With unemployment rates stubbornly high and the global economy increasingly competitive, the United States needs to better understand businesses, policies to support businesses, and, ultimately, how to spur job creation. Jobs don’t just appear or disappear; they are created (and destroyed) by businesses that are reacting to market conditions and opportunities. While our national statistical system is increasing its capacity to produce statistics on these dynamic processes, policymakers could better target job creation programs if the statistical system collected more data about how businesses finance operations and investment in innovation, especially at the regional/local level. Further, to bolster the value of data currently produced, we need to nourish active data user communities to advance the substantive scientific understanding of job creation policies and educate policymakers about the importance and utility of the data.

Read more on the AmStat website.

The Economic Development Administration (EDA) at the U.S. Department of Commerce has issued a call for proposals on the “Mapping Regional Innovation Clusters Project.”  I am still reading over all the details and thinking about some of its implications, but in seeking proposals in the $1 million/year range for three years of support this should bring out a large and diverse set of applicants.   

The short stated intent of the project:


For further details: http://www.grants.gov/search/search.do?mode=VIEW&oppId=54670

My comments here will be fairly simple.

• Missed opportunity.  It’s a real shame that significant efforts like this aren’t actually better thought out across agencies by groups like the Office of Management and Budget, the Office of Science and Technology Policy, or through informal task forces.  This effort could be so much the better if it were coming on the tail of a one-year or two-year research effort across U.S. statistical agencies to develop new and relevant regional innovation statistics from the underlying microdata.  Instead, whoever wins will be forced to use many of the same fairly worn sets of indicators.  So much could be done in this regard at Census and BLS, at a minimum, but it takes effort, time, and some funding.  The U.S. statistical agencies are becoming increasingly aware that they need to produce better regional statistics (BEA is really taking the lead hear but only after some rough years). 
• Web visuals aren’t so different.  Having just gone through my first project in online data visualization with the Kauffman Index of Entrepreneurial Activity, I can say that doing online data visualization is not cheap and online visualizations are only as good as the traditional analysis completed.  Unfortunately, I don’t feel like the science behind regional clusters or what is actually important to be measured when looking at regional strengths and weaknesses is specified enough to offer a fully-coherent base of knowledge for visualization. 

The solicitation specifically identifies a couple of prior EDA-funded projects which the agency wants to be a component of the new project:

• Indiana Business Research Center’s Innovation Index
• West Virginia University’s State Innovation Map

A new paper out from the National Bureau of Economic Research - “Dynamic Text-Based Industry Classifications and Endogenous Product Differentiation” by Gordon M. Phillips and Gerard Hoberg - discusses the power large-scale text analysis can provide in examining industrial classifications and other traditionally nebulous areas of differentiation among firms and markets. 


This is a timely publication as the Office of Management and Budget (OMB) is in the final stages of seeking approval (and feedback) about the 2012 revisions to the North American Industrial Classification System.  While there is a lot of effort made to update these industry classifications unfortunately I do not believe that government officials are yet taking advantage of some of the methods which are described in this paper which mine existing data to look for discontinuities in how industries are defined, when firms change industries, or other aspects of industrial organization. 

Now, the prospect of the government performing large-scale text analysis like this might scare some, but in my mind, there are groups like the Center for Economic Studies at the Census Bureau or other places like the Statistics of Income Division at the Internal Revenue Service who could do this responsibly if given the mandate, funding, and some lead time.  These places house large quantities of text data yet maintain separate research functions and most importantly they maintain processes for seeking outside researcher proposals for cutting edge research which would benefit the agencies through improved data products.  I’ve never heard staff at either of these locations discuss this NAICS redesign as a high priority but perhaps if OMB were using their coordinating powers and discretionary funding with more force, that could change. 

Identifying new industries clusters, and other big changes in the industrial organization faster and more accurately remains a key deficiency in the current national statistical system.  The U.S. regions who are on the front line of economic development rely too much on private data to try to understand change in their economies because the federal system has too often missed the data needs of the diffused customers here.  Coincidentally, the Council for Community and Economic Research annual conference starts today in Washington, DC.  This is the most organized group of individuals advocating for improved regional economic statistics in the United States. 

