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High-tech industries key to higher income in state, report finds

By David Smith

This article was published November 28, 2012 at 4:01 a.m.

— More than 1,200 high-paying jobs have been created in Arkansas in the past four years as a result of knowledge-based initiatives, the authors of a research report said Tuesday.

Those workers earned on average about $70,000 a year, more than double Arkansas’ average annual per capita income of $34,014, which is still about $7,600 below the national per capita income.

The report was prepared by the Battelle Institute of Columbus, Ohio, a nonprofit organization focused on science, technology, education and commercial innovation. It was unveiled Tuesday at the state Capitol.

Battelle was paid $85,000 to do the report, with funding coming from public and private sources — the Arkansas Economic Development Commission, the Arkansas Science and Technology Authority, the Arkansas Research Alliance and the Arkansas State Chamber of Commerce.

Mitch Horowitz, vice president and managing director of the Battelle Technology Partnership Practice, said Arkansas’ per capita income has risen more than 40 percent in the past decade and is now more than 81 percent of the country’s average.

That increase has been helped by the growth in knowledge-based industries, he said.

“Those industries that have above the national per capita wage grew in this state pretty significantly,” Horowitz said. “And at the same time, they declined nationally. So you can see the knowledge economy at work in bringing jobs [to Arkansas].”

But the state has to ensure that the resources continue to aid the growth in knowledge-based jobs, he said.

From 2008 to 2011, knowledge-based initiatives that were focused on research received $61.2 million in state funding, the report said. The firms receiving the funds were able to leverage that into an additional $191.8 million in nonstate support, the report said. That means the companies were able to generate $3.14 in investments for every $1 in state funding.

The progress is a solid improvement over the condition of Arkansas’ knowledge-based economy just eight years ago.

In 2004, the Milken Institute of Santa Monica, Calif., in a study titled “Arkansas’ Position in the Knowledge-Based Economy: Prospects and Policy Options,” said, “Arkansas has been operating at the periphery of the knowledge-based economy.”

That report, funded by the Winthrop Rockefeller Foundation, added that while other states had been investing heavily and nurturing key institutions in the knowledge-based economy, Arkansas had not kept pace.

It is important that the state continue the investment in the knowledge-based economy, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville.

“When you think about supporting basic research and bringing in the best and brightest [researchers] from all over the world, with their laboratories and their ideas here, it is critical that we can do the basic investments,” Deck said. “When you look at what other states do and how Arkansas is going to compete for these value-added jobs, these are critical investments to make.”

Gov. Mike Beebe hopes to pass legislation in the next session to provide about $25 million to support knowledge-based research.

“Research is a long-term investment,” said Beebe, who attended the report’s unveiling at the Capitol.

Jerry Adams, chief executive officer of the Arkansas Research Alliance, said the state funding would help to attract top-level researchers to Arkansas. The research alliance works to create economic development opportunities through research.

The organization already has helped Arkansas universities hire three scholars to do research in the state. But that has been through temporary funding from the state, Adams said.

“I think we’ve gone about as far as we can through temporary funding,” Adams said. “You think differently about your company if you don’t know where the funding is coming from the next year. This is a marathon.”

It takes about 18 months to recruit an eminent scholar, Adams said.

“If you have funding for a year but don’t know if you have it the next year, how can you make commitments for next year in order to get someone to come here?” Adams said.

Business, Pages 25 on 11/28/2012

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