Michigan needs to maintain a major push started a decade ago to diversify the state’s economy, according to a study that credits the effort with spurring greater innovation and entrepreneurship.
The study commissioned by the Michigan Economic Development Corp. and conducted by Columbus, Ohio-based TEConomy Partners LLC offered 11 recommendations for continued economic diversification and growing technology sectors through entrepreneurship and innovation.
“Now is the time for Michigan to reinvest in its commitment to transition the state’s economy into a 21st century knowledge economy driven by innovation,” according to the report that looks at the impacts and effectiveness of the state’s 21st Century Jobs Fund. “The economy of Michigan is at a crossroads — its ability to reshape itself through innovation and entrepreneurship is predicated on its ability to stay the course and continue to make significant investments to improve the entrepreneurial climate of the state.
“Michigan must not turn back. The time is now to seize this economic development opportunity.”
The study found that the 21st Century Jobs Fund invested $261.6 million to assist nearly 1,400 companies, 1,073 of which were still operating as of 2014. Those companies directly employed more than 11,000 people and paid wages and benefits of $879.5 million, according to the TEConomy report.
The companies assisted by the fund also generated $3.2 billion in economic output and paid nearly $48.4 million in state and local taxes.
When indirect impacts are taken into account, the 21st Century Jobs Fund has supported 26,800 jobs that generated $1.6 billion in income and $5.5 billion in economic output.
“The investments we’ve made have paid off for the state when you look at the return on investment,” said Fred Molnar, vice president of entrepreneurship and innovation at the MEDC. “The money invested, I think, has been invested wisely and the return on investment shows that. In the future, we’re going to work hard and smart to continue investing smartly to diversify the Michigan economy.”
Despite the gains, Michigan needs to maintain efforts to diversify economically and support entrepreneurism as other states do the same, Molnar said. He called TEConomy’s study a “very confirming report.”
“We’re right in the heat of the battle. We’ve made tremendous progress, but there is much more work to be done,” he said. “We all know that we’ve come a long way, but we still have a long way to go, too. We’re not at the top of the mountain, that’s for sure.”
For instance, Michigan lags the national averages for the rate of new startups, employment in young firms that are five years old or less, and the presence of high-growth companies.
Recommendations in the TEConomy report focus on capital formation, commercializing innovations, and generating and attracting the talent that early-stage and startup companies need. That latter area includes a program to connect executives, developing entrepreneur-in-residence initiatives around industry clusters, and additional funding for executive attraction.