The World’s Largest Science and

Innovation Park

Presentation for:

Seattle Chamber of Commerce

Egils MilbergsExecutive Director

Washington Economic Development

Commission

July 13, 2010

Great Recession

US trailing major economies

in restoring jobs

Brazil and Chile have seen

strongest job growth. Asian

economies bounce back

Source: Organization for Economic Cooperation and

Development and the International Labor Organization.

Global Job Trends

Geography of WA Unemployment (May NSA)

Path to Recovery

Anticipated recovery time by revenue size (in millions)

Source: 2010 Manufacturing and Wholesale Distributions National Survey

1960s & 1970s

Advantage is Cost

Strategy is

“Make it Cheaper”

1980s & 1990s

Advantage is Quality

Strategy is

“Make it Better”

2000sAdvantage is Innovation

Strategy is

“Make something new”

The key to economic recovery

Over half of Fortune 500 and just under half of 2008 Inc. list began during a recession or bear market.

Dane Stangler, Kauffman Foundation

There is no better time likea downturn to innovate.

• The societal rates of return to R&D are between two to four times private returns.

• At least 2/3 of the increase in per-capita GDP is from innovation.

• Jobs in technology industries pay approximately 70 percent more than other jobs.

• Innovation is the key source of competitive advantage against low-wage nations.

10

Innovation Drives Economic Growth

40 countries/regions

16 Indicators

Economic Structure

• Human capital (college

education; researchers)

• Innovation capacity (corporate

R&D; government R&D; scientific

publications)

• Entrepreneurship (new firms;

venture capital)

• IT infrastructure (e-government;

corporate investment; broadband)

Economic Policy (corp. tax;

ease of doing business)

Economic Performance (trade

balance, FDI, GDP per worker,

productivity)

Actually we’re No. 6

0

10

20

30

40

50

60

70

80

Overall ScoreOverall Score

12

• 1. China

• 2. Singapore

• 3. Estonia

• 4. Denmark

• 5. Luxembourg

• 6. Slovenia

• 7. Russia

• 8. Lithuania

• 9. Cyprus

• 10. Japan

• 11. Hungary

• 12. Slovakia

• 13. Czech Republic

• 14. India

15. Latvia

16. Austria

17. S. Korea

18. Ireland

19. EU-10

20. Spain

21. Sweden

22. France

23. Portugal

24. Malta

25. Belgium

26. EU-25

27. Poland

Decade Trend: The U.S. is Behind….28. UK

29. EU-15

30. Mexico

31. Netherlands

32. Australia

33. Finland

34. Canada

35. Germany

36. Italy

37. NAFTA

38. Greece

39. Brazil

40. United States

13

Average annual growth of R&D expenditures : 1996–2007

EU = European Union

Researchers in selected regions/countries/economies: 1995–2007

NOTES: U.S. data for 2007 estimated based on 2004–06 growth rate. EU includes

all 27 member states. EU = European Union; FTE = full-time equivalent Source: NSF Science and Engineering Indicators 2010

Market shares of computer and office machinery manufacturing: 1995–2007

NOTES: EU = European Union. Asia-9 includes India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand,

and Vietnam. China includes Hong Kong. EU excludes Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta, and Slovenia.

Source: NSF Science and Engineering Indicators 2010

Trade balance in high-technology goods 1995–2008

NOTES: Asia-9 includes India, Indonesia, Malaysia, Philippines, South Korea, Singapore, Taiwan, Thailand, and Vietnam.

China includes Hong Kong. EU excludes Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta, and Slovenia.

Source: NSF Science and Engineering Indicators 2010

Plan for Washington

Washington: A History of Innovation

COSTCO

Commercial

Airplanes

States and regions can be powerful players in the innovation economy

• States, regions and smaller nations are:

– Large enough to:

• create intellectual capital

• build innovation ecosystem(s)

• connect globally

• respond to innovation opportunities

– Small enough for:

• shared vision and achievable outcomes

• trusted personal relationships

• effective governance

2007 Rank

Metro AreaTotal Score

1San Jose –Sunnyvale-Santa Clara, CA

100.0

2 Seattle-Bellevue-Everett, WA

46.4

3 Cambridge-Newton-Framingham, MA

45.2

4Washington-Arlington-Alexandria, DC-VA-MD-WV

41.8

5Los Angeles – Long Beach – Glendale, CA

40.2

6 Dallas – Plano -Irving, TX

21.8

7 San Diego – Carlsbad – San Marcos, CA

19.3

8 Santa Ana –Anaheim-Irvine, CA

17.7

9New York – White Plains – Wayne, NY-NJ

16.8

10San Francisco – San Mateo-Redwood City, CA

16.1

Geography of Knowledge Based IndustriesMilken Institute

A New Innovation Growth Curve

TIME

PR

OS

PE

RIT

Y

We are here

A Ten Year VisionWe should not fear to lead

Make Washington State the most

attractive, creative and fertile

investment environment for

innovation in the world.

23

…, we can’t rest on our laurels, so

let’s commit today to grooming a

workforce and leaders who are

agile, creative, and embrace

innovation.Gov. Chris Gregoire

March 10, 2009

We must look over the horizon and prepare for the new economy that will emerge when this recession passes.

