REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - “INVENTION TO VENTURE” WORKSHOP - UNIVERSITY OF NEVADA-RENO

FRIDAY, APRIL 20, 2007

AS PREPARED FOR DELIVERY

Introduction by Milton Glick, President, University of Nevada-Reno

Thank you, President Glick, for that kind introduction. It is a pleasure for me to be here today.

I’ve been looking forward to this visit to the University of Nevada, Reno for several reasons. For one, I was anxious to see the “Innovators Alliance” program in action. Second, I wanted to gain a better understanding of how UNR is playing an important role in advancing America’s economic competitiveness.

And third, my friend and colleague, Matthew Crow, who serves as our agency’s Deputy Assistant Secretary, attended UNR in the early ‘80s, I believe, so I feel like I’m returning to the scene of a crime. Matt claims he spent more time in class than he did at the Little Waldorf Bar and Grill, but sometimes I have my doubts.

President Bush feels strongly that the best way for America to keep its innovative edge in today’s global economy is to innovate – to turn ideas into reality. And the “Invention to Venture” program is a great example of the type of initiative that will help America maintain its reputation as the most innovative country on the planet. And this is critical, because at the end of the day, the ability to innovate is our country’s – and every other country’s – only possible sustainable competitive advantage.

It’s on this question that I would like to focus my remarks today. In my opinion, I suggest that it takes the ability to adapt to and capitalize on what I call the 5 “new realities” of the 21st Century economy.

THE FIVE NEW REALITIES

Let’s begin with New Reality #1 of the 21st Century economy: While perhaps the most obvious, it’s the most important, which is that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says, the world is flat. In the new flat, global marketplace, competition is not just from the firm down the road; our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

Let’s put this into perspective. I have a little globalization pop quiz for you: Which of the following cars is more “American:” the Ford Mustang, the Toyota Siena mini-van, or the Pontiac GTO?

• The Pontiac is actually Australian (GM’s Holden).

• The Ford and the Toyota are both built here in America, but the Mustang has about 60% American parts content and the Toyota has about 90% American parts content.

So, yes, our competition is indeed global, but with global competition comes opportunities for global partnerships – opportunities to expand our markets and increase our competitiveness. This is happening right here in Nevada more than any other state in the union. Nevada's exports reached $5.5 billion 2006, representing a 367% increase in the last 4 years, the largest percentage gain among the 50 states. And, with 95% of potential customers for American products outside the United States, this reality becomes more important every passing day.

New Reality #2: Competition is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the U.S. population. It took 35 years for the telephone to do the same thing. The personal computer accomplished the same level of market penetration in 16 years, 13 years for the cell phone and only 7 years for the Internet.

Every day it seems our latest gadget becomes outdated as the new and improved version hits the marketplace. There are good jobs that exist today that we couldn’t even dream up two years ago: Podcast manager…Blog writer…I-Pod accessory manufacturer…Satellite radio host.

Even the nature of innovation itself is changing: Innovation is becoming multidisciplinary as different technologies converge, creating new fields. Fields that didn’t even exist just a few decades ago. People smarter than me debate where bioinformatics or nanotechnology will take us, but all agree that they will become major drivers of the U.S. economy.

This new reality where cycle times for products and ideas continue to shrink will require all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do have the opportunity for reward.

Time is a master with no mercy. As leaders, we are all responsible for adapting and evolving our organizations to meet the challenges that time will bring. This is difficult, because with today’s rapid pace of change, change is often necessary before people are ready to embrace it – which is a particular challenge for governments at all levels.

New Reality #3: Yes, the world becomes a bit more complicated every day. In order to respond to this increased complexity, we must realize that we have reached a point where the components of competitiveness can no longer be pursued separately. Just as technologies are converging to create new fields of innovation, so are the components of competitiveness merging to shape economic growth in the 21st Century. This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs occurring in separate silos can no longer be tolerated.

The interconnected challenges of workforce, education, community and economic development must be tackled in concert – with each element leveraging the other. The resources available for each competitiveness component are important and precious, and we must use them to their full advantage.

Second, in our new 21st Century, Tom Friedman-the-world-is-flat reality, we must acknowledge what we all learned on the school playgrounds of our youth, that we are stronger when we stand together than when we stand alone.

Standing together means that we need to look beyond traditional political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

An example of such collaboration is the CANAMEX Corridor Plan, which is a partnership between Nevada, Arizona, Idaho, Utah and Montana. The participating States in the CANAMEX Corridor Plan are working together in the areas of transportation, commerce and communication to stimulate investment and economic growth in this region that stretches from Canada to Mexico. This is a great example of how political jurisdictions – in this case states and even nations – can work together to strengthen their collective prosperity.

New Reality #4: Public-Private partnerships become more critical every day. While governments at all levels, universities and other non-profit institutions are important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur, regardless of how much government spends. The private sector should not just have a seat at the table, but should actively be engaged as full partners in strategies for economic growth.

And the best way to ensure private sector engagement in economic development is to create an environment that supports business. The Reno/Sparks region is leading the way in this area, as illustrated by its 2005 ranking by Inc. Magazine as the nation’s “Number 1 Place for Doing Business in America.”

The private sector should be helping to shape – within the parameters of public accountability, of course – the development strategies that will lead to more higher-skill, higher-wage jobs.

New Reality #5: At the end of the day, it is the ability to innovate that is the only possible sustainable competitive advantage in the 21st Century. It’s not location. It’s not even the cost of doing business. Factors such as these will continually shift in a dynamic worldwide economy. But if a nation can maintain its edge in innovation, it will grow and prosper.

America is clearly the world’s leader in innovation. The spirit of discovery is one of our national strengths. From Edison's light bulb to Jarvik’s artificial heart to the iPod to the frozen pizza, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive and more prosperous.

We are the world leader in venture capital, and we possess one of the most open economies for trade and investment. We have a stable government, which is exceptionally well led in my humble opinion, and we share a culture that is uniquely supportive of risk-taking, and this must not be underestimated.

We are home to research facilities and universities that are the envy of the world. And, to our credit, American institutions of higher learning are playing a much more active role in economic growth and innovation than any other nation.

And with more than $80 million in research expenditures, the University of Nevada is a great example. That’s why the Economic Development Administration has invested more than $740,000 in UNR’s University Center for Economic Development since 2001. The University Center focuses on fostering economic development throughout Nevada by making UNR’s extensive resources available to surrounding areas and organizations to help create new jobs and economic opportunity.

The 20th Century undoubtedly belonged to the United States. Our leadership in the 20th Century was founded on our ability to foster new ideas and bring them to fruition. And, at the dawn of the 21st Century, we must not be complacent in our prominence. More than ever, international competitors are more rapidly commercializing technological advances, educating highly skilled workforces, and offering world-class research opportunities.

So, these are some of the “new realities” of the 21st Century economy:

• We are in a global economy.

• The pace of change will continue to accelerate.

• The components of competitiveness can no longer be pursued separately.

• Partnership with the private sector is critical.

• And innovation is the only sustainable competitive advantage.

On behalf of Commerce Secretary Carlos Gutierrez, I applaud your efforts to foster innovation and advance the art and science of economic development. I look forward to EDA’s continued partnership with UNR and other universities that are playing such an important role in making America more competitive in the global marketplace.

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