1. Innovation and Entrepreneurship: Policy Opportunities and Challenges Remarks at TECNA Baltimore, March 19, 2009 Rob Atkinson President Information Technology and Innovation Foundation

4. IT Drove the U.S. Productivity Turnaround (Annual rate of total factor productivity growth)

5. And Continues to Drive Productivity, Even in Recession

10. Industry R&D Investment Does Not Appreciably Decline in Recession Investment as Share of R&D Percent Annual Growth Average, 1953-2007 1.22% 2.3% Average, downturn years 1.19% 2.9%

11. But the Other Challenge is Long Term: The U.S. is Lagging in Innovation

14. We’re Number 1?

15. Actually, We’re Number 6 Now No. 6

18. Benchmarked Change from the Beginning of the Decade

20. Corporate R&D

21. Corporate R&D Change: 2003-2007

22. Government R&D

23. Government R&D Change

24. Some States Are Also Lagging in Innovation

26. 2008 SNEI Overall Scores TOP 5: Massachusetts Washington Maryland Delaware New Jersey

27. Workforce Education

28. U.S. Migration of Knowledge Workers

29. Immigration of Knowledge Workers

30. Fastest-Growing Firms

31. Venture Capital

32. High-Tech Jobs

33. Industry Investment in R&D

34. So, What To Do?

35. An Innovation Economy Requires an Innovation-Based Economic Development Policy

36. Economic Development Doctrines and State Economic Development Policy Conventional Economic Development Neo-classical Business Climate Neo-Keynesian Populist Innovation Economics

37. Economic Development Doctrines and State Economic Development Policy Conventional Economic Development Neo-classical Business Climate Neo-Keynesian Populist Innovation Economics Source of growth: Capital investment Principal Economic Development Means Drive down costs through firm-specific subsidies Object of Policy Recruitment of out-of-state firms Quality of Life Minor importance Goal Get big

38. Economic Development Doctrines and State Economic Development Policy Conventional Economic Development Neo-classical Business Climate Neo-Keynesian Populist Innovation Economics Source of growth: Capital investment Capital investment Principal Economic Development Means Drive down costs through firm-specific subsidies Drive down costs through lower taxes and reduced regulations Object of Policy Recruitment of out-of-state firms Recruitment of out-of-state firms Quality of Life Minor importance Not important Goal Get big Get big

39. Economic Development Doctrines and State Economic Development Policy Conventional Economic Development Neo-classical Business Climate Neo-Keynesian Populist Innovation Economics Source of growth: Capital investment Capital investment Worker incomes Principal Economic Development Means Drive down costs through firm-specific subsidies Drive down costs through lower taxes and reduced regulations Drive up wages and benefits and foster more progressive taxes and public spending Object of Policy Recruitment of out-of-state firms Recruitment of out-of-state firms Small business and socially- conscious business Quality of Life Minor importance Not important High importance Goal Get big Get big Get fair

40. Economic Development Doctrines and State Economic Development Policy Conventional Economic Development Neo-classical Business Climate Neo-Keynesian Populist Innovation Economics Source of growth: Capital investment Capital investment Worker incomes Innovation and organizational learning Principal Economic Development Means Drive down costs through firm-specific subsidies Drive down costs through lower taxes and reduced regulations Drive up wages and benefits and foster more progressive taxes and public spending Spur firm innovation through targeted supports (e.g., research, financing, skills, etc.) and incentives for firms to produce these themselves. Object of Policy Recruitment of out-of-state firms Recruitment of out-of-state firms Small business and socially- conscious business High growth entrepreneurs and existing firms Quality of Life Minor importance Not important High importance Moderately important to attract and retain knowledge workers. Goal Get big Get big Get fair Get more prosperous

48. [email_address] www.itif.org Thank You