I should note that while there is great potential power in the methods employed by Phillips and Hoberg, the authors also note the potential gaming which could be used by firms if they felt the text they were sharing could be manipulated to effect government policies to the firms advantage.  “We also note that
while our new measures are interesting for research or scientific purposes, they would not be good for policy and antitrust purposes as they could be manipulated by firms fairly easily if firms believed they were being used by policy makers.”  I think these methods would be best added to an existing review process and not seen as a substitute.  In that case, the ability to game the system could be reduced. 

The Council for Community and Economic Research (C2ER) and the Council of Development Finance Agencies (CDFA) recently released the C2ER-CDFA State Business Finance & Incentives Resource Center. C2ER and CDFA members can use this to research business incentives and development finance programs across the country.  The C2ER-CDFA State Business Finance & Incentives Resource Center is a national database with more than 1,700 programs from all 50 states and federal agencies. Programs are cataloged and searchable by state, type (i.e. bonds, grants, loans, loan guarantees, tax credits, etc.), category (i.e. tax, direct business financing, indirect business finance, etc.), and business need.

I've been lamenting for the last couple of months the dearth of good policy data sets that could enable analysis of actual policy impacts across states on important topics.  Today, I am pleased to report the introduction of a new database that does just this, although I wish it did so over time and also was open to all scholars, not just the members of the associations which sponsor it.  But, all good things come with time, I hope, and I am a huge supporter of C2ER and would recommend membership.  I've downloaded two sample documents from the website so people can see more of what they'd actually get in this database: listings at the state level and detail about individual policy.  With state-level, longitudinal business tabulations/databases now available from Census and rich, although not yet longitudinal files from the Bureau of Labor Statistics, we should see examinations in this area of scholarship expanding greatly.

One of the top five topics which comes up in correspondence for me deals with surveys to study the effectiveness of entrepreneurial support programs at the regional level.  It's an incredibly important question but not one, from my experience, where there is a lot of sharing among organizations or an advanced level of survey design.  So, at the request of some colleagues in the FastTrac program, I have been working with some colleagues at the Foundation, our grantees in Detroit, and other contractors, to develop an alumni survey for the Detroit FastTrac to the Future program, one of our FastTrac LaunchPad initiatives.  This is still a pilot survey project that will begin collecting data in the next few days but it's reached a stage where we'd welcome critiques of the survey instrument.  One of the great things about Survey Monkey as a tool  is that anyone can test out of the survey using this link and no real data is collected.  So, I throw things open here to see what sort of survey we have designed for an annual collection of data with the Detroit FastTrac to the Future programs.  If you have an instrument that you've used for collection with a similar population, please let us know by adding a comment to this post. 

Two short courses for economic development professionals offered through Georgia Tech look to have a focus on entrepreneurship in 2010:

• IEDC Entrepreneurial and Small Business Development, October 7 - 8, 2010
• IEDC Technology-led Economic Development, December 2 - 3, 2010

The Census Bureau's Local Employment Dynamics (LED) has a call for papers out for its March 10-12, 2010, conference in Washington, D.C.  This is a program with some already innovative products such as On the Map which looks at where workers are employed compared to where they live, but in my estimation, LED has only just begun.  It is a program which will only become full funded in the next couple of years, if things go well, but the possibilities of useful products are almost endless.  Work is underway, as I understand, at Census to expand the matched data to include the self-employed as well as to look more specifically at products which would be of interest to different audiences such as regional and state policy makers. 

In a new report just released today, the Kauffman Foundation (with leadership from Rob Fairlie) partnered with Fortune Small Business to examine the best places to launch a company in the United States.  Growing economies, affordable workers, stable housing markets, and low crime are just some of the features that led to the top cities in the list:

1.    1. Oklahoma City
2.    2. Pittsburgh
3.    3. Raleigh
4.    4. Houston
5.    5. Hartford
6.    6. Washington, D.C.
7.    7. Charlotte
8.    8. Austin
9.    9. New York City
10.   10. Baltimore

Fortune Small Business has developed a lot of online content to supplement this release including lots of data listings which will be of interest to many.