Rhode Island Innovates

January 19th, 2015#innovateRI

Rhode Island Innovates

Metropolitan Policy Program

Slater Mill

1793The Beginning of the Industrial Revolution

Blurring Distinction Between

Manufacturing and Services

Relentless Pace of Technological

Change“Digitization of

Everything”

2016

R&D-intensive industries that concentrate the nation’s science, technology, engineering, and mathematics (STEM) workforce.

A M E R I C A’ SA D VA N C E D

I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,

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B R O O K I N G S

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P R O J E C T

Advanced Industries

Pharmaceuticals

Medical EquipmentMotor Vehicles & Parts

Shipbuilding

Manufacturing35

Software Computer Systems Design

Telecommunications R&D Consulting Services

Services12

Oil & Gas Extraction

Electricity Generation

Energy

3

Advanced Industries

60.0%

8.7%

90.0%81.2%

17.7%

80.0%

U.S. GDP

ExportsU.S. Workers

Private Sector R&D

PatentsEngineers / Architects

Concentrate the Assets of the Innovative Economy

Advanced Industries

$160

$120

$80

$40

$0

Aver

age

Wag

e (th

ousa

nds)

Associate’s Degree

Some College

Secondary Diploma

No Secondary Diploma

$153

$117

$130

$89

$115

$69

$89

$56 $60

$38

$54

$32

$44

$28 $3

3

$20

Offer a Significant Wage Premium at Every Level of Education

Doctoral Degree

Professional Degree

Master’s Degree

Bachelor’s Degree

50 percent of advanced industry jobs

require less than a bachelor’s degree

Advanced Industries

Drive Productivity in Other Industries

Stimulate Local Economies

Support LongSupply Chains

Develop Technology that Transforms Lives

Advanced Industries

Rhode Island’s Position

1 2 3

1

2 3

Rhode Island rests at the center of a

33 million person

megalopolis with

$2.1 trillion in output.

The state’s labor market has tracked the United States in recent decades …

Employment rate Unemployment rate

Source: Bureau of Labor Statistics

Average wages

50%

80%

0%

20% 50k

25k

0

Rhode Island United States

However, the state’s growth capacity deteriorated through the recession.

Real Output Growth (2000-2014)

Source: Bureau of Economic Analysis

New HampshireMassachusetts

Rhode Island

ConnecticutMaine

100

110

120

2000 2006 2009 2014

A core problem: The advanced industry base has shrunk.

US AI Employment

Rhode Island AI Employment

100

110

120

1980 2000 20131990

US Employment

RI Employment

Advanced Industry Employment, 1980-2013

Source: Bureau of Economic Analysis

Median income still hasn’t recovered from the recession.

Source: St. Louis Fed FRED Database

Real Median Income2014 U.S. Dollars

$49,000

$54,250

$59,500

$64,750

$70,000

1999 2001 2003 2005 2007 2009 2011 2013

Rhode Island$58,633

Rhode Island lacks sizable high-value growth engines.

✓ Erosion of the state’s advanced industry base and the failure to nurture new advanced industries has left the state adrift

✓ Rhode Island needs to build more resilient, future-oriented industry specializations to secure the next generation of prosperity

Industry opportunities

1 2 31

2

3

Assessment of Line-of-Sight to Significant Markets

Recommended Target Growth Areas

Industry Clusters Identification

Core Competency Identification

Advanced

5

Biomedical Innovation IT, Cyber, and Data Analytics

Defense Shipbuilding and Maritime

Design, Food, and Custom Manufacturing

Advanced Business Services

Opportunity

2

Arts, Education, Hospitality & Tourism

Transport, Distribution, and Logistics

Growth Areas

Biomedical Innovation: Position and Opportunities

31,548

1.8%

2.9%

size of primary industrytotal employment (2013)

projected job growth(2013-2022)

projected output growth(2013-2022)

Opportunity

Industry-university partnerships at URI, Brown, with Brown Operational Plan for

Excellence calling for major new facilities, such as a shared, translational

neuroscience research lab.

Rhode Island Performance in Primary Industry

IT, Cyber, and Data Analytics: Position and Opportunities

Opportunity • Major expansion expected at NUWC• Projected development at URI• Brown ranks #5 in applied math and 20th in

computer sciences among research universities

• New Brown Data Sciences Institute

12,528

2.4%

4.9%

size of primary industriestotal employment (2013)

projected job growthsoftware services, (2013-2022)

projected output growthsoftware services, (2013-2022)


Chuck HagelFormer Secretary, Department of Defense

“Rhode Island is the Silicon Valley of underwater technology”

Defense, Shipbuilding, and Maritime: Position and Opportunities


Opportunity

• Rhode Island is the most specialized and fastest growing state in New England in Marine, Defense Ship Building, Materials and Machinery.

• Electric Boat’s Quonset Point hull manufacturing complex is the only site capable of such work in the U.S.

