When it comes to investing in research and development at businesses, nonprofit organizations and universities that can lead to commercial successes and jobs, Maine is a laggard.
The total research and development investment in Maine in 2011 amounted to about 1 percent of the state’s gross domestic product, placing it 41st in the nation. Maine lagged its New England neighbors by this measure and most of the rest of the country.
Why does it matter? Innovation — the discoveries and creations that yield new products and services that change the way we live and work — is critical to propelling an economy. If Maine government and businesses are investing so little in the innovations that can help the state grow, that spells trouble for Maine’s economic prospects.
That’s where organizations such as the Maine Technology Institute come in. In 2007, voters OK’d a $50 million investment in the Maine Technology Asset Fund managed by the state-funded, nonprofit organization.
The organization awarded the funds on a competitive basis to businesses, nonprofit groups and university labs with research and commercialization plans approved by the American Association for the Advancement of Science. As a condition of receiving a grant, each applicant had to secure significant matching funds.
The rigorous, merit-based process — in contrast to a process in which R&D funds were awarded according to political pull — paid off.
The entities that received the fund’s $53 million in grants secured more than $80 million in matching funds from other sources, according to the Maine Technology Institute. A 2011 evaluation of Maine’s research and development investments found the 29 projects that had received funding by mid-2011 had directly created 289.5 jobs and preserved 303 more in traditionally higher-paying sectors. 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.
But the Maine Technology Asset Fund has awarded all of its available grant funds. It hasn’t received a new infusion of funds since 2010, when voters approved a $3 million bond allocation. If Maine wants to realize an economic benefit from research and development, it needs to make a sustained and significant commitment to investing in R&D.
But that commitment has fallen off track since Gov. Paul LePage took office. In 2012, LePage vetoed a $20 million bond that would have allowed the Maine Technology Institute to make more awards through the technology asset fund. And earlier this year, lawmakers abandoned the fund’s competitive approach in favor of bonds earmarked for narrowly defined research and training initiatives.
Even without available funding for the Maine Technology Asset Fund — and despite inevitable failures such as that involving the Maine Technology Institute-supported, Owls Head-based solar energy company Ascendant Energy, which recently filed for bankruptcy — the Maine Technology Institute has continued to carry on important work that has proven to support businesses and pay dividends for the state.
A recent evaluation of the institute’s Development Loan program, which offers business R&D loans of up to $500,000 to support product commercialization, found the program yielded a 12.4 percent, three-year return on investment to the state in the form of state revenues. Employment grew 19 percent on average at the 32 participating businesses from 2011 to 2012.
The organization in recent years also has adopted an emphasis on mentoring entrepreneurs. But the Maine Technology Institute’s potential is limited without a significant commitment of funding to support its mission.
After the ouster last week of President Robert Martin and Ascendant Energy’s recent bankruptcy, it’s possible the organization’s image has suffered damage. But it’s important to look beyond the recent controversy to a history of overall success and work toward a future in which the organization has an even greater impact on Maine’s economy.