Index of the Massachusetts Innovation Economy

Dialogue at State House frames agenda for future priorities, strategies, investments

Flynn, chair of the Index Advisory Committee since its inception, first identified the strengths of the Commonwealth’s knowledge-based economy.

In direct comparison to other leading technology states—including California, Illinois, Minnesota, New York, New Jersey, North Carolina, Pennsylvania, Virginia and Connecticut—the Commonwealth is doing very well in attracting research funds, patenting activity, venture capital funding, new business formation, and per capita performance in many areas of research and development.

However, Flynn continued, there were a number of worrisome trends. Massachusetts has endured a net loss of more than 84,000 residents since 2001. Younger workers between the ages of 22 and 34 continue to leave the Commonwealth in growing numbers. The numbers also show that the lack of affordable housing is undermining the standard of living and undercuts the state’s competitiveness. And, the state’s job growth rate lags behind other leading technology states in key industry clusters, including financial services, healthcare technology, diversified industrial support and software and communications.

A distinguished panel of experts from the public and private sector then joined in an insightful and far-reaching dialogue on the future strategic challenges for the Commonwealth—a discussion made more meaningful by the transition to a new administration.

The day before the Index release event, it was announced that Joint Committee Co-Chair State Rep. Daniel Bosley from North Adams had been appointed by Governor-Elect Patrick Deval to be “special advisor” to the governor for economic development.

According to reports, Bosley will coordinate the Governor’s “Development Cabinet,” which will consist of the secretaries of Housing and Economic Development, Labor and Workforce Development, Energy and Environmental Affairs, and Transportation and Construction. As leader of the new economic cabinet, Bosley will be charged with developing and executing “specific strategies to expand business and job growth throughout the Commonwealth.”

Joining Bosley in the very attentive audience at the Index event were Daniel O’Connell, the newly appointed Secretary of Housing and Economic Development, and Andrea Silbert, who is heading Governor-Elect Deval Patrick’s economic transition team.

The panel included Rick Burnes of Charles River Ventures, Lita Nelsen of MIT, Paul Harrington of the Center for Labor Studies at Northeastern University, and Don Dubendorf, the Chair of MTC’s Innovation Institute Governing Board. Moderating the panel was Joseph Alviani, former executive director of MTC.

In response to a question about the decline in jobs and in workforce, Paul Harrington jumped right in, pointing the finger at trends in wages and salaries in Massachusetts. The only two states that were performing worse than Massachusetts, Harrington said, “were Louisiana, devastated by Hurricane Katrina, and Michigan, where the auto industry has been decimated.” Harrington compared the current situation to that of 1989-1993, when the Commonwealth “led the nation” in decline in wages and salary and job losses.

Rick Burnes, responding to a question about a trend identified by the Index in the decline of early stage venture capital, despite the overall robustness of venture capital investment in Massachusetts, said that it was “too easy to make money in the 1990s.” Venture capitalists, by definition, he continued, “don’t like to take risks. Burnes said that while Massachusetts has attracted a large pool of investment money, there was a gap in the transition from the research stage to proving the concept in the marketplace. Product development and manufacturing is done in other states, such as North Carolina.

Don Dubendorf took a different view on workforce issues, suggesting that a strategy needed to be focused on how to retain people who are 55 or older in the workforce—and to retain the value they represent. He also pointed to a number of important needs: pension reform; a way to reverse the decline in engineering students by investing in education at an earlier stage; and an increase in investments in the regions outside of the 495 region.

Lita Nelsen suggested that the state needed to look at the whole system in innovation and federal research investments. “There is very little federal funding of basic research,” she said. Industry, she continued, is not a player today. “We don’t have Bell Laboratories anymore,” Nelsen said. In the past, she continued, “federal research dollars paid for big breakthroughs in transistors, in genomics.” Today, much of the federal research funding is very focused, and there has been a decline in funding in the fundamental sciences from the National Science Foundation and the National Institutes for Health.

Acknowledging the presence of members of Governor-Elect Patrick’s economic team, Alviani asked the panelists to offer their top three suggestions to the new administration.

The panelists responded with enthusiasm. Nelsen called for major investments in the University of Massachusetts, praising its research capabilities and its world-class scientists, including winning the Nobel Prize in Medicine. “We need to make college education affordable for all Massachusetts students,” she said. She also called for building more technology transfer facilities, a critical component to capturing downstream economic benefits of research.

Burnes urged that Massachusetts should accentuate the positive and use some salesmanship in attracting and retaining young adults. “It’s a terrific place to live with a great quality of life,” he said. Affordability of housing is one of the keys, Burnes continued. He told a story, with chagrin, about how a colleague with a six-figure salary felt priced out of the market. “He’s living in Providence, Rhode Island, and commuting,” Burnes said.

Harrington asked that the new administration look at zoning and regulation to create more affordable housing and business development—with enough resources to make it happen. Harrington described many past efforts as a kind of “development hockey”—the state throws “a few biscuits into the corner and sees [which community] can dig them out.”

Dubendorf cautioned against seeing the world as a “brand new clean slate.” Economic development is a long-term strategy, and it requires “humility.” He urged the new administration to work in partnership and to engage in meaningful dialogue and collaboration with the different participants and sectors.

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MIT's Lita Nelsen

Rep. Dan Bosley

MTC's Executive Director
Mitchell Adams

Chair of MTC's Innovation Institute Governing Board Don Dubendorf and Paul Harrington of the Center for Labor Studies, Northeastern University

Rick Burnes of Charles River Ventures

Paul Harrington and Rick Burnes

Don Dubendorf, Rep. Dan Bosley
and Joe Alviani