Building the Illinois Innovation Economy Summary of a Symposium (2013) / Chapter Skim
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Panel I: The Overall Innovation Challenge
Panel I: The Overall Innovation Challenge
Pages 32-56
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THE GLOBAL INNOVATION IMPERATIVE Charles Wessner The National Academies Dr. Wessner began by thanking Dr.
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I spend a fair amount of my time going around the world, and I find that people in every country admire and respect our educational system and its ability to produce the best people and innovations." Among the positive features of the U.S. innovation system are its robust research universities, generous federal funding of research and development, a vibrant culture of entrepreneurship, significant manufacturing capabilities, openness to new opportunities, and adaptability.
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Like Taiwan and South Korea, China continues to invest in new, world-class universities, while the United States relies on universities built generations ago. Key strategies are to build innovation clusters through the development of large S&T parks and acquire technologies and talent from abroad.2 China, he said, has gained competency partly by compelling foreign firms that seek to sell in the Chinese market to set up manufacturing plants in China.
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German manufacturing wages average about $46 an hour, while the United States average is about $34 an hour.6 German businesses are heavily taxed and tightly regulated, and most have representatives of labor unions on their boards, yet the Germans export massively to China. Other features of the German innovation strategy include a focus on traditional industries, such as chemicals, autos, and appliances -- a strategy criticized as low-growth by many economists.
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"We are at war, and we have to make sure military equipment works right the first time and every time." But because the amount of nondefense R&D spending by DoD is so small, there is little support for "the scientific seed corn for the future." Beyond that, he said, "we are seriously overstating to ourselves what we are spending in the research space." For example, federal spending as a share of GDP has been declining since the mid-1960s.9 While R&D spending by the private sector has continued to rise, and provides a major source of innovation, he said, a high proportion of privatesector spending is dedicated not to fueling innovation, but to incremental improvement of existing products. Such spending patterns reflect major risks for the United States, he said.
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"The effects of government-supported R&D are all around us," he said. "You drive on the interstate highway system to a federally supported airport, board a federally supported airframe powered by federally supported turbines, and take off under the guidance of the federal air traffic control system to go to a federally supported university to review the prospects of a promising company receiving federal awards to commercialize its technology developed through federally supported research.
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But many job losses reflect actual decline of output that is neither inevitable nor normal. This is demonstrated by the fact that manufacturing is growing in many productive nations, including developed nations, such as Germany, with high costs, high taxes, and strict regulations.12 Often ignored are the effects of "modern mercantilism" that involves combinations of currency manipulation, closed markets, tax subsidies, tariffs, direct subsidies of free land and capital, discriminatory national procurement, and forced transfer of IP and obligatory joint ventures.13 "So this decline should be of grave concern to us," he said.
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Or she might have to return to work in South Korea or China if it is impossible to find work in the United States." AN OVERVIEW OF FEDERAL CLUSTER POLICY John Fernandez SNR Denton Mr. Fernandez, who introduced himself as "a Midwesterner," and who is a former mayor of Bloomington, Indiana and former assistant Secretary of Commerce for Economic Development, brought a combination of federal and regional experiences to the conference.
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He argued, however, that changes in policy took place only slowly in Washington, and the new emphasis on innovation was accepted only slowly. An important turning point, he said, was the America COMPETES Reauthorization Act of 2010, when the Federal government and Congress agreed on the value of regional strategies and embedded in the Act new authorities that actually drive 17 He cited several recent studies that describe this policy development, including: Maryann Feldman and Lauren Lanahan, "Silos of Small Beer: A Case Study of the Efficacy of Federal Innovation Programs in a Key Midwest Regional Economy," Science Progress 2010.
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There is tremendous innovation happening everywhere in America, including rural communities, but we have to get people moving into the 21st century."
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These became known as Energy Regional Innovation Clusters, or ERICs. "They were an opportunity to shine a thin bright light on the concept," he said, "so all of us rallied around and did that." ERICs involved six agencies and $130 million in federal investments; the first of them was the Greater Philadelphia Innovation Cluster.
