Innovation and entrepreneurship are pivotal forces, driving regions and countries both economically and socially. But what is the true engine behind this transformative momentum? This exploration aims to unravel the roles local, regional, and national governments play. They catalyze innovators, entrepreneurs, and private companies—the vanguards of innovation—who serve as the bedrock of the innovation ecosystem.
From 2017 to 2022, the US’s economic performance was remarkable. According to the IMF, its GDP saw a CAGR of 5.15%, and its GDP per capita rose by 4.65%. By 2022, the GNI per capita was $76,370. Adjusted for purchasing power parity (PPP), this number was $77,530, based on World Bank data. Strikingly, none of the other G7 nations matched this.
To provide a clearer picture, consider Germany. It’s often seen as a benchmark for Western Europe’s economic strength. However, its GDP CAGR was 1.79%, and its GDP per capita grew by only 1.63%. Its GNI per capita stood at $53,390, and $65,300 on a PPP basis. Comparatively, Japan, holding the title of the G7’s second-largest economy, experienced a -2.70% in GDP CAGR and a -2.45% dip in GDP per capita, culminating in a GNI of $42,440 and a PPP-adjusted value of $48,470. South Korea, recognized as a 20th-century economic marvel, logged a 1.33% GDP CAGR and a 1.23% ascent in GDP per capita, leading to a GNI of $35,990 and a PPP equivalent of $50,730.
So, what grants the US this unparalleled dynamism?
On August 11th, Andrew Kimball, CEO of the New York City Economic Development Corporation, spoke on NY1 TV’s “Inside City Hall” about the Kingsbridge Armory’s transformation into a hub for innovation in the Bronx. He emphasized New York City government’s commitment to inspiring innovators, entrepreneurs, and private companies. Kimball also praised the city’s detailed strategies, drawing a parallel to natural ecosystems, in shaping policies, regulations, and infrastructure to foster a thriving entrepreneurial environment.
For over a decade, I have immersed myself in studying the innovation ecosystems in New York, the broader US, and significant regions globally. In my comprehensive research, particularly post the 2008 financial crisis, I’ve discerned a unique American perspective on leveraging policy tools with specific priorities and concerns. This aligns well with the insights Andrew Kimball shared.
A dominant theme is evident: the strategies and policies crafted by the US’s federal, state, and local governments to bolster their innovation ecosystems are both sophisticated and deeply impactful. Central to these strategies is a persistent passion for ceaselessly inspiring innovators, entrepreneurs, and businesses, guiding them toward effective market opportunities.
The ultimate goal is to help them transform their innovative ideas, specialized knowledge, and technological innovations into actionable opportunities. Moreover, integral to this vision is the establishment of a supportive culture and institutional framework where setbacks and failures aren’t viewed as insurmountable barriers but rather as invaluable experiences and catalysts for future growth.
Mirroring how natural ecosystems influence their inhabitants, governments play a pivotal role in shaping the innovation ecosystem. Through discerning policies and regulations, they foster a culture that champions progression. This approach, reminiscent of the natural world’s abiotic elements, ensures that private innovators are primarily well-positioned to lead in building a robust innovation ecosystem.
The gears of government are currently shifting. They transitioned from Old Public Administration to New Public Management, then segued into New Public Service, and are now evolving into New Governance. In this transformational phase, ‘CX – Customer Experience’ emerges prominently. The U.S. federal government underscores CX Innovation, calibrating its performance metrics in line with this accent. This evolution signifies a pivot from a purely bureaucratic stance to one infused with managerial acumen, viewing citizens and businesses through a lens of customer-centricity.
Time and again, private innovators, entrepreneurs, and visionary companies are drawn to regions boasting the most nurturing innovation ecosystems. Over the previous decade, the US has solidified its position as this beacon, magnetizing a plethora of innovators, entrepreneurs, and corporations from Europe and Asia.
As we look to the horizon, governments at local, state, and national levels worldwide face a pressing challenge: Nurturing a thriving innovation ecosystem requires more than just enticements. It’s about continually igniting the flame of creativity and entrepreneurship in those who lead change. In the realm of innovation, echoing Andrew Kimball’s sentiments, inspiring them should be the torchbearer, followed by incentives and other forms of support.
Dr. Young-Dall Lee
Principal, NYET, New York Institute of Entrepreneurship and Technology
NYET - New York Institute of Entrepreneurship and Technology® 