Four Reasons Why: Pennsylvania Cannot Afford to Have Its Tech-Based Economic Development Fall Behind
By R. Chadwick Paul, Jr., President and CEO
The race to develop innovative, technology-based companies has become an international competition. Countries are vying for the next “big idea” and the next entrepreneurial superstar in the mold of a Jeff Bezos or Elon Musk. States, in turn, are also fighting for talent and resources.
While Ben Franklin Technology Partners has long-served as the gold standard by which tech-based economic development programs are measured, Pennsylvania now faces more competition than ever. Other states continue to invest more in this arena in an effort to grow their economies, retain and nurture their homegrown talent and companies, and attract firms from outside their borders. Here are four reasons why Pennsylvania cannot afford to have its tech-based economic development fall behind neighboring states:
1. Brain drain is a serious threat.
Pennsylvania’s population is one of the oldest in the U.S. Yet, despite having many of the best colleges and universities in the nation, many of our brightest young people are choosing to start or continue their careers out of state. A 2015 study of 10 northeastern Pennsylvania universities found that less than a third of students planned to stay in the region after graduation.
Not only does that hinder economic growth in the short-term; that puts Pennsylvania in a precarious situation when it comes to generating tax revenue into the future. Pennsylvania’s loss would be neighboring states’ gains. Imagine not only losing one of our best resources, but exporting those resources to our closest competitors.
2. Ecosystems aren’t just for wildlife.
When most people contemplate an ecosystem, they think of an environment with animals and plants biologically sustaining and supporting one another. Start-ups and innovative companies also require a symbiotic environment in which to succeed and grow, especially during their formative years. This includes not only financial assistance, but also targeted and proven expertise, equipment and work space, mentoring, and a support network. But, unlike 35 years ago when Ben Franklin was founded, there are many other states focused on supporting business ecosystems that allow them to compete in a global market.
In many cases, those states are using the techniques that we pioneered and developed right here at Ben Franklin Technology Partners! With the extra funding they receive when compared to Ben Franklin, programs in neighboring states are able to offer more services to more businesses, and thus gain a competitive edge.
3. Momentum is key.
Ben Franklin has built a reputation as one of the premier technology-based economic development programs in the world. And when an organization is at the top of its industry, the challenge to stay there grows.
Other states have noticed Ben Franklin’s success and have invested heavily in trying to surpass us. We’re already seeing neighboring states allocate more resources to supporting companies that attract and retain the workers who Pennsylvania educated and developed. If the Commonwealth doesn’t invest in the companies and opportunities those workers seek, they will pursue jobs elsewhere.
Competing for talent and innovative companies on a budget that is more than 50 percent lower than it was in 2008 puts us at a severe competitive disadvantage. Restoring Ben Franklin funding to previous levels is a step in the right direction to ensuring that we reap the rewards of 35 years of experience and momentum. Further, appropriate funding will lead Pennsylvania to greater prosperity by providing capital and support to promising firms, creating more company successes and more tax revenue.
4. What would be lost by underfunding would be lost forever.
There is a long learning curve in Ben Franklin’s technology-based economic development work. Developing relationships with business and community leaders, college and university resources, business and technical experts, former and prospective clients, and other economic development partners is a process that takes many years. Ben Franklin staff possess decades of finely tuned experience in turning brilliant ideas into commercially successful companies. All of that is what we call Ben Franklin’s “secret sauce.”
That highly effective combination cannot be cut back dramatically and then later brought back. The deep experience of staff who may be laid off, the dropped connections of not participating in the networks, and the disruption of the client pipeline would largely waste 35 years of work. We’d be starting out all over again.
Ben Franklin is a jewel in Pennsylvania’s economic development arsenal. The current funding level is unsustainable. What Pennsylvania would lose by underfunding Ben Franklin would be lost forever.
Because of diminished funding, Ben Franklin is currently unable to invest in some deserving companies, and others are inadequately funded. Many of the high-value support services that clients cite as being key factors in their success are in jeopardy. A recent independent economic analysis shows that every dollar invested by the state into Ben Franklin generates $3.90 in additional state taxes. Conversely, for every dollar cut from Ben Franklin’s budget, $3.90 of future tax revenue for the Commonwealth disappears. As our state seeks new streams of revenue to meet fiscal challenges, investing more in Ben Franklin Technology Partners makes sense.
Our neighboring states have demonstrated that they are serious players in tech-based economic development. They’re using our playbook and are dedicating more resources to compete than ever before.
When it comes to technology-based economic development in Pennsylvania, the choice is simple. We can continue to inadequately fund Ben Franklin, eventually lose one of the best tech-based economic development organizations in the world, sacrifice $3.90 of state tax revenues per dollar invested, and fall behind the competition. Or we can properly support Ben Franklin and invest in the companies, industries, and employees that are vital to our Commonwealth’s economic future. It’s time to restore funding to the Ben Franklin Technology Partners to support innovation, entrepreneurship, and future economic success in Pennsylvania.