AUGUSTA — The Maine Economic Growth Council’s recently released “Measures of Growth 2016,” the 22nd annual edition, highlights 25 indicators that collectively measure the performance of Maine’s economy.
As a longtime member of the council who has had the privilege of serving as a co-chair for the last two years, I appreciate the long-term perspective and objective data this report provides for the people of Maine. Our focus is on achieving a high quality of life for all Maine people, which we believe stems from a vibrant and sustainable economy, vital communities and a healthy environment.
Each year, the council carefully weighs the indicators in the report and any emerging issues that may warrant inclusion. Indicators are evaluated and assigned grades based on their progress relative to assigned benchmarks that are both aspirational and potentially attainable. “Gold stars” are assigned to indicators that have demonstrated exceptional performance, while “red flags” highlight areas in need of particular attention.
Research and development spending has been a consistent area of concern, having received a red flag in every Measures of Growth report since 2009. Maine’s total R&D spending has been approximately 1 percent of our gross state product in recent years, consistently falling short of the council’s goal of 3 percent. Based on 2011 data, the most recent and reliable available, Maine was approximately $1 billion short of the benchmark.
By comparison, New England’s average was 4.4 percent of GDP, the U.S. average was 2.9 percent, and the EPSCoR average was 1.7 percent. (EPSCoR refers to the Experimental Program to Stimulate Competitive Research, a measurement that encompasses 28 mostly large, rural states, including Maine.)
As president and CEO of Maine Marine Composites, an ocean engineering firm, and as a member and co-chair of the Maine Economic Growth Council, I am particularly troubled by Maine’s consistently poor performance on this important indicator.
The council’s goal is consistent with the state’s Science and Technology Action Plan and is viewed by the council as necessary to expand Maine’s innovation economy and improve competitiveness in the knowledge-based economy. Research and development supports innovation, which can happen throughout the economy and throughout a company’s life cycle,
To drive growth in our economy, it is vital that we find an appropriate mechanism to provide adequate funds for R&D, and equally important that our resources are strategically targeted to generate meaningful economic activity for the state. Maine is fortunate to be home to some world-class nonprofit research institutions, and Maine’s percentage of total R&D from the nonprofit sector (15 percent) exceeds the New England (5 percent), U.S. (2 percent), and EPSCoR (2 percent) averages.
Maine also performs well in the percentage of total R&D from the academic sector (27 percent) relative to the U.S (17 percent) and New England (15 percent) averages.
However, with only 58 percent of Maine’s total R&D investment coming from the private sector, we fall well below the private-sector averages for the other regions (81 percent for the U.S., 80 percent for New England, and 68 percent for the EPSCoR states). Private-sector investment can create immediate economic activity, and improving our performance in this area is critical to moving toward the benchmark.
Investing in the foundational underpinnings of our economy is vital to Maine’s future growth. Expanding our broadband connectivity and improving our transportation infrastructure help connect us to the world at large. Investment in Maine’s people improves worker productivity and creates new opportunities.
We also need to make the best use of our limited resources. Maine’s spending on R&D has been shown to yield a high return on investment. A Nobel Prize-winning economist has demonstrated that innovation in some form ultimately underlies approximately 80 percent of all economic growth. Moving toward the council’s benchmark can help us create an ecosystem that supports our innovation economy and ultimately help us move toward the council’s vision of a high quality of life for all Maine people.
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