Thursday, February 15, 2018
A recipe for curing economic development myopia.
The Information Technology & Innovation Foundation (ITIF), known for its rigorous evaluations of tech-driven economies, in November published its 2017 State New Economy Index, which uses 25 indicators to measure the extent to which state economies are knowledge-based, globalized, entrepreneurial, IT-driven and innovation-oriented. This year, for the first time, that index’s findings are included in the “Rankings That Matter” charts on all 50 data pages for this year’s State of the States report, on the pages that follow.
“All regions have technological or innovation-driven activity occurring locally,” write co-authors ITIF President Robert D. Atkinson and Economic Analyst John Wu. “Yet policy discussions about America’s innovation-driven, high-tech economy too often spotlight just a few iconic places. It has always been too myopic a view of how innovation is distributed across the country.”
Here, with permission of Messrs. Atkinson and Wu, we present an adaptation of subsequent analysis of the role of high-tech startups, published in late November 2017.
The number of technology-based start-ups surged 47 percent in the last decade. These firms still account for a relatively small share of all businesses, but they have an outsized impact on economic growth, because they provide better-paying, longer-lasting jobs than other start-ups, and they contribute more to innovation, productivity, and competitiveness.
While these firms provide outsized contributions to employment, innovation, exports, and productivity growth, many policymakers focus more broadly on helping all business start-ups without regard to type. Such a broad-based focus risks reducing overall economic growth.