Innovation 2.0: Egils Milbergs presentation to the Washington Economic Development Association Winter Meeting, Olympia, Washington, February 15 2011

1. Innovation 2.0
A Winning Strategy for Driving Growth
A Policy Reset in Time of Fiscal Constraint
Prepared for:
Washington Economic Development Association
Winter Legislative Conference
February 15, 2011
Egils Milbergs
Executive Director
Washington Economic Development Commission
www.wedc.wa.gov
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WA Economic Development Commission 1

2. Summary
This generation’s “Sputnik moment.” New global and national
economic realities challenge Washington State to start,
nurture and transform industries driven by innovation.
Innovation has been a focus of Washington’s high-tech
industries. The focus needs to be broadened to all people,
industries and geographies of the state to expand our overall
ability to provide high value jobs.
Washington possesses substantial assets and initiatives related
to innovation, but the state is far from reaching its potential.
A comprehensive economic growth strategy focused on
innovation and catalyzing “bottom-up” collaboration among
industries, universities, laboratories, regions, etc., can transform
Washington into a model 21st century innovation economy.

3. Sputnik Moments 2011
1985
1957
“this is our generations’
Sputnik moment”
President’s Commission on
“one small ball in the air” Industrial Competitiveness

4. The World is Changing
“not your father’s economy”
Innovation
Our Goal: Make Washington the most attractive, creative
and fertile environment for innovation in the world by 2020
Washington Economic Development
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Commission

5. 2010 New Economy Index
Overall Scores
26 indicators in five categories:
1. Knowledge Jobs
2. Globalization
3. Economic Dynamism
4. Digital Economy Source: ITIF
5. Innovation Capacity Development Commission
WA Economic 5

6. Knowledge-based Competition
China is now the world’s second largest economy
Soaring
R&D in
China

7. We are in tough hole ……..
Peak to
trough job
losses
1981-82:
2.9% of
labor force
This time:
5.5% of
labor force
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8. The Great Reset
FROM TO
• Public Sector Jobs • Private Sector Jobs
• Shovel Ready • Innovation
• Expand Safety Net • Upgrading Skills
• Consumption • Investment
• Debt • Exports
• Competing Regions • Collaborating Regions
• Top-down macro • Bottom-up cluster
strategies strategies
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9. WEDC Innovation Strategy
Public Impact
Business
Performance
World Greatest Innovation Ecosystem
Talent & Investment &
Workforce Entrepreneurship Infrastructure

10. Innovation Clusters Matter
• New industries and JOBS
Education • Grow faster
Workforce Research
• Pay higher wages
Start-ups
• More spin-off and start-up
Business opportunities
Regional
Innovation • Offset advantages of low
Clusters wage competition
Capital Associations
• Attract talent and
Non- investment
Gov’t
Defense
Profits • Solve social, energy,
Military environmental problems
• Maintain defense and
homeland security
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11. Marine Medical Freight
Global Health
Technology Devices Mobility
Health
Nano Services
Photonics
Bio-Fuels
Defense
Technology
Advanced
Manufacturing
Electric Car
Wine,
Water
Environment Value-Add Smart Grid Advanced
Cloud
Technology Food Clean Tech Materials
Computing,
Data Centers Economic Development Commission
WA 11

12. Designated Innovation Partnership Zones
 Bellingham Innovation Zone
 Aerospace Convergence Zone
 Sequim, North Olympic Innovation Partnership Zone
 Tri-Cities Research District
 South Lake Union Life Science Innovation Partnership Zone
 Spokane University District Innovation Partnership Zone
 Bothell Biomedical Manufacturing Corridor
 Central Washington Resource Energy Collaborative
 Grays Harbor Sustainable Industries
 Pullman Innovation Partnership
 Discovery Corridor Innovation Zone: Steinmueller Innovation Park
 Walla Walla Innovation Partnership Zone
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13. Major WA Military Installations
191,000 jobs
Whidbey Island $12.2 billion in output
Naval Air
$10.5 billion in labor income
Naval Station
Everett $5.2 billion in defense contracts
Naval Submarine
Base Bangor Spokane
Fairchild AFB
US Coast Guard
Intelligence, Surveillance, and Recon
WA Nat’l Guard Special forces and special operations
Network-centric operations
Puget Sound Cyber security
Naval Shipyard Composite materials
Joint Base
Lewis McChord  Unmanned systems – both air and sea
Madigan Medical Center  Energy efficiency and alternatives
Health care for veterans
US Army, Yakima
US Marine Corps
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14. Washington Economic Development
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16. Key Policy
Strategies
Washington Economic Development
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Commission

17. TALENT: New Pathways for Learning
• Protect training capacity for
high demand occupations
• Increase production of
science & engineering and
innovation graduates
• Expand use of on-line
education
• Reduce K-12 drop-out rate
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18. INVESTMENT: Accelerate Commercialization
• Compete aggressively for
Federal R&D funds
• Double recruitment of
STARS and EIRs
• Double start-ups by
access to expertise and
entrepreneurial capital
• Make permanent R&D tax
credit
• Clean Energy Public-
Private Partnership
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19. Infrastructure & Regulations
• Expand local infrastructure financing
tools (e.g. TIF)
• Define infrastructure to include
“intangible” capital
• Build-out broadband(wired & wireless)
• Create mechanism for self-financing of
industry clusters
• Reduce regulatory barriers and
uncertainty
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20. Seize Global Markets
• Implement Governor’s
export assistance initiative
• Invest in freight mobility &
infrastructure
• Focus trade promotion on
competitive clusters, not
national markets
• Improve foreign market
intelligence and on-line
tools
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21. World’s Greatest Innovation Park
Collaboration across regional boundaries
• Provide operational funding
for IPZs
• Strengthen links with
defense and mfg. sectors
• Pursue Federal funding of
regional innovation clusters
• Create mechanism for self-
financing of industry clusters
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22. Brand “Decade of Innovation”
• Utilize media to promote
how WA innovates
• Leverage the 2012 World’s
Fair Anniversary
• Define metrics to track
trends, inputs & outcomes
• Launch innovation “X”
Prize
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23. Innovation ecosystem is even bigger….
PNWER Region (GDP/Pop.)
State/Prov. GDP* Population
Wash. 311,270 6,468,424
Alberta 259,900 3,585,000
Oregon 158,233 3,790,060
B.C. 150,412 4,310,305
Idaho 51,149 1,523,816
Sask. 40,340 1,008,697
Alaska 44,517 686,293
Montana 34,253 967,440
Yukon 1,767 32,714
Total 1,051,841 22,372,731
If Pacific Northwest Economic Region
*2007 population & GDP in $US Million
were a separate country, it would rank
13th in total GDP

24. Setting Priorities…..
Reduce Create
Economic
Development Tough
Choices
Programs
Eliminate Invest
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25. WA Economic Development Commission 25

26. The risks inherent to starting a thriving enterprise
in today’s troubled waters are immense, but the
rewards have never been greater.
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27. Thank You
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