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Remarks of Assistant Secretary of Commerce for Economic Development David A. Sampson SSTI Conference - Building Tech-based Economies: From Policies to Practice
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| Good afternoon. Thank you Dr. Singerman for the kind introduction. As you all may know, Dr. Singerman served before me as Assistant Secretary of Commerce for Economic Development. Phil, thank you for your continuing support, guidance and valued advice. Economic development is not a partisan issue. We know what works in promoting economic opportunity and I welcome your friendship and continued input.I would like to thank SSTI for inviting me to participate in this conference. Dan, great conference. SSTI plays a vital role in promoting tech-led economic development in America. You are truly on the front lines. You should be extremely proud of the work you do. I know I'm impressed, as are others I talk to in Washington and around the country. The Department of Commerce and the Economic Development Administration are honored to partner with such a fine organization. I wish you continued success. We meet at a unique and pivotal moment of history in which our liberty and very survival are at stake. And not only for us, but for all civilized nations. The potential that technology led economic development holds for our nation, states and communities is meaningless if we remain vulnerable to terrorist and tyrants, who have weapons of mass destruction at their disposal and the will to use them. President Bush has told us that Iraq is a "grave and growing" danger to the United States. We still face potential further terrorist attacks, there is trouble in the Middle East, we are experiencing an uneven recovery, and corporate credibility issues have shaken our confidence. To be sure, many Americans are uncertain about the future, and President Bush understands that. But, ladies and gentlemen, as President Bush recently said, "The foundation for economic growth in America is strong."President Bush led the way in creating a new ethic of responsibility in America's corporate community. In July, I was honored to join the President in the East Room as he signed legislation that exposes and punishes acts of corruption, moves corporate accounting out of the shadows, and protects small investors and pension holders.The President is also focused on assuring the Nation's taxpayers that their government is pursuing a budget based on fiscal responsibility.As he said a few weeks ago, "If you overspend, it creates a fundamental weakness in the foundation of economic growth."The President is committed to working with Congress to make sure they hear the message -- the message of fiscal responsibility. And this means that we must set priorities. The most immediate threat to our country is from those who wish to do us harm. And so our most important priority, when it comes to budgeting and time and effort, is to protect American citizens. The President is concerned about the economic security of every American. But he's also optimistic about the future, because the fundamentals for growth in the American economy are strong:" Inflation and interest rates are low;" Auto sales are strong;" New home sales are setting records;" Wages are rising faster than inflation; and" Consumer spending remains strong.Our Nation is on track for sustained economic growth.As the President said at the Waco Economic Summit, the first three-quarters of his administration were marked by recession. The last 3 quarters have shown growth. The trend is moving in the right direction, but we must do more to ensure strong growth and that every American who wants a job can get one.As we enter the 21st century, America leads the world in developing and commercializing new technologies. One reason why so many observers identified the 20th Century as "the American Century" is because the United States pioneered so many scientific discoveries and research breakthroughs during the last 100 years. Much of that began right here in Dearborn. This progress continues all around our Nation every day. From genomics to quantum computing to nanotechnology and so many things in between, U.S. scientists and high tech workers are generating new products and trailblazing revolutionary discoveries every day.However, our Nation is now facing new and unique challenges in the wake of the September 11, 2002 terrorist attacks.It is now imperative that the private sector plays a key role in furthering our Nation's security. The private sector needs now to explore what kind of business practices and innovations are demanded by the times. It is important that we get ahead of the curve when it comes to protecting our Nation.Putting American technology and ingenuity to work is where we should start. We lead the world in developing and commercializing new technologies. Our scientists and high-tech workers turn out new products and discoveries almost daily. I see it as I travel this great country.Advances in technology will greatly help efforts to harden infrastructure ... to detect dangers ... and to empower our military.Investing in technology also enhances our economic security. Before the recent downturn, high tech companies were creating twice as many new jobs as any other industry. The impact can be even greater for regional economies.Technology is making us more productive and the economy more stable. IT alone accounted for two-thirds of extraordinary productivity gains in the latter half of the 1990s. Those gains continue, despite last year's recession. And that has lifted corporate profits, which helped make for one of the mildest downturns in over 50 years.President Bush is committed to American leadership in science and technology. He's asking for a $112 billion R&D budget ... the largest ever. He wants Congress to make permanent the federal R&D tax credit for private industry, which spends twice as much government. The idea is to encourage industry to invest and to innovate. But to keep government out of the driver's seat.EDA has developed a new relationship with the Commerce Department's Technology