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"We had some money dedicated to sustainable development, and we worked with seven other federal agencies to create this program. We are showing that the federal government actually can collaborate." Another program, the Jobs and Innovation Accelerator Challenge, draws on 13 federal agencies to support high-growth, regional clusters in a $37 million competition.
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You get penalized for collaborating as an agency. Clusters need incentives for collaboration -- with agencies, regional economic development partnerships, and other cluster initiatives.
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innovation system, and stated that the country needs to respond quickly if it is to retain its competitive status. ILLINOIS SCIENCE & TECHNOLOGY COALITION Mark Harris and Edward Fetters Illinois Science & Technology Coalition Mr.
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It had also worked with the University of Illinois to join the national network of advanced manufacturing discussed earlier in the day. The Coalition has a global focus, he said, including a partnership in smart grid technology with the Korean government and another in bioscience with Shanghai and Brazil.
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The function is to educate stakeholders through a monthly publication that reports on key metrics of the Illinois innovation economy, including analysis, benchmarking, and promotion of innovation and entrepreneurial activity metrics. It tracks data on such topics as venture capital growth, STEM education, patents, and trademarks.
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The state has more than 20 departments or divisions conducting nanotechnology research at its major universities and national labs, as well as at the clusters already located at Northwestern's Illinois Science and Technology Park and the Research Park at the University of Illinois. The nanotechnology report just being released by ISTC carried a full market analysis of nanotechnology assets, research talent, and infrastructure.
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For example: Nanotechnology can make the tools of medicine cheaper and more effective through large-scale replication of nanostructures; Research and diagnosis can be made more efficient, as single-molecule detection technologies increase efficiency and decrease misdiagnoses; Sensors and implantable devices can be developed to allow for continuous health monitoring and semi-automated treatment. Finally, the grand challenge of advanced manufacturing is designed to collaborate with the White House's National Manufacturing Initiative to apply nanotechnologies or nanomaterials to new or existing manufacturing.
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A new project providing hands-on training to students is the Nanotechnology Employment, Education, and Economic Development Initiative (NE3I) run jointly by Illinois Science + Technology Park, NanoInk, Oakton Community College, the State of Illinois, and the Village of Skokie.
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Innovation occurs in large as well as small companies, but large companies often lack the structure that "allows innovation to take flight." Other elements needed to create this workforce are the continuing education programs of universities, the partnerships between cities and community colleges, "and the obligation of companies to support the continuing education of their own employees." This last notion was often forgotten, he said, when businesses overlooked their responsibility in the continuum of education. "I become angry listening to companies complain about not finding the people they need.
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For IT start-ups, a range of private investment forms are needed, including personal investment, sweat equity, willing friends and family, IT knowledgeable angels, category-specific venture capital firms, accessible private equity, and IT industry-savvy commercial banks. "People have to learn that it's okay to invest in a start-up," he said.
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" Mr. Fernandez advised looking at the entire spectrum of innovation activities.
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"Many economists and even smart people in business don't understand the need for substantial public investment in basic research," he said, "and then participation beyond that." The research process is essential in providing the ideas and raw material for innovations, and government has an essential role in supporting both the research and the climate for translational development of the research. Venture capital can be an active participant, he said, but most venture funding is "followon money" that does not participate at the early, riskier stages when help is needed most.
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The Small Business Administration should reverse certain reforms that offer awards only after a spinoff company is formed rather than when it is still in formation. Neil Kane of Illinois Partners Executive Services said he had been working for well over a decade to help commercialize the results of research in universities and federal labs that is funded by taxpayers.
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Arthur Pancoe, a successful investor and medical research analyst with deep roots at Northwestern, said that he had worn many hats in his long career, and that he was "not quite as pessimistic" about the ability to find alert Illinois investors ready to support good ideas. Having personally donated $10 million to fund a medical research building at the university, he advised that certain government tax policies were a major barrier to small-firm formation and development.
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