Let’s Stop and Think on NCInnovation

by | Sep 5, 2023 | Politics

Economic survival in the 21st century depends upon a community’s ability to innovate. With the rise of emerging markets around the world, places like North Carolina have exhausted their ability to mobilize crude resources for industrial development. Advanced economies need to configure high technology into new products and new firms, and if they fail to make that alchemy work, they’ll go into decline.

The North Carolina General Assembly seems aware of this imperative, which has inspired them to propose a package of innovation-oriented reforms that Phil Berger is calling NCInnovation. This initiative has advanced with enthusiasm on both sides of the partisan divide. And when such a polarized body as the NCGA unites behind a policy that sounds progressive, many North Carolinians will be tempted to rejoice. NCInnovation, however, is more questionable than an initial review may suggest. I want to be as diplomatic as possible in my critique because I hope that observers of every ideological stripe will consider what I have to say.

NCInnovation is a complicated Rube-Goldberg contraption that brings several approaches to bear on an undeniable problem. That is to say, North Carolina churns out steaming helpings of peer-reviewed science but lags competitor-states in the translation of academic research into startup companies. To catalyze more entrepreneurship, legislators, led by Phil Berger, wish to inject $1.4 billion in one-time state investments into a new endowment that would build clusters, assist NC scientists in starting new firms, and provide financial help to researchers seeking to develop new products based upon their own research. If you’ve persisted through the wonk-ese, here are a few reasons why this seeming thrust into the future should cause a touch of consternation.

The assumptions behind NCInnovation are spottier than its bland intentions might lead one to expect. In essence Berger and his allies envision the replication of Research Triangle Park and its dynamism in other, struggling redoubts. But building innovation clusters is far more challenging than policymakers often assume. To take the most salient example, RTP may only have succeeded because of the timing at which it was established. North Carolina’s elders built Research Triangle Park at nearly the exact moment when large-scale corporate R&D was coming to the fore, the South was becoming air-conditioned, and the fall of Apartheid in the former Confederacy had made Dixie a safe destination for Northern capital. Efforts to emulate RTP’s success have since failed–in every part of the world. Assuming that we can create clusters from nothing when that geographic wizardry has come up short elsewhere runs the risk of hubris.

Furthermore, the very model of cluster-building is inappropriate to the objective that Berger has set out in his plans. We are, ostensibly, attempting to translate more academic research into startup companies. But why distract from this goal by pouring resources into a dubious effort to make clusters where none exist? In fact, NCInnovation leaves the Research Triangle OUT of its plans. This makes no sense whatsoever given that the lion’s share of commercially viable research in North Carolina takes place at UNC, NC State, and Duke. At best, NCInnovation’s champions are engaging in myopia.

Perhaps NCInnovation will be established and succeed, or even transform the state. Given that Phil Berger almost always achieves his policy objectives, hoping for the best in this way may be our only option. The pitfalls, however, are manifold, and I would urge caution in this very large undertaking for our state.

Update: I’ve received correspondence from someone better informed than me indicating that I was mistaken in stating that NCInnovation will make direct investments in private firms. I have removed that claim from the piece and deeply apologize for the error.


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