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46 MEETING GLOBAL CHALLENGES Keynote Address John Fernandez Assistant Secretary U.S. Economic Development Administration Secretary Fernandez thanked Chairman Wagner, President Zimmerman, and U.S. National Academies for organizing “this prestigious event,” as well as Ambassador Murphy and State Secretary Schütte for their leadership in strengthening German-U.S. commercial relationships. He described the symposium as “an excellent opportunity to collaborate, show best practices, and discuss some of the challenges” of strengthening innovation. “I look forward to learning from you and working with you,” he said, “as we seek to brighten both our nations and futures.” He said that he would focus his remarks on “how the United States under President Obama’s leadership is working to restore the strength of the innovators, and to keep us competitive in the 21st-century global economy.” He began with several major global challenges. The first was the structural changes in the world economy, which has brought new competition from all parts of the globe. The second is the ongoing recession that has affected the global economy—a recession “caused in part by poor financial regulatory decisions, a recession that has impacted world trade and pointed to the widening imbalances between developed nations and the rest of the world.” The third was the need to “face the impact of our unsustainable dependence on oil, a dependence that threatens the global economy by driving gas and energy prices higher.” As serious as these challenges are, Mr. Fernandez continued, there is unprecedented opportunity characterized by innovation, research and development, exports, and emerging sectors, such as clean-tech and low-carbon industries. These are opportunities “that promise an economy that works for everyone, regardless of where they live in the world.” As a candidate, President Obama said to the people of Berlin in July 2008, “While the 20th century taught us that we share a common destiny, the 21st has revealed a world more intertwined than any time in human history.”
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PROCEEDINGS 47 SUSTAINING A FLOW OF NEW IDEAS Those involved in development issues have increasingly recognized the critical role played by innovation in assuring success in the global market place, he continued. In the United States, the economy depends heavily on a continuous and open flow of new technologies and new ideas. Sustaining and encouraging that inherent capacity is a top priority in attempting to maintain America’s economic leadership. This emphasis, he said, was reflected by the President’s 2011 State of the Union speech. “I don’t think we’ve ever heard a State of the Union address so focused on innovation and our country’s commitment to support it,” he said. This commitment begins with several building blocks, Mr. Fernandez said: people, ideas, and networks. First, innovation is possible only through the actions of a skilled and talented work force, and strengthening this work force is the beginning point of the administration’s strategy. The second building block is continued investment in basic research to accelerate the knowledge breakthroughs that mark the beginning of the innovation cycle. The President proposed doubling the nation’s investments in R&D, and eventually increasing them to the level of 3 percent of GDP. Third, an innovation economy depends on modern infrastructural networks, including the smart grid, next generation air traffic control, new wireless communications systems, and other systems that move people and ideas with speed and efficiency. REMOVING BARRIERS TO INNOVATION While investing in these building blocks, he said, the Administration is also working to remove barriers to innovation. It is attempting to improve the patent system, both to increase the quality and quantity of patents and to reduce delays in processing. The Administration is also reviewing federal regulations to assure that rules facilitate rather than impede competition and innovation. To help ensure an environment in which small and large business can thrive, the President called for major tax reforms, including making permanent the research and development tax credit and bringing the corporate tax structure more closely in line with many of OECD counterparts. Finally, the strategy supports entrepreneurs through initiatives like Startup America, launched by the White House in January 2011 to promote entrepreneurship across the country. Startup America is investing $2 billion to help entrepreneurs by lowering barriers to high-potential, fast-growing small companies, especially in high-tech fields such as clean energy, nanotechnology, biotechnology, and advanced manufacturing. The Obama administration, Mr. Fernandez said, has recognized that the strength of the national economy depends on the strength of its regional components. In fundamental ways, the President’s innovation strategy depends on the cities, counties, and states where innovation actually occurs. A basic decision by this Administration has been to press for greater coordination among
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48 MEETING GLOBAL CHALLENGES the federal agencies charged with reaching out to the regions, and ensuring that the regions have the incentives, support, and knowledge they need. Primary mechanisms for this outreach are innovation clusters where universities, businesses, research institutes, foundations, political organizations, and others intersect as partners to work toward common development goals. This is a significant departure from earlier economic development policies that often promoted a “race to the bottom” in which cities, counties, and states undercut each other to attract short-term growth. The Task Force on Advancing Regional Innovation Clusters (TARIC) is a collaboration of federal agencies that seek to advance the growth of regional innovation clusters in the United States. While innovation clusters have existed for decades, beginning with the North Carolina’s Research Triangle Park in the 1950s, only recently does the federal government have a strategy to promote and align investments that support these clusters. PROGRAMS TO JUMP-START GROWTH In addition, in May 2011, the Economic Development Administration of the Department of Commerce (EDA) launched an initiative called the Jobs and Innovation Accelerator Challenge to jump-start innovation-fueled growth. The Jobs Accelerator is a joint effort of 16 federal agencies designed to promote growth through public-private partnerships in at least 20 pilot regions that demonstrate high-growth potential. Each of these accelerator challenge investments will serve as a catalyst to leverage private capital in the regions from foundations, corporations, financial institutions, and other private partners. This competition builds on the success of an earlier pilot project, the Energy Regional Innovation Cluster (ERIC), launched in 2010. That initiative provides about $130 million from seven federal agencies to create a regional research center, develop new building efficiency technologies, and cluster the work of local partners to implement these technologies in local businesses and buildings. Today, ERIC, which was won by the Greater Philadelphia Innovation Cluster consortium, is investing resources to commercialize research, launch new small businesses, and connect education and work force training strategies. These efforts are coupled with high-risk, high-reward policy tools, such as the i6 Challenges proof-of-concept competition that is designed to help move innovative ideas from the lab to the market place. The EDA is also promoting a Regional Innovation Acceleration Network to connect venture development organizations within America’s regions to promote best practices. Mr. Fernandez lauded President Obama for his “understanding the power of innovation and its importance to the future of our national competitiveness.” At the heart of competitiveness, he said, was the simple truth that “when you expand opportunity to more people, it creates more opportunity for everyone.” That work “is not yet done,” he said; substantial parts of the United States have not participated in the high-growth innovation economy. There are many cities and towns that were one thriving but are now suffering.
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PROCEEDINGS 49 Our national objective is to ensure that new opportunities “are not just for the biggest cities, or for people with advanced degrees or good connections. Everyone needs to have a stake in this innovation-fueled economy.” He concluded by saying that “what is true for communities within the United States is also true for relationships between countries.” The benefits of global economic growth over the past few decades have not accrued equally to everyone, he said, “but we’re confident that the President’s strategy for American innovation, as well as other forms of engagement, will help broaden opportunities for those who have not yet had them.”