Accelerating Innovation

Commerce Department Seeks Public Input on Innovation Metrics

The Department of Commerce is seeking public input on ways to measure innovation in the economy. The public comments will support the work of the Measuring Innovation in the 21st Century Advisory Committee, established by Secretary Gutierrez to provide recommendations on how to measure innovation and its impact on the US economy. Comments from the public will inform and advance the development of proposals. "Input from innovators, entrepreneurs from businesses of all sizes, and academics is very important to the Committee as it develops ideas for innovation metrics," Gutierrez said. "Innovation is a driver of our economy and we need to help policymakers and the business community better measure innovation for the purpose of developing appropriate public policy."

The notice of public comment is available on the Committee's Web site at: www.innovationmetrics.gov Comments will be published on the Web site. The Committee anticipates the recommendations will cover the following four major categories identified by the participants during the initial meeting:

1. Improvement of the underlying architecture of the U.S. System of National Accounts to facilitate development of improved and more granular measures of innovation and productivity;
2. Identification of appropriate economy-wide and sector-specific statistical series or other indicators that could be used to quantify innovation and/or its impacts;
3. Identification of firm-specific data items that could enable comparisons and aggregation; and
4. Identification of specific "holes" in the current data collection system that limit our ability to measure innovation.

Comments in response to the Federal Register notice are due by Friday, May 11. The Federal Register notice can be accessed by the link below.
Notice and request for comments.

2007 State New Economy Index. Massachusetts Holds the Top Spot

The 2007 State New Economy Index, released by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF), is a state-by-state analysis of how state economies are transforming from an old industrial economic model based on "smokestack chasing" in which economic development success is measured by the number of big company relocations rather than in the creation and retention of high value-added, high-wage jobs.

The Index uses 26 indicators from a variety of sources to rank each state on the extent to which their economies are structured and operate to effectively compete regionally as well as globally. It examines the degree to which state economies are knowledge-based, globalized, entrepreneurial, information technology-driven and innovation-based. According to the Index, the most important driver is the information technology revolution that that is impacting virtually all industries and driving increased productivity.

Massachusetts has held the top spot on the State Index issued in 1999, 2002 and 2007, while New Jersey and Maryland have each made a steady climbs with each Index to close the gap and take the second and third place rankings this year. Wisconsin, Vermont, North Dakota and Rhode Island made the greatest strides on the Index from 2002 to 2007, while Missouri, Maine, Oregon, Arizona, New Mexico, Oklahoma, and Hawaii recording the biggest decline in the rankings over the last five years.

All the states at the top of the ranking show above-average levels of entrepreneurship, even those that are not growing rapidly in employment. Most are at the forefront of the information technology and Internet revolutions, with a large share of their institutions and residents embracing the digital economy. Most have a solid infrastructure that fosters and supports technological innovation and many have high levels of domestic and foreign immigration of highly mobile, highly skilled knowledge workers seeking good employment opportunities coupled with a good quality of life.

States ranking at the bottom of the Index tend to depend on natural resources or on mass production manufacturing and rely on low costs rather than innovative capacity to gain advantage.

The report also outlines an eight-point public policy framework of "best practices" that state officials can use as a guide. The key strategies discussed are:

1. Align Incentives behind Innovation Economy Fundamentals
2. Co-Invest in an Innovation Infrastructure
3. Co-Invest in the Skills of the Workforce
4. Cultivate Entrepreneurship
5. Support Industry Clusters
6. Reduce Business Costs without Reducing the Standard of Living
7. Boost Productivity
8. Reorganize Economic Development Efforts

“The 2007 State New Economy Index is an important update and advances our thinking about economic development strategies and policies that foster innovation based competitive advantage.” said Egils Milbergs of the Center for Accelerating Innovation. Click for the full 92 page report (PDF format).

Is US Stock Market at a Historic Tipping Point?