Administration, led by the Under Secretary Phil Bond, also the Secretary's Chief of Staff, and Assistant Secretary Bruce Mehlman, who many of you know. Bruce and I, and our staffs, meet regularly to discuss tech-led economic development and how our two agencies can work together to advance the President's domestic economic goals. By creating a synergistic effort between the two agencies, EDA will be able to more efficiently place federal dollars in economic development programs that represent the cutting edge of technology. I deeply appreciate and value Bruce's contribution in this respect. He brings a reasoned and insightful voice to the discussions involving tech-led development, not only at the Commerce Department, but also of course within the White House and with the public sector. Technological innovation is critical to our nation for many reasons. First and foremost, technology fuels sustainable economic expansion - creating high-wage jobs, world-class exports and productivity growth so critical to our long-term global competitiveness. Innovations also improve our quality of life… from new drugs and cures that help people live longer and healthier lives, to agricultural advances that permit more bountiful harvests with less herbicides and pesticides. Advances in technology are vital to our efforts to protect our homeland by hardening our infrastructure, detecting dangers and empowering our defenders. Energy innovations are the key to meeting our future power needs while protecting our environment, and technology holds extraordinary promise for the future of education. By exporting our technology around the world we help improve the standard of living of the other 6 billion people on the planet. Technology is also essential to improving the quality of life and standard of living at the state and local level. As you consider your role in promoting economic development strategies, the extraordinary impact of technological innovation - both in strengthening existing industries and facilitating the growth of new businesses - is inescapable and uniquely compelling.Second, high tech is a powerful job creator. Between 1992 and 2000, high tech companies created twice as many jobs as non-high tech private employers nationwide. The impacts are even more profound for many regional economies. From 1990 to 1999, high tech employment grew 34% in Omaha and 73% in Boise.). In Dallas, Texas, high tech jobs grew 26.8% during the 90's. It is important to note that these jobs pay, on average, nearly twice as much as other private sector jobs, with the attendant economic multiplier impact. In Pittsburgh, for example, the region's technology sector directly employs nearly 18% of the overall workforce but contributes 24% of the region's total payroll. Technology is making us more productive. IT products and IT-producing industries have contributed roughly two-thirds of the extraordinary American productivity growth that appeared in the latter half of the 1990s. And it's worth noting that this productivity growth endures. During each of the previous eight recessions, productivity growth turned negative. By contrast, during the economic downturn of 2001, productivity growth remained robust at about 2%, jumping to 5.2% in the 4th quarter of 2001 and over 6% in the first quarter of 2002. This is critical because we know America can never compete in the losing game of "who can pay their workers least"… technology-inspired productivity means we don't have to.Third, technology boosts economic output. Take information technology. While IT-producing industries represent only 7% of all businesses, they accounted for roughly 28% of overall real economic growth between 1996-2000. This also has great impact at the local level. From 1981 to 1998, for example, the contribution of the high-tech sector to Boise, Idaho's local economy jumped from 12% to 43%. Fourth, Technology likewise contributes to American exports. Technology exports accounted for 29% of all U.S. exports in 2000. In New Mexico, high tech exports accounted for 86% of the State's total in 2000.Fifth, Technology expands a region's knowledge base. Strong technology clusters BOTH require outstanding research presences at Universities or federal labs AND reinforce these critical resources. The sum is greater than the parts when innovators and technology commercializers are around one another. This is important, among other reasons, because large cities that are home to a major research university generated roughly 20% more income per capita than their peers without a major university, 10% more for smaller cities with University presences. Sixth, Technology often invites reinforcing cycles of innovation and investment. VCs chase after entrepreneurs who follow the innovators. Innovators are attracted to regions that offer opportunities to pursue cutting edge research, to start-up commercial ventures and obtain funding to take products from lab to market. For example, in Pittsburgh, over $458 million of R&D at regional universities and federal government facilities helped attract $741 million in venture capital investment to the region in 2000. Seventh, and technology renews communities in a sustainable way. Technology growth and development is bringing new vitality to rural areas long ignored and to formerly great urban areas now in decay. We must do more to link rural areas to tech-led economic growth. The information revolution is riding to the rescue of many washed-out powerhouses of the industrial revolution, with cyber districts transforming large blocks of formerly empty warehousing and manufacturing space into highly sought-after post-industrial hubs. EDA has invested in just such a development in Baltimore at the site of a former, abandoned can factory. State and regional public policies directly impact the pace of economic growth, high-wage job creation, and global investment. Decisions made at the local level play a critical role in establishing the environment needed to let innovators innovate and entrepreneurs create jobs, companies, and community wealth.Of course there is no single policy formula that works to foster innovation and technology