In the 1950s, Robert Solow, a winner of the Nobel Prize for economics, determined that 80 percent of a nation’s economic growth can be credited to innovation that leads to new products and services, brings those products to market and ultimately changes how we live.
If the correlation between innovation and economic growth is so strong, it’s disappointing Maine invests so little in the research and development that can bring about that innovation.
That’s why as the transportation community raises alarm that road projects could be put at risk by a legislative delay in assembling a bonds package, residents should also be raising alarm about Maine’s sagging investment in another area dependent on bonds: research and development.
In 2010, research and development spending in Maine by businesses, colleges, universities and nonprofit organizations amounted to 1 percent of the state’s gross domestic product, according to the Maine Development Foundation. Maine lagged the national average of 2.6 percent and the 4.1 percent New England average.
The state’s research and development investment level placed it 45th in the nation in 2010.
The innovations that have changed lives, increased productivity, spawned new industries and created new jobs have started with research. And government has an important — though not exclusive — role to play in helping to pay for the research and product development that private businesses often have trouble justifying in their own budgets because of the lack of a certain and immediate payoff.
Last year, Gov. Paul LePage vetoed a $20 million bond package that would have allowed the Maine Technology Institute to award competitive grants to Maine businesses, nonprofits and universities to pay for the research and development needed to commercialize products in their infancy. The Republican-led Legislature allowed LePage ’s veto to stand.
Maine was already behind at that point in terms of research and development investments, though the state had made some advances in the past decade. Now, it’s crucial Maine start to catch up.
But as lawmakers design a bond package, they must be prepared to make tough choices in favor of investments that have proven to work.
A 2011 evaluation of Maine’s research and development investments, commissioned by the state Department of Economic and Community Development, points to some of those difficult choices.
The independent assessment points out that just a quarter of Maine’s research and development investments flow to industry programs, while the rest flow to university and nonprofit ventures that often don’t forge industry connections. Maine’s research and development investments, according to the assessment, are heavily weighted toward the research stage of product development, rather than the business development and growth stages that can help products gain market traction and generate economic activity.
This is a complaint LePage registered when he vetoed last year’s research and development bond. And it’s a problem that lawmakers can address when they get to work on a bonds package: They should set aside funding for research and development initiatives in Maine that have proven to work by striking the right balance between research and commercialization.
The Maine Technology Asset Fund, administered by the Maine Technology Institute, is one of those examples. Since its 2007 inception, the fund has pledged more than $50 million to projects that emphasize university-industry partnerships, attract significant matching funds to multiply the effect of the state’s investment, and hold the potential to make a major economic impact.
According to the 2011 research and development evaluation, 29 projects that had received funding by mid-2011 had directly created 289.5 jobs and preserved 303 more. Nineteen of those projects had led to the creation of a new product or service, and those in charge of 15 of those projects were pursuing intellectual property protections for their innovations.
Maine’s economy is in desperate need of more successes that can stem from a research and development funding infusion. If lawmakers know what to include in an investment package that works, all it takes is the political courage to make the right choice.