The Financial Times reported today on what has been called a “seismic shift” -- that Europe has eclipsed the US in stock market value for the first time since the first world war.  Egils Mlbergs commented: "This is a clear indicator that the global dominance of American capital markets is under challenge."  The FT article points out that Europe’s 24 stock markets, including Russia and emerging Europe, saw their capitalization rise to $15,720bn (€11,819bn) at the end of last week, according to Thomson Financial data. That exceeded the $15,640bn market value of the US. The FT says that the rise of the euro against the dollar, growth of east European markets such as Russia and stock market outperformance spurred by improving profitability have seen Europe close a long-held gap with the US. The last time Europe eclipsed the US in market capitalization was likely to have been before the First World War, said Mike Staunton, stock-market historian at London Business School. European shares have outperformed the US, with their market capitalization rising 160 per cent since the start of 2003 in dollar terms, said Thomson Financial. That compared with a 70.5 per cent rise for the US stock market. Over that time the euro has risen 26 per cent against the dollar.

Denmark Tops Global Rankings in Network Readiness. US Slips to 7th Place.

Denmark tops the global networked readiness rankings according to the World Economic Forum report The Global Information Technology Report 2006-2007’s "Networked Readiness Index". Sweden, Singapore and Finland follow, while the United States loses ground in networked readiness, falling 6 places to 7th position.

“Nordic countries score high in global competitiveness ranking reports in large part due to their pro-innovation policies aimed at early adoption and diffusion of new technologies and supporting research and education investments,” said Egils Milbergs of the Center for Accelerating Innovation. “In the increasingly networked world, the US should accelerate collaboration with Nordic countries to leverage information technology intellectual capital, infrastructure and applications.”

Denmark is number one for the first time, moving up 2 positions from last year and reflecting an upward trend dating back to 2003. Denmark has benefited from a clear government ICT vision and early focus on ICT penetration and usage, which has resulted in impressive levels of Internet and PC usage as well as that of e-government and in a very dynamic e-business environment. A well-developed internal market, together with a continuous emphasis on education and R&D and a talent for pioneering applications and technologies, have laid the basis for the development of a first-league high-tech industry.

The rest of the Nordic countries, except Iceland which loses some ground from last year, follow Denmark’s upward trend, with Sweden, Finland and Norway moving up 6, 1 and 3 places, to 2nd, 4th and 10th respectively. Nordic countries have consistently featured among the top 10 in the last 6 years, reflecting exceptional levels of networked readiness as well as overall competitiveness. The recipe of Nordic countries for networked and competitive success has to do with a very strong focus on education, which has enabled the establishment and development of highly efficient educational institutions and a culture of innovation; transparent and well-functioning public institutions which have resulted in a business-friendly environment; and a strong readiness by key national stakeholders to adopt the latest technologies.

Singapore moved down one place to 3rd position, maintaining its dominant position for the 5th successive year. Singapore’s ICT excellence is built on the country’s excellent regulatory and business environment, on the government’s early focus on the adoption and diffusion of the latest technologies, and on ICT penetration and its ability to involve the private sector in a common strategy and vision for ICT readiness.

Among the top 20, Switzerland, up 4 ranks to 5th place, registers one of the biggest improvements, after Sweden and the Netherlands, both 6 ranks up from last year. Switzerland’s ICT prowess is pushed by its first-class business environment and by effective e-leadership shown by the business sector and, to a lesser extent by the civil society, in ICT usage and innovation.

United States loses its top position and drops 6 places to 7th, mainly due to relative deterioration of the political and regulatory environment. However, the country maintains its primacy in innovation, driven by one of the world’s best tertiary education systems and its high degree of cooperation with the industry as well as by the extremely efficient market environment displayed. The latter has been very conducive to the development and prospering of the ICT sector (in particular, the availability of venture-capital, sophistication of the financial market and the ease to start a business).

Highlights of the Results of the Networked Readiness Index Rankings 2006-2007

Download the full Networked Readiness Index 2006 (PDF or Excel format)