fast 500 companies
R&D to GSP ($ ratio)
Entrepreneurs
Exports ($)
Real GSP growth
Innovation Resources
Patents
per Capita
 VA ranked last among the benchmark states for per
capita patents awarded in 2006.
Innovation Economy Outcomes
Entrepreneurs
Per Capita
 Compared to other benchmark states, VA had
the 2nd lowest level of entrepreneurs per
capita in 2005.
Innovation Economy Outcomes
R&D Share
of GSP
 In 2004, VA ranked 6th among benchmark states
for R&D as a share of GSP, slightly below the
national average.
High Growth Potential Technologies for VA
Resources for
R&D and
technology
development are
limited.
Determining
where scarce
resources should
be deployed is a
critically
important task.
Screening Criteria:
Virginia’s
Economic
Base
Suitable for
Targeted
Policy
Interventions
Unique
Factors to
Virginia
Industry
Transforming
Technologies
High Growth
Potential
Technologies
Virginia’s
Existing R&D
Assets
Technology Industry Selection
Industry Cluster
Industry Sub-Clusters
Current
Industry Base
Growth
Potential
Existing R&D
Assets
Other Factors
National Security and
Aerospace
Aerospace
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National Security
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Agriculture and
Processed Food
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Health Care
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Biomedical Sciences
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Chemicals and
Materials
Chemicals
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Materials
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Energy and
Environment
Energy
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Environment
IT Services
Telecom
Electronics
Transportation and
Logistics
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Agriculture and Food
Biomedical and Health
Care
Information and
Communications
Transportation and
Logistics
High Growth Potential Technologies
Technology-Based Industry Cluster
High Growth Potential Technologies
Biomedical Sciences and
Health Care
Point of Care Diagnostics
Information Technology Services
Chemicals and Materials
Clean Energy and Environment
Transportation and Logistics
Computational Technologies
Health IT
Cybersecurity
Nanomaterials
Biopolymers
Fuel Cells and Distributed Hydrogen
Carbon Capture and Storage
Radio Frequency Identification
“Smart” Roads
Biomedical Sciences and Health Care
Information Technology Asset Map
Materials and Chemicals Asset Map
Energy and Environment Asset Map
Transportation and Logistics Asset Map
Case Studies
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Enhancing Research Excellence at Universities
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Enhancing Collaboration Across Sectors/Disciplines
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Georgia Research Alliance
University of Texas Eminent Scholars Program
Ohio Third Frontier (Wright Mega-Centers)
NY Centers for Advanced Technology
MD Industrial Partnerships Program
CA Industry-University Coop. Research Program
NC Research Triangle
Enhancing Entrepreneurship and Access to Capital
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MD Venture Fund
GA Advanced Technology Development Fund
PA Ben Franklin Technology Partners
Lessons Learned
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Highlight collaboration as a central component of all
programs.
Utilize industry and technology experts as key players in
decision-making.
Seek to leverage multiple sources of funding.
Incorporate key economic development objectives and
milestones.
Introduce and maintain strong systems of accountability.
Include flexibility to allow for corrections and to support
longevity.
Measure innovation progress.
Summary Assessment
Global and national economic realities challenge forwardlooking states to expand industries driven by technology and
innovation.
Many of Virginia’s high-tech industries serve the Federal
market. While important, this narrow focus limits the state’s
diversity and overall ability to provide high value jobs.
Virginia possesses important assets and initiatives related to
innovation, but the Commonwealth has not reached its
potential.
An initiative to stimulate innovation and catalyze collaboration
among industries, universities, laboratories, etc., can transform
Virginia into a model innovation economy.
Strategic Focuses for Virginia
Enhancing Research
Excellence at
Universities
Engaging Private Sector
Collaboration Across
Sectors And Disciplines
Catalyzing
Innovation
Nurturing
Entrepreneurship and
Access to Capital
Making Smart
Technology Choices
Recommended Approach for Virginia
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Overall Strategic Goal:
Virginia will become a Model Innovation Economy
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Crafted and directed by business, government and
university communities
Implementation Mechanism:
Virginia Innovation Alliance (VIA)
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Public/Private Partnership
A structure to power collaboration
Catalyzes Virginia’s assets, addresses liabilities
Introduces a seamless innovation value chain
VIA Governance and Funding
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Governance:
Governing board (15-20) with a majority industry leaders.
 Membership from government, universities, research labs, etc.
 Advisory committees for technology platforms.
 Small management unit.
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Budget: Source & level to be decided
Stable and sustained multi-year funding.
 Initial core funding from the Commonwealth, with major
support from industry.
 To be successful it will require matching funds.
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Monitoring Innovation Progress
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Overall Progress in the Commonwealth:
Scorecard or index to measure performance of Virginia’s
innovation enterprise.
 Research outputs (patents, citations, outside funding, etc.).
 Economic results (startups, VC funding, spinoffs, employment
concentration, sector growth, etc).
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Performance of specific VIA programs:
Metrics to monitor program performance.
 R&D and economic outcomes.
 Participants will be required to report on progress.
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Next Steps
Administration
Review
Private
Sector
Review
Reviewed with:
11 CEOs
→Secretary of Commerce
→Secretary of Finance
→Secretary of Technology
→Secretary of Education
→Governor
→Presented Overview
→CEOs were supportive
Completed
Completed
Stakeholder
Review
Review with
Stakeholders:
→Economic Developers
→Universities
→Legislators
Outline
Action
Plan
Action Plan:
→Develop program
structure, governance,
and participants
→Identify prototype market
for public/private
collaboration
Target: September 2008
Target: TBD
In Progress
In Progress