EXECUTIVE SUMMARY

A case for technology
Technological innovations have revolutionized the way we communicate, learn and conduct business.  By increasing productivity and GDP while reducing inflation, information technology has been critical to the unprecedented economic prosperity that the United States has experienced in the last decade.  Despite recent concerns about the slowing economy, there is confidence that the scientific and economic promise of continued technological innovation will lead the nation to even better days.

More than 200 businesspeople, community leaders, government officials, educators and nonprofit representatives from more than 120 organizations convened in Kalamazoo, Michigan for Economic Summit ’01: Empowering Innovation for Growth to discuss the actions needed to translate these innovations into social and economic prosperity. Through panels, breakout sessions and facilitated dialogues using eFORUM technology, the delegates charted a course of action for the regional economy. 

Choosing a direction
Delegates expressed significant interest in distancing themselves from the agricultural and industrial heritage of the region.  In fact, the delegates said that preserving the agricultural heritage and emphasizing traditional industries were the least important of nine suggested actions for reaching the preferred economic future for the region. Similarly, the delegates thought that provincial thinking was the most significant roadblock to economic development in the region.

The delegates favored new industries, renewed will and innovative technologies to drive Southwest Michigan’s economic future. An overwhelming majority of delegates said that technological innovation would be the most important trend driving the economy in the next 10 years. In fact, they perceived that the two leading industries for the next two decades would be information technology and biotechnology.

While Michigan has been a technology leader on some fronts, such as Merit Network, Inc.’s work on Internet 2, overall, the state lacks the technological infrastructure to establish a competitive advantage over similar states.  According to Federal Communications Commission data, Michigan is one of the lowest ranked states in the country for the rate of high-speed telecommunications growth.  Michigan lags far behind competitor states like California, Pennsylvania, Texas and New York.  Though Michigan has roughly 4 percent of the nation’s population, it has little more than 1 percent of its high-speed broadband lines. Indeed, the state is ranked 37^th in homes and 40^th in schools with high-speed Internet access.

Broadband
Summit delegates identified broadband as the top infrastructure improvement needed to facilitate the growth of the local economy.  Three-quarters of the delegates said that broadband deployment is “critical” or “extremely critical” to economic growth in Southwest Michigan. Congressman Fred Upton, the summit chair, concurred, predicting that just as the cities that were connected to highways in the 1950s advanced at a faster rate than those that were not, the communities that are wired for high-speed access to the Internet will advance exponentially faster than those that are not. 

Under Secretary of Commerce for Technology Phillip Bond outlined the reasons why broadband is so important to the economy. According to Bond, broadband revolutionizes business processes, creates better supply chain management, enhances customer relations and allows for just-in-time learning. It also fundamentally changes health care and life sciences by enabling home checkups and remote medical examinations via computer.

Laura Chappelle, chairman of the Michigan Public Service Commission, and Robert Filka of the Michigan Economic Development Corporation (MEDC) described the actions needed to foster broadband deployment in the region.  According to Chappelle, the Commission is working to streamline the permitting process and to reduce and simplify fees so that high-speed service can be introduced to all communities.  Filka noted that MEDC’s LinkMichigan plan would aggregate statewide telecommunication purchases to create a high-speed backbone, implement taxation and permitting fairness, increase access to information about the telecommunication infrastructure that exists in Michigan and provide funds for regional telecommunication planning of last mile solutions. The delegates suggested three specific action items to facilitate the deployment of broadband for the benefit of Michigan businesses and consumers:

• Define user needs and educate them

• Set minimum levels of connectivity and define the “telecom” region

• Obtain government support for equitable access

The delegates thought that defining user needs and educating them would be the most effective and feasible action. Although the delegates believed that obtaining government support for equitable access would be effective, they did not altogether believe that it would be feasible.

Workforce development
Delegates viewed workforce development as a critical component in shaping the future of the region’s economy, particularly given the desire to concentrate on high-skilled technology jobs. According to a U.S. Chamber of Commerce survey presented at the summit, 40 percent of respondents in the Midwest said that selecting a well-trained staff is essential to maintaining a competitive edge. The delegates echoed these sentiments, saying that the lack of a skilled workforce was one of the three most significant roadblocks to economic development in Southwest Michigan.

The delegates discussed a variety of mechanisms for driving the workforce development agenda, stressing the importance of these efforts because so many communities are struggling to maintain their economic vitality in the slowed economy.  The summit delegates suggested three specific action items for the short term:

• Establishing a community vision
• Performing a community assessment
• Developing “inclusive” partnerships

The summit delegates assessed both the effectiveness and feasibility of each.  They were evenly divided about the effectiveness of the three proposed items.  The delegates believed that establishing a community vision and developing inclusive partnerships would be the most effective initiatives, followed closely by the performance of a community assessment. The delegates were less divided about the feasibility of each.  The participants clearly expressed their belief that performing a community assessment would be most feasible of the three options, followed by inclusive partnerships and establishing a community vision.

Attracting research and investment capital
With the strategies for deploying broadband and developing the workforce outlined, delegates turned to the task of assessing strategies for attracting research and investment capital.  They discussed eight topics: developing multiple investment funds, harvesting technology, adding foreign markets, growing small companies to IPO, acquisitions for growth, the development of clusters, addressing turnover in the IT industry and recruiting talent.

These issues were distilled into three action items that were assessed according to their effectiveness and feasibility:

• Focusing on the creation of better IT through bolstering the higher education base
• Improving the federal and state funding sources to the community
• Creating a consortium of companies to build partnerships to increase efficiencies and gain additional public research dollars

The delegates recommended bolstering the higher education base as the most effective and feasible means of attracting research and investment capital, followed by the creation of a consortium of companies to gain additional public research dollars.  Increasing federal and state funding for communities was viewed as the least feasible and the least effective of the three. 

Prospects for the future
Delegates expressed some concern that a lack of community will would hamper the efforts to affect systemic economic change in the region, but if the sheer attendance and enthusiastic response of the summit delegates were any indication of potential activity, Southwest Michigan may well be on its way to a technologically enhanced and worker friendly future. For his part, Congressman Fred Upton pledged to help develop the workforce and infrastructure in Southwest Michigan in order to achieve the goals outlined in the summit.