New Report Offers Keys to Economic Growth -The Keys to Growth in the New Economy: Investing in Discovery, Engineering, and Entrepreneurship.

The critical roles of research and development, entrepreneurship, and capital formation within economic development are highlighted in a new report, The Keys to Growth in the New Economy: Investing in Discovery, Engineering, and Entrepreneurship.

Contact: Paul Kalomiris
Economic and Technology Policy Studies NGA Center for Best Practices

The report concludes that economic development strategies based on industrial recruitment ignore the fundamental dimension—namely knowledge creation—which developed the recruited jobs in the first place. The authors make four conclusions about the knowledge-based economy:

1. Investments in research, development and commercialization produce jobs, wealth and economic growth. The key resources for creating knowledge-based economies are education, research, entrepreneurship and capital formation. The challenge to state policymakers is to comprehend and incorporate knowledge from the complex system of education, research, entrepreneurship and capital formation into policies, goals and budgets. Building a successful policy infrastructure to support economic growth will position states to better compete.

2. Follow the Arkansas model. The Arkansas Science & Technology Authority (ASTA) was created by the state legislature in 1983. Within three years, the quasi-public agency planned and established a collection of programs to stimulate technology-based economic development in the state. Since then, the agency has invested more than $50 million to create more than 1,000 jobs in small technology-based firms.

3. The practice of knowledge-based economic growth generates the "increasing returns" of knowledge that drive the economy. Research influences economic growth, but the economic value of research becomes real when private equity capital is invested, creating companies and knowledge-based jobs, and commercializing new products and services. Public policy can create appropriate incentives for private investments in the early-stage activities of young, technology-based enterprises. Incentives are needed for angel investors, as well as efforts to organize, educate and train them.

4. Science, engineering and technology are important. The authors consider these three areas to be of primary importance to economic well-being. They argue that these areas must secure urgent policy attention, as investments in science, engineering and technology will galvanize economic growth.

* The Keys to Growth Report: http://www.arkansasscienceandtechnology.org/pdfs/keys_to_growth.pdf

http://www.nga.org/center/frontAndCenter/1,1188,C_FRONT_CENTER%5ED_5522,00.html