development in all regions. This may be the most valuable lesson from Michael Porter's cluster theory - all regions are different, with different competencies and different strategies for success. Every region should NOT expect to become "the next Silicon Valley" or the premier biotech center of excellence. Cities cannot simply decide to become good at something without a base to expand on - they must build upon existing strengths.However, as the Council on Competitiveness observed, there are no low-tech industries - only low-tech firms - and cities that set realistic strategies based upon local strengths can excel as innovation hubs. There appear to be four basic steps community leaders can take to help set the business climate to sustain technology growth. First, policy makers can take steps to PROMOTE INNOVATION. Supporting research excellence - at universities, federal labs and industry; protecting intellectual property rights and encouraging technology transfer; providing a certain and navigable regulatory framework that prioritizes innovation; and encouraging linkages and consortia between knowledge creators and commercializers, all encourage technology excellence.As an example, EDA assistance helped convert the former Fitzsimons Army base located in the Aurora-Denver area into a $4.2 billion, 25,000-worker science and technology campus. The project is the Nation's largest medical-related redevelopment project. Second, local leaders need to SUPPORT ENTREPRENEURSHIP, by pursuing tax policies that encourage investment and risk capital; supporting trade inside and outside the cluster, encouraging entrepreneurship education at all levels; supporting business incubators; and reducing regulations that impede new business formation. I am proud to say that EDA is doing just that. Recently, I visited one of our economic development partners -- Advancing California's Emerging Technologies (ACET). In August, Commerce Secretary Don Evans also visited ACET and presented them with a $6 million investment, the largest single grant the Commerce Department has made since the beginning of the Bush Administration and the largest since 1995. On the grounds of the former Alameda Naval Air Station, EDA is partnering with ACET to expand their Bio-Tech Incubator. Third, policy makers looking to develop technology leadership must IMPROVE INFRASTRUCTURE, such as community transportation systems, energy generation and transmission infrastructure, and zoning and real estate laws. Strategic recruitment of firms allows local leaders to reinforce cluster strengths among partners and suppliers. And the telecommunications infrastructure is particularly critical in the information age, with broadband networks holding a key to enterprise efficiency and cross-cluster productivity. Communities around the country are beginning to employ a number of strategies to boost broadband deployment and usage. The localities that create the most broadband friendly environments may be like the localities that attracted railroads in the last century, while the localities that don't prioritize bandwidth may end up like the towns by-passed by the railroads. And while it is still too early to quantify the importance of protecting critical infrastructure as part of our overall homeland security strategy - public safety capabilities, less vulnerable locations, and operation of redundant networks may offer some regions an expanded role in our nation's struggle against global terrorism. And fourth, local leaders need to EMPOWER PEOPLE. Flexible, well-educated and continuously trained workers are critical to innovation, and entrepreneurs will often look for such a workforce when deciding where to start their businesses. Entrepreneur networks are needed to connect researchers, innovators, investors and businesspeople. Communities' quality of life - the dynamics and amenities that make regions desirable locations to live and raise a family - are critical to attracting the best and brightest innovators and entrepreneurs. And America's traditional openness to immigrants has been a seminal factor in our ability to out-recruit European competitors for talented engineers from places like India and China. A recent Wall Street Journal piece offered a telling anecdote of a German government web site looking to lure foreign researchers to Germany with the following sales pitch: "Germany, as the statistics show, is no more xenophobic than other European countries." Just as America's inclusiveness and meritocracy are competitive advantages on the international stage, community personality is a key differentiator regionally.Lest you think "I'm from Washington and I'm just here to tell you what to do," let me acknowledge that there is much to be done at the federal level also. I am happy to report that President Bush and his Administration are committed to continued American leadership in science and technology. In fact, the common theme among our highest priority issues right now - winning the global war on terrorism, protecting Americans here at home, and restoring robust economic growth - is using technology to improve our world.Of greatest importance to this President may be the bipartisan efforts to improve our nation's education system, epitomized by the Leave No Child Behind Act signed last year. To remain globally competitive - both as a tech-led economy and as the most-inclusive opportunity society - we must place education first, and that's what President Bush is doing.There are many efforts underway at the Department of Commerce to support innovation, entrepreneurship, infrastructure development and citizen empowerment. EDA can be a valuable resource to you. We are committed to developing new partnerships and expand our deal flow to strategically invest in drivers of regional economic growth and prosperity.Once again I appreciate your having me here and I congratulate all of you for your commitment and efforts to strengthen American economic growth at this unique time in our nation's history. Your work is critical to our economic strength and long-term prosperity.Thank you | ||
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