Friday, December 7, 2007

TECH | NYS Underperforms

How should one monitor the progress of a state's competitiveness in the stakes for future tech jobs?

One way is to look at the data for federal grants for Small Business Innovation Research (SBIR), which is a way to bring research dollars to a state at the same time as one is building a stable of ponies for future venture-capital bets.

New York City’s Silicon Alley (in conjunction with its more hardware-oriented cousin techspots up the Hudson Valley from Poughkeepsie to Albany and elsewhere in the state) likes to think of itself as #3 after Silicon Valley and Route 128, and a recent ITAC report seeks to make something out of the fact that in the total number of tech jobs, the NYC metro area ranks ahead even of Silicon Valley and Greater Boston. The sheer size of the NYC metro area is what seems to put NYC ahead on the ITAC count. It is certainly true that having a lot of tech jobs in the NYC area is important in creating critical mass for future innovation. But density of tech jobs is surely more important for creating an environment conducive to serendipity, and the other important ingredient is effective leadership from the governor's office.

These factors go a long way to explain why NY State performs so poorly on the number of SBIR awards in FY 2006. New York was in eighth place in FY 2005 as well, so the rank is not an accident of the year 2006. As expected by the conventional wisdom, California ranks #1 with 725 grants and Massachusetts is #2 with 466 grants. But between these two front-runners and NY State (with only 163 grants) are five interlopers: Virginia (221), Texas (176), Colorado (173), Maryland (169) and Ohio (167). The strength of Virginia and Maryland on this list could reflect the proximity of their Beltway components both to agency grant-makers and to the Army and Navy research labs. Texas may also have benefited from its having a former governor in the White House for nearly six years.

But Colorado and Ohio ranking higher than the Empire State? I was mystified and am grateful to my friend David Hochman for helping me understand why they are doing better than NY State. Colorado doesn't have aggressive tech programs at the state level but it has several large Commerce Department (NIST and NOAA) and DOE labs, and in addition, for a range of historic reasons a really vibrant (high-density) tech community around Boulder and Longmont. Ohio has not only the Air Force labs and a significant NASA Center but also an unusual state program called the "Third Frontier" Project, a.k.a. the Ohio Research Commercialization Grant Program (felicitously acronymed ORCGP). This program, which has no direct parallel in NY State, provides aggressive support for institutions attempting to obtain federal grants.

Between 2005 and 2006, Michigan (with Detroit in a near-depression status because of the decline of the U.S. auto industry) dropped off the top ten list and was replaced by Washington (home of Microsoft, 91 grants). In ninth place is Pennsylvania with 133 grants.

Since Governor Eliot Spitzer was not in charge in FY2006, these numbers do not reflect on his current administration. We can hope that New York moves up in the rankings in future.

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