If you encounter problems viewing this email go to http://www.publicforuminstitute.org/nde/news/nde-news.htm

Week of January 16 - 22, 2006

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news.

National Innovation Act of 2005

Addressing America’s innovation challenges may become a hot topic in Congress this year. Senators Joseph Lieberman (D-CT) and John Ensign (R-NV) have recently introduced the National Innovation Act of 2005. This legislation seeks to implement many of the recommendations of the National Innovation Initiative report that was released last year. The bill (S. 2109) includes a number of provisions. Among the highlights are a plan for creating a White House-level President’s Council for Innovation as well as a series of new scholarship and fellowship programs to encourage studies in science, mathematics and engineering. The bill encourages federal agencies to spend up to 3% of their research budgets on high-risk frontier research, and it also calls for a doubling of the National Science Foundation’s budget over the next five years.

A summary of S. 2109, the National Innovation Act of 2005, is available at http://lieberman.senate.gov/documents/bills/051215niasummary.doc.
The original report of the National Innovation Initiative, Innovate America, can be found at: http://innovateamerica.org.

Bankruptcy Filings Break Record

Preliminary research from Lundquist Consulting, a California-based firm that tracks and analyzes bankruptcy data, indicates that 2005 ended as a record year for consumer bankruptcies. As Congress was enacting legislation (the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) to tighten bankruptcy rules last year, many critics argued that the new law would create a wave of new bankruptcy filings. And, it appears they were right -- at least over the short term. In 2005, 2,043, 555 consumer bankruptcy filings occurred -- up 31.5% from a total of 1.552 million filings last year. All regions of the country witnessed major growth in bankruptcy filings with the highest growth rates appearing in mid-Western states. It appears that much of this spike occurred in anticipation of the new and tougher rules. A vast majority of the filings occurred prior to the new law going into effect in October. Very few filings (less than 2% of the total) occurred after October and under the new rules. Analysts predict a slow and steady rise in the number of bankruptcies as the industry becomes better acquainted with the new law’s effect and procedures. Official 2005 data from the Administrative Office of the US Courts is expected to be released on March 1, 2006.

To view a press release describing the latest data on 2005 bankruptcy filings, visit http://www.lundquistconsulting.com/news.html

Fixing the US Patent System

A new paper from researchers at the AEI-Brookings Joint Center for Regulatory Studies takes a hard look at US patent policies and procedures. Under current rules, patents are awarded according to a “first to invent” method, i.e. a final patent is ultimately awarded to the inventor who proves that he or she was the first to develop a new product, service, or technology. Most other developed nations utilize a “first to file” system where a patent is awarded to the first inventor who files for a patent. It has generally been believed that the “first to invent” system is more entrepreneur-friendly. Because large incumbent firms can afford to retain expensive legal support, they may be better able to file patent applications in a timely and regular manner. The researchers, Linda R. Cohen and Jun Ishii, find little evidence to support this claim. Instead, they find that large incumbent firms tend often delay filing patent claims in an effort to delay the introduction of new and often disruptive technologies. These practices tend to delay the introduction and diffusion of new technologies. When competition from challengers does exist, incumbent firms will accelerate their patent filings, and thus expedite the commercialization process. Cohen and Ishii do not recommend scrapping the current system but they do note that researchers need to understand the relative costs and benefits of “first to file” vs. “first to invent.”

The November 2005 AEI-Brookings Joint Center for Regulatory Studies Working Paper (05-22), “Competition, Innovation, and Racing for Priority at the U.S. Patent and Trademark Office, by Linda Cohen and Jun Ishii, is available at: http://www.aei-brookings.org/admin/authorpdfs/page.php?id=1215

The Diffusion of Innovation

Effective innovation policies don’t just focus on inventing new stuff. They also concern themselves with the diffusion of innovation, specifically, how well are new products, services and technologies deployed in the economy? A recently published research note from the San Francisco Federal Reserve examines this topic by looking at the diffusion of information technology. The note summarizes research by Mark Doms and Ethan Lewis who have studied the use of personal computers by businesses between 1990 and 2002. They have found that, not surprisingly, metro areas with highly educated populations are more likely to become computer intensive and to enjoy higher relative wage growth. They also found that a region’s role as an information technology center did contribute to faster adoption of computers. However, the education level of the population had a stronger impact than did the local presence of information technology firms. Chalk another one for the importance of human capital in the 21st century economy.

The 2005 Federal Reserve Bank of San Francisco Research Note, “The Diffusion of Personal Computers Across the US” (#2005-37), by Mark Doms, is available at
http://www.frbsf.org/publications/economics/letter/2005/el2005-37.html#sum

Small Business Lending and Income Growth

The Small Business Administration (SBA) regularly touts its loan programs as drivers of small business growth and wider economic development opportunities. A new paper from researchers at the Federal Reserve Bank of Atlanta finds strong evidence to support this contention. The analysts, Ben Craig, William Jackson and James Thomson, examine the economic impact of SBA’s loan portfolio which now consists of 219,000 loans totaling $45 billion. With this total, SBA is far and away the largest single financial backer of small business in the US. After reviewing volumes of data, the authors find a strong -- albeit small -- connection between the extent of SBA loan activity and a metropolitan area’s future per capita income growth.

The December 2005 Federal Reserve Bank of Atlanta Working Paper, “SBA Guaranteed Lending and Local Economic Growth” (2005-28), by Ben R. Craig, William E. Jackson, III, and James B. Thomson, is available at: http://www.frbatlanta.org/filelegacydocs/wp0528.pdf

Start Saving

How much do savings help entrepreneurs? A new paper examining the relationship between personal wealth and entry into entrepreneurship will be the focus of an upcoming seminar at the Hudson Institute titled “Do Household Savings Encourage Entrepreneurship?” The paper, written by Professors Erik Hurst of the University of Chicago and Annamaria Lusardi of Dartmouth College, finds that accumulated savings are likely to influence people to be entrepreneurs at the top of the wealth distribution -- after the 95th percentile. The program -- part of a series of seminars sponsored by the Kauffman Foundation – will open with a keynote address by the Honorable Ann Combs, Assistant Secretary, U.S. Department of Labor, on measures that may be taken to increase savings.

The seminar will occur on January 27. For information on how to register – or to request additional information, visit the Kauffman Research Portal.

National Dialogue on Entrepreneurship
2300 M Street, NW; Suite 900
Washington, DC 20037

All stories © 2005 The Public Forum Institute
Content from this newsletter may be reproduced for non-commercial purposes with proper attribution to the National Dialogue on Entrepreneurship and a link to www.publicforuminstitute.org/nde. 

Subscribe: 
To sign up to receive NDE-news, visit www.publicforuminstitute.org/nde/join/

Unsubscribe:
This email was sent to (%Email%).   Unsubscribe this email address.  If you have problems with the automated process please e-mail Mark Marich with your email address in the body and your unsubscribe request will be handled promptly.

Privacy Statement: 
The Public Forum Institute recognizes and respects the importance of protecting the privacy of all information provided by recipients of our e-mail newsletter. We use a variety of security technologies and procedures to help protect your personal information from unauthorized access, use, or disclosure and will not share personally identifiable information with other companies or organizations.