rhode island innovates
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Blurring Distinction Between
Manufacturing and Services
Relentless Pace of Technological
Change“Digitization of
Everything”
2016
R&D-intensive industries that concentrate the nation’s science, technology, engineering, and mathematics (STEM) workforce.
A M E R I C A’ SA D VA N C E D
I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,
A N D W H Y T H E Y M AT T E R
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
A M E R I C A’ SA D VA N C E D
I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,
A N D W H Y T H E Y M AT T E R
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
A M E R I C A’ SA D VA N C E D
I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,
A N D W H Y T H E Y M AT T E R
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
A M E R I C A’ SA D VA N C E D
I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,
A N D W H Y T H E Y M AT T E R
W H A T
W H E R E
W H Y
B R O O K I N G S
A D V A N C E D
I N D U S T R I E S
P R O J E C T
Advanced Industries
Pharmaceuticals
Medical EquipmentMotor Vehicles & Parts
Shipbuilding
Manufacturing35
Software Computer Systems Design
Telecommunications R&D Consulting Services
Services12
Oil & Gas Extraction
Electricity Generation
Energy
3
Advanced Industries
60.0%
8.7%
90.0%81.2%
17.7%
80.0%
U.S. GDP
ExportsU.S. Workers
Private Sector R&D
PatentsEngineers / Architects
Concentrate the Assets of the Innovative Economy
Advanced Industries
$160
$120
$80
$40
$0
Aver
age
Wag
e (th
ousa
nds)
Associate’s Degree
Some College
Secondary Diploma
No Secondary Diploma
$153
$117
$130
$89
$115
$69
$89
$56 $60
$38
$54
$32
$44
$28 $3
3
$20
Offer a Significant Wage Premium at Every Level of Education
Doctoral Degree
Professional Degree
Master’s Degree
Bachelor’s Degree
50 percent of advanced industry jobs
require less than a bachelor’s degree
Advanced Industries
Drive Productivity in Other Industries
Stimulate Local Economies
Support LongSupply Chains
Develop Technology that Transforms Lives
Advanced Industries
The state’s labor market has tracked the United States in recent decades …
Employment rate Unemployment rate
Source: Bureau of Labor Statistics
Average wages
50%
80%
0%
20% 50k
25k
0
Rhode Island United States
However, the state’s growth capacity deteriorated through the recession.
Real Output Growth (2000-2014)
Source: Bureau of Economic Analysis
New HampshireMassachusetts
Rhode Island
ConnecticutMaine
100
110
120
2000 2006 2009 2014
A core problem: The advanced industry base has shrunk.
US AI Employment
Rhode Island AI Employment
100
110
120
1980 2000 20131990
US Employment
RI Employment
Advanced Industry Employment, 1980-2013
Source: Bureau of Economic Analysis
Median income still hasn’t recovered from the recession.
Source: St. Louis Fed FRED Database
Real Median Income2014 U.S. Dollars
$49,000
$54,250
$59,500
$64,750
$70,000
1999 2001 2003 2005 2007 2009 2011 2013
Rhode Island$58,633
Rhode Island lacks sizable high-value growth engines.
✓ Erosion of the state’s advanced industry base and the failure to nurture new advanced industries has left the state adrift
✓ Rhode Island needs to build more resilient, future-oriented industry specializations to secure the next generation of prosperity
Assessment of Line-of-Sight to Significant Markets
Recommended Target Growth Areas
Industry Clusters Identification
Core Competency Identification
Advanced
5
Biomedical Innovation IT, Cyber, and Data Analytics
Defense Shipbuilding and Maritime
Design, Food, and Custom Manufacturing
Advanced Business Services
Opportunity
2
Arts, Education, Hospitality & Tourism
Transport, Distribution, and Logistics
Growth Areas
Biomedical Innovation: Position and Opportunities
31,548
1.8%
2.9%
size of primary industrytotal employment (2013)
projected job growth(2013-2022)
projected output growth(2013-2022)
Opportunity
Industry-university partnerships at URI, Brown, with Brown Operational Plan for
Excellence calling for major new facilities, such as a shared, translational
neuroscience research lab.
Rhode Island Performance in Primary Industry
IT, Cyber, and Data Analytics: Position and Opportunities
Opportunity • Major expansion expected at NUWC• Projected development at URI• Brown ranks #5 in applied math and 20th in
computer sciences among research universities
• New Brown Data Sciences Institute
12,528
2.4%
4.9%
size of primary industriestotal employment (2013)
projected job growthsoftware services, (2013-2022)
projected output growthsoftware services, (2013-2022)
Rhode Island Performance in Primary Industry
Chuck HagelFormer Secretary, Department of Defense
“Rhode Island is the Silicon Valley of underwater technology”
Defense, Shipbuilding, and Maritime: Position and Opportunities
Rhode Island Performance in Primary Industry
Opportunity
• Rhode Island is the most specialized and fastest growing state in New England in Marine, Defense Ship Building, Materials and Machinery.
• Electric Boat’s Quonset Point hull manufacturing complex is the only site capable of such work in the U.S.
19,107
-0.6%
2.1%
size of primary industriestotal employment (2013)
projected job growth(2013-2022)
projected output growth(2013-2022)
Advanced Business Services: Position and Opportunities
Opportunity
Advanced Business Services growth in Rhode Island well outpacing
Massachusetts and Connecticut.
35,232
1.0%
3.6%
size of primary industriestotal employment (2013)
projected job growthfinance and insurance, (2013-2022)
projected output growthfinance and insurance, (2013-2022)
Rhode Island Performance in Primary Industry
Design, Food, and Custom Manufacturing: Position and Opportunities
Rhode Island Performance in Primary Industry Opportunity
Rhode Island has more than 2 times the national concentration of Design and Consumer Products industries.
31,548
1.8%
2.9%
size of primary industriestotal employment (2013)
projected job growth(2013-2022)
projected output growth(2013-2022)
Transport, Distribution, and Logistics: Position and Opportunities
Rhode Island Performance in Primary Industry Opportunity
Warehousing and Freight Transportation, while small, are each growing by double-
digits since the economic recovery.
21,322
0.9%
3.6%
size of primary industriestotal employment (2013)
projected job growth(2013-2022)
projected output growth(2013-2022)
Arts, Education, Hospitality & Tourism: Position and Opportunities
Opportunity
Rhode Island is 38% more concentrated in jobs and generates 13% higher value-added per worker
than the nation as a whole.
Rhode Island Performance in Primary Industry
42,801
1.2%
2.3%
size of primary industriestotal employment (2013)
projected job growth(2013-2022)
projected output growth(2013-2022)
Takeaway: There is no silver bullet.
✓ Rhode Island lacks massive anchors to make strategy simple.
✓ The state’s task must be to expand multiple intriguing, but small clusters.
✓ A proliferation of individually very small industries argues against narrow targeting.
✓ However, the interrelatedness of the state’s small industries and clusters recommends “platform strategies” that broadly address the fundamentals of industry growth and key growth areas.
The industry analysis suggests the needed strategy.
Brookings/Battelle Network Analysis of Patent Citations in Rhode Island
Business environment
problems
Shaky core competitiveness
drivers
Splintered business-civic
leadership
Problems
Licenses, patents and startups per $10 million of university research expenditures
Rhode Island and U.S. average, 2013
0.0
0.2
0.4
0.6
0.8
1.0
1.2
United States Rhode Island
Licenses Patents Startups
Recruit and support the work of commercially-oriented impact faculty.
Sponsor a Rhode Island Global Innovation Challenge to accelerate early-stage startups.
Launch a Rhode Island Entrepreneurs in Residence program.
Responses
Licenses, patents and startups per $10 million of university research expenditures
Rhode Island and U.S. average, 2013
0.0
0.2
0.4
0.6
0.8
1.0
1.2
United States Rhode Island
Licenses Patents Startups
Responses
Create industry-university-laboratory tech collaboration centers focused on AI.
- Cleveland’s Global Cardiovascular Innovation Center
State Bachelor's degree Rank
ME 38% 1PA 32% 2VT 31% 3OR 31% 4MN 30% 5MA 30% 6DE 29% 7NH 27% 8CT 27% 9RI 25% 10
Share of All Degrees Granted in STEM
Establish state as national leader in STEAM education and training.
Expand the Wavemaker Fellowship to encourage graduates to stay and work in Rhode Island.
Responses
State Bachelor's degree Rank
ME 38% 1PA 32% 2VT 31% 3OR 31% 4MN 30% 5MA 30% 6DE 29% 7NH 27% 8CT 27% 9RI 25% 10
Share of All Degrees Granted in STEM Responses
Launch RI Codes, a statewide coding initiative to prepare more Rhode Islanders for careers in tech.
- General Assembly New York City
Fix underperforming R&D tax credit by raising the cap on deductions and making the credit refundable.
Assemble and prepare more large pad-ready commercial/industrial sites.
Responses
45th
CNBC 2015 Top States for
Business Rankings
Tax Foundation’s 2016 State Business
Tax Rankings
48th46th
Forbes 2015 Business Climate
Rankings
Rhode Island lags its competitors on numerous assessments of business environment
Reform unemployment insurance by reducing its incidence on young and growing firms.
Pursue a regulatory streamlining campaign to signal that the state is sophisticated, forward-thinking, and entrepreneurial.
Responses
45th
CNBC 2015 Top States for
Business Rankings
Tax Foundation’s 2016 State Business
Tax Rankings
48th46th
Forbes 2015 Business Climate
Rankings
Rhode Island lags its competitors on numerous assessments of business environment
- Chicago’s Small Business Center Web Portal
Commuter Rail Service Between Major Northeastern Cities
Trains Daily
Average Rush Hour Travel Time
Providence and Boston 37 1:15
Stamford and Manhattan 204 0:50Wilmington and
Philadelphia 37 0:48
Baltimore and Washington 76 0:57
Begin development of new express commuter rail service between Providence and Boston and expanded intercity rail service.
Responses
Spearhead the development of a new app-based Rhody Pass ticket option that reduces fares.
Rhode Island lacks a high-level business-civic organization that
can deliver decisively on transformative initiatives.
Partnership for RI
Response