Commerce Secretary Gary LockeMarch 18, 2009

Entrepreneurs would appreciate this challenge. The risks inherent to starting a thriving business in today’s troubled waters are immense, but the rewards have never been greater.

InvestmentEntrepreneurship

Talent

Infrastructure

GrowthEmployment ProsperityQuality of Life Competitiveness

Innovation Policy Framework

GSHInnovation

Ecosystem

Education

Research

Entrepreneurs

Associations

Non-ProfitsGov’t

Capital

Business

Workforce

Skills

Innovation Drivers

Innovation Outcomes

Innovation Ecosystem

New Model for Economic Development

Traditional Model Innovation Driven Model

Attract and retain companies Invest in talent, ideas and infrastructure

Jobs Quality of jobs, per capita incomes

Lowest cost of business inputs Higher value inputs, increasing productivity and outcomes

Top down economic development Bottom-up and organic growth

Competing regions: zero sum game Collaborating regions: value creation

Closed linear innovation system Open innovation ecosystem

Single disciplines, functions Multiple disciplines, integration

Locally linked clusters Globally linked clusters

Strategize Organize Operationize

Four Critical Challenges

Talent Challenge

28

Parents disagree about skills to drive innovation

Newsweek-Intel Global Innovation Survey Sept -Oct 4,800 adults

Researchers and

entrepreneurs

create new ideas

Firm creation

and innovation

success

Transforming ideas

Into applications

No capital

Dead

ideas

No capital

Creating business

models

Dead

firms

Graphic concept adapted from

Dr. Charles Wessner, National Academies

Investment Challenge

Double “Valley of Death”30Egils Milbergs

Infrastructure Challenge

Post “ICE” Age?Internal Combustion Engine

31

Beyond Oil?

Export Challenge

Washington’s exports to Asia – per capita goods exports, 2000-2008

Data source: www.wisertrade.org*Newly industrialized countries: Hong Kong, Republic of Korea, Singapore, and China (Taiwan)

304 365

891

655827

1,151

0

200

400

600

800

1,000

1,200

1,400

2000 2004 2008

US

Do

llars

China

Asia NICs*

Washington Innovation Ecosystem

Innovation Model is Shifting

Development

Linear Model Collaborative Model

Research

Commercialization

Innovation Ecosystem

Education

Research

Entrepreneurs

Associations

Non-Profits

Government

Capital

Business

Workforce Skills

Innovation Ecosystems Evolve

Growth Node

Innovation Ecosystem

Nascent

Cluster

Virtual

Cluster

None or few firms

Growth potential

Few to many firms

Fast growth

Key linkages

Virtualized

functions

Accelerated

collaboration

Many nodes

Dense linkages

Network to Network

STARSIPZs

R&D

EIRsPatents

Incubators

InnovationAccelerators

Tax

Incentives

Talent

Gap

Funding SBIR

Source: Washington Technology Industry Association (WTIA)http://wtia.micromaps.com/

Emergent Innovation Ecosystems(illustrative portfolio)

SMART GRID/ ENERGY EFFICIENCY

CLOUD COMPUTINGRENEWABLE

ENERGY

GLOBAL HEALTHELECTRIC VEHICLEINFRASTRUCTURE

ADVANCED MANUCTURING

NEW MATERIALSHEALTH IT

MEDICAL DEVICESWATER RESOURCES/

ENVIRONMENT

LOGISTICS/FREIGHT MOBILITY

DEFENSETECHNOLOGY

FOOD PROCESSING

Aerospace

IT, gaming,

simulation

Biomedical,

Incubators

Clean Tech,

Smart Grid,

Biofuels

Defense

Biotech, Energy

Wine, Water

Life Sciences,

Global Health

World’s Largest Innovation Park

Food

Processing

Wind, Solar,

Data Centers

Marine

Food

Tourism

Marine

Energy

Agriculture,

Composites

New Forestry.

Green Tech

“Twilight”

Medical

Devices

Environment

Remediation

Electric

Cars

Clean IT

State Fair

Extending the Innovation Ecosystem

PNWER GDP and PopulationIf PNWER were a separate country, it

would rank 13th in total GDP

Country GDP* 1. US 13,811,200 2. Japan 4,376,705 3. Germany 3,297,705 4. China 3,280,053 5. U.K. 2,727,806 6. France 2,562,288 7. Italy 2,107,481 8. Spain 1,429,226 9. Canada 1,326,37610. Brazil 1,314,17011. Russia 1,291,01112. India 1,170,96813. PNWER 1,051,841

*2007 GDP in $US Million

PNWER Region (GDP/Pop.)

State/Prov. GDP* Population

Wash. 311,270 6,468,424Alberta 259,900 3,585,000 Oregon 158,233 3,790,060B.C. 150,412 4,310,305Idaho 51,149 1,523,816 Sask. 40,340 1,008,697Alaska 44,517 686,293Montana 34,253 967,440 Yukon 1,767 32,714

Total 1,051,841 22,372,731

*2007 population & GDP in $US Million

WEDC Strategy Timeline

Preliminary Policy Priorities

Innovation & Jobs Summit

Stakeholder Engagement

Research Reports

ED Inventory Update

Prepare Draft

Final Review

Roll-out

WEDC Meetings

Apr 28

Aug 3

Sept 14

Dec 14

43