19,107

-0.6%

2.1%




Advanced Business Services: Position and Opportunities

Opportunity

Advanced Business Services growth in Rhode Island well outpacing

Massachusetts and Connecticut.

35,232

1.0%

3.6%


projected job growthfinance and insurance, (2013-2022)

projected output growthfinance and insurance, (2013-2022)


Design, Food, and Custom Manufacturing: Position and Opportunities

Rhode Island Performance in Primary Industry Opportunity

Rhode Island has more than 2 times the national concentration of Design and Consumer Products industries.

31,548

1.8%

2.9%




Transport, Distribution, and Logistics: Position and Opportunities

Rhode Island Performance in Primary Industry Opportunity

Warehousing and Freight Transportation, while small, are each growing by double-

digits since the economic recovery.

21,322

0.9%

3.6%




Arts, Education, Hospitality & Tourism: Position and Opportunities

Opportunity

Rhode Island is 38% more concentrated in jobs and generates 13% higher value-added per worker

than the nation as a whole.


42,801

1.2%

2.3%




Takeaway: There is no silver bullet.

✓ Rhode Island lacks massive anchors to make strategy simple.

✓ The state’s task must be to expand multiple intriguing, but small clusters.


1 2 31 2

3

✓ A proliferation of individually very small industries argues against narrow targeting.

✓ However, the interrelatedness of the state’s small industries and clusters recommends “platform strategies” that broadly address the fundamentals of industry growth and key growth areas.

The industry analysis suggests the needed strategy.

Brookings/Battelle Network Analysis of Patent Citations in Rhode Island

Execution

Business Climate Innovation

TalentPlace

Business environment

problems

Shaky core competitiveness

drivers

Splintered business-civic

leadership

Problems

Rhode Island Competes


Rhode Island Acts

Responses



Rhode Island Acts

Licenses, patents and startups per $10 million of university research expenditures

Rhode Island and U.S. average, 2013

0.0

0.2

0.4

0.6

0.8

1.0

1.2

United States Rhode Island

Licenses Patents Startups

Recruit and support the work of commercially-oriented impact faculty.

Sponsor a Rhode Island Global Innovation Challenge to accelerate early-stage startups.

Launch a Rhode Island Entrepreneurs in Residence program.

Responses

Licenses, patents and startups per $10 million of university research expenditures

Rhode Island and U.S. average, 2013

0.0

0.2

0.4

0.6

0.8

1.0

1.2

United States Rhode Island

Licenses Patents Startups

Responses

Create industry-university-laboratory tech collaboration centers focused on AI.

- Cleveland’s Global Cardiovascular Innovation Center

State Bachelor's degree Rank

ME 38% 1PA 32% 2VT 31% 3OR 31% 4MN 30% 5MA 30% 6DE 29% 7NH 27% 8CT 27% 9RI 25% 10

Share of All Degrees Granted in STEM

Establish state as national leader in STEAM education and training.

Expand the Wavemaker Fellowship to encourage graduates to stay and work in Rhode Island.

Responses

State Bachelor's degree Rank

ME 38% 1PA 32% 2VT 31% 3OR 31% 4MN 30% 5MA 30% 6DE 29% 7NH 27% 8CT 27% 9RI 25% 10

Share of All Degrees Granted in STEM Responses

Launch RI Codes, a statewide coding initiative to prepare more Rhode Islanders for careers in tech.

- General Assembly New York City



Rhode Island Acts

Fix underperforming R&D tax credit by raising the cap on deductions and making the credit refundable.

Assemble and prepare more large pad-ready commercial/industrial sites.

Responses

45th

CNBC 2015 Top States for

Business Rankings

Tax Foundation’s 2016 State Business

Tax Rankings

48th46th

Forbes 2015 Business Climate

Rankings

Rhode Island lags its competitors on numerous assessments of business environment

Reform unemployment insurance by reducing its incidence on young and growing firms.

Pursue a regulatory streamlining campaign to signal that the state is sophisticated, forward-thinking, and entrepreneurial.

Responses

45th

CNBC 2015 Top States for

Business Rankings

Tax Foundation’s 2016 State Business

Tax Rankings

48th46th

Forbes 2015 Business Climate

Rankings

Rhode Island lags its competitors on numerous assessments of business environment

- Chicago’s Small Business Center Web Portal

Commuter Rail Service Between Major Northeastern Cities

Trains Daily

Average Rush Hour Travel Time

Providence and Boston 37 1:15

Stamford and Manhattan 204 0:50Wilmington and

Philadelphia 37 0:48

Baltimore and Washington 76 0:57

Begin development of new express commuter rail service between Providence and Boston and expanded intercity rail service.

Responses

Spearhead the development of a new app-based Rhody Pass ticket option that reduces fares.



Rhode Island Acts

Rhode Island lacks a high-level business-civic organization that

can deliver decisively on transformative initiatives.

Partnership for RI

Response

January 19th, 2015#innovateRI


Metropolitan Policy Program

Economy & Finance

Rhode Island Innovates