Kennedy and Bresciani: Invest in an innovative economy
By Mark Kennedy
and Dean Bresciani
In recent weeks as we traveled across the state, we received very positive feedback regarding our proposal for the state to invest $25 million a year each supporting research at the University of North Dakota and North Dakota State University. Attendees in Bismarck, Dickinson, Fargo, Grand Forks, Minot, Watford City and Williston affirmed their belief in expanded research to strengthen our core agriculture and energy industries, diversify the state's economy, spur economic growth and create opportunities for our citizens.
A recent report by the Information Technology and Innovation Foundation supports the value of research. Their New Economy Index measures the degree that the 50 state economies match the ideal structure of the innovation driven new economy. This index is based on 25 measures, each of which is relative to size, making it conceivable that North Dakota could rank first. In 2017, North Dakota ranked 38th, down from 36th in 2014 and 34th in 2012. As the state assesses how to best align itself to be more innovation driven, it is instructive to see where we already excel and where we need further investment to enhance statewide competitiveness.
North Dakota ranks ninth in its embrace of the digital economy. This includes being ranked sixth in e-government, measuring a state's use of digital technologies that not only cut costs, but also boost productivity for businesses and residents. The state ranks 18th in implementation of broadband infrastructure. North Dakota's digital economy is bolstered by high connectivity in industries where NDSU and UND have strong engagement. The state ranks 10th in health IT and 12th in online agriculture.
North Dakota also ranks ninth in the number of business startups and failures as a share of private establishments. Both UND and NDSU support startups, and we are committed to continuing our work with the Commerce Department and Bank of North Dakota in promoting emerging technologies.
North Dakota ranked 23rd in workforce education, measuring the proportion of citizens with bachelor's degrees. The report notes how "a 1 percent increase in the supply of college graduates increases all high school dropouts' wages by 1.6 percent and all college graduates' wages by 0.4 percent." While pleased that the state is ranked in the top half, we remain committed to delivering more graduates to the state's workforce.
Making significant progress on any effort must include taking advantage of your strengths. For North Dakota, our strengths are a top-10 ranking in being digitally connected and in promoting startups. But it also requires addressing attributes that hold us back. While North Dakota may be well wired with many startups and college graduates, it is ranked 46th in innovation capacity and 38th in knowledge jobs. Expanded university research can drive progress in the attributes underlying both.
Industry investment in research and development in the state ranks 36th, while non-industry investment ranked 19th. We join New Mexico ranking 1st, Rhode Island 4th, Idaho 7th, Mississippi 8th in small states benefiting from strong non-industry research, in part, due to equal representation with big states in the U.S. Senate. While several research-intensive companies have operations in the state, UND and NDSU have not yet reached scale sufficient to attract a significant share of their research. We must do so to truly diversify the state's economy.
In 2015, higher education institutions accounted for 13 percent nationally of R&D expenditures, with business contributing 72 percent. North Dakota's higher education institutions accounted for a significantly higher share at 47 percent with business contributing only 46 percent. Expanded investment in university research promises to attract more corporate research. To accomplish this, additional research support for universities must be evaluated at the end of each biennium, avoiding preconditions for universities from scaring away potential corporate partners.
Added state investment would build on the more than $250 million in research already being conducted by NDSU and UND, better positioning both to deliver even more high technology talent and discovery that can improve the state's ranking in high tech jobs (41st), and scientists and engineers (36th). Expanded research can improve the state's 39th ranking in generating patents that lead to startups, while improving the prospects of fast-growing firms (35th), venture capital invested (43rd) and Initial Public Offerings (30th). Bolstered research can improve our manufacturing value add (37th), while the resulting diversified economy would make the state more attractive for trailing spouses and improve our record in importing knowledge workers — 39th.
Not only should the state look to NDSU and UND to seek federal and corporate dollars to supplement state investments, but also progress on these attributes. They are best able to deliver these benefits if state investment does not come with upfront red tape that has hampered previous efforts. We understand the high expectations that added state investment in university research would generate and would welcome the opportunity to work together to deliver these benefits.
Mark Kennedy is president of the University of North Dakota. Dean Bresciani is president of North Dakota State University.