Regional Institutions for Innovation and Productivity

Conference Video

Information Technology and the Future of Washington State

Chris Gregoire
Governor, Washington State

Brad Smith
Senior Vice President, General Counsel, and Corporate Secretary, Microsoft

here is a link to a visual of the Puget Sound Tech Universe

Wired For Innovation: How Information Technology is Reshaping the Economy

Erik Brynjolfsson
Schussel Family Professor, MIT Sloan School of Management,
Director, MIT Center for Digital Business

Erik Brynjolfsson examines why the spread between leader and laggard industries has been growing in the past decade. IT intensive industries have been pulling way from the pack, as measured by corporate performance and gross profit margins. The reason is what Brynjolfsson identifies as the "Information Gold Mine."

Digital Information is doubling every 1.2 years, and the size of the largest data warehouses is tripling every two years - these speeds surpass even Moore's law! The rapid growth of data information is due to emerging technologies that reduce firms' costs of measurement, experimentation, sharing, and replication. Examples are Cloud Computing, or Enterprise 2.0 networks that capture many-to-many knowledge sharing within companies, communities of employees, and customers and suppliers.

Innovation and Competitiveness: Reevaluating the Contributors to Growth

Bart van Ark
Senior Vice President and Chief Economist, The Conference Board,
Professor of Economics, University of Groningen, Netherlands.

Bart van Ark predicts that 2010 will see a return to robust economic growth, driven largely by emerging nations. Whether economies move up the value chain will depend on their R&D, innovation, and investment in high-tech capital.

He points out that "IT Intangibles" (licenses, intellectual property rights etc.) are major sources of strategic advantages to firms, since they represent "Strategic Capital." Intangible investment is therefore the key support for innovation and productivity growth. Differences in intangibles are shown to be surprisingly large, even across advanced nations.

Information Technology and the Transformation of the Washington Economy

Theo Eicher
Professor and Robert R. Richards Distinguished Scholar,
Director, Economic Policy Research Center,
University of Washington

Theo Eicher highlights the recent structural changes in the Washington state economy. Over the past two decades, the economy has shifted from being broadly manufacturing based to IT. The shift towards an information economy that has now been identified as "The New Economy." Eicher demonstrates the changes in income, output and employment in Washington State that have occurred since the early 1990s are driven by the infomration sector.

Central to the expansion of the Washington state economy has been Microsoft corporation. The Milken foundation documents, for example, that The Puget Sound area "employed 226,300 high tech workers in 2007, just 17,700 fewer than San Jose," and that "the region captures 23.4 percent of all software wages in North America." "The strength of industry titan Microsoft and its affiliated companies gives the Seattle metro area a decisive lead in this category."

Regional Institutions for Innovation and Commercialization

Linden Rhoads
Vice Provost of Technology Transfer, University of Washington

Linden Rhoads examines the barriers to IT adoption, and how these barriers related to "entrepreneurial faculty." After reviewing best practices for commercializing new technology, she highlights key building blocks: Entrepreneurship Programs, Incubators, Funding, and Industrial Relations.

Ms. Rhoads supports Research Parks as the key driver of commercialization in the region and outlines how such institutions would interact with local entrepreneurs.

Technology Innovations: Powering or Pummeling the Economy

Daniel Wilson
Senior Economist, Federal Reserve Bank of San Francisco,
Assistant Director, Center for the Study of Innovation and Productivity

Daniel Wilson traces the effects of technology over the business cycle. After he outlines why technical change is the driver of productivity growth, he investigates why per capita income in the US has increased from $7,000 in 1949 to over $30,000 today. He shows that new technologies are not only drivers of growth, but that they also follow the trend during recessions.

While IT intensive sectors perform better during recessions, he finds that technical change can also lead to job losses and restructuring effects that are accelerated during recessions. Hence the long run gains in employment might be preceeded by short term job losses, yet another reason to focus on the crucial skills necessary to accommodate technical change.

Information Technology and Education as Determinants of Productivity Growth

Thomas Strobel
Economist, Ifo Institute of Economic Research at the University of Munich

Thomas Strobel provides a visual example of how two countries diverged in their levels of economic growth exactly because of their differences in IT investment. In a case study of the US and Germany, he shows that while IT investment generated two growth accelerations in the US, Germany experienced dual growth reductions.

The source of the divergence is shown to be the insufficient IT investment in Germany, which generated less IT production, but also smaller IT spillovers from IT producers to IT users. Crucially, the lack of appropriate human capital to complement IT investment is shown to be at the heart of the problem.