STAC testimony: Clusters needed to develop new industries

PROVIDENCE – If Rhode Island is to grow its presence in the knowledge economy, it must encourage collaboration among existing businesses and community organizations to create a strong local supply chain that both brings money into the city and keeps it circulating here.

So said Christina Gabriel, president of the University Energy Initiative in Pittsburgh, who was speaking at the second of three meetings of the R.I. Science and Technology Advisory Council Wