North Carolina’s future depends on accelerating our entrepreneurial economy and providing opportunity for families across the financial spectrum. As the official North Carolina State Toast says, “here’s to the land of the long leaf pine, the summer land where the sun doth shine, where the weak grow strong and strong grow great …”
In the second half of the 20th century, North Carolina policy leaders embraced this spirit. Through a set of strategic investments in K-12 education, the creation of a competitive community college system, and investments in promising new knowledge-based sectors, employment, per-capita income, and educational attainment all increased in a way that balanced growth with equity.
Yet for the past several years, real income for poor and middle-class citizens has declined. The recession had a disproportionate negative impact on low-wage jobs, and our primary industries have not produced higher-quality jobs fast enough. The result is that income inequality is higher than ever. This pattern must be reversed if North Carolina wants to prosper in the long-term. But what’s to be done?
In a recent paper titled “Rebuilding the Bridge to the Future: An Analysis of What Works for North Carolina’s Economy,” T. William Lester and Nichola Lowe, professors from UNC-Chapel Hill’s Department of City and Regional Planning, offer up three policy recommendations. They include:
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▪ Increasing public support for existing sector initiatives (such as investment in advanced manufacturing, textiles, and biotechnology).
▪ Investing and promoting emerging clusters such as aerospace through the newly formed NC Aero, as well as clean tech and “smart grid” technology.
▪ Encouraging county and local governments to enforce living wage requirements on any business that receives local incentive dollars or has public contracts (an authority the state legislature removed by passing HB74, which outlawed living wage requirements and paid sick leave ordinances for local government vendors).
While these are promising recommendations, they don’t go far enough in fostering local innovation economies.
As we shared in our recent column on innovation districts, communities across our state are becoming much more intentional about catalyzing local entrepreneurship. For instance, in response to a recent request for proposals to participate in InnovateNC, 18 communities across the state applied with a wide range of bold ideas for accelerating local entrepreneurial development – with a focus on creating opportunities for a diverse array of local entrepreneurs and small business owners.
These are efforts we need to actively support at the state level. One potential strategy could be the creation of a competitive Community Innovation Fund. Similar to the Department of Commerce’s Main Street Program, which focuses on revitalizing historic downtowns, the Community Innovation Fund would be a block grant dedicated to helping our communities foster local entrepreneurship.
Communities would compete to participate in the Community Innovation Fund by presenting a compelling local entrepreneurial acceleration plan with measurable outcomes, a clear implementation timeline, broad stakeholder engagement, and evidence of matching local funds to invest in the plan. Once selected, communities would work with assigned innovation experts to refine the plan to receive the initial matched funds.
Once specific milestones were hit, additional funding would be available to scale the impact. Success would be measured based on the number of new businesses launched, number and quality of jobs created (measured on their broad demographic reach), and the amount of additional private sector investment generated.
For instance, according to an economic impact study by the Main Street Center, every $5,000 invested through its fund created 10 net new jobs in Main Street districts, three new businesses, and $691,000 in private sector investment. The same could be measured on entrepreneurial output through a Community Innovation Fund – making sure to include progress on minority entrepreneurship.
The Community Innovation Fund would also help generate significant new investment opportunities for local and national venture funds. This, in turn, would help leverage the Venture Multiplier a policy initiative newly proposed by Governor McCrory and Treasurer Cowell to create a matching investment vehicle for N.C. venture funds and increase investment in local enterprises, helping fuel their growth.
To be competitive as a state, we need to invest in our local innovation economies and ensure these efforts yield shared prosperity for our citizens where the weak grow strong and the strong grow great.
Christopher Gergen is CEO of Forward Impact, a fellow in Innovation and Entrepreneurship at Duke University, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin, a director at the nonprofit Center for Creative Leadership, blogs at www.messyquest.com. They can be reached at email@example.com and followed on Twitter through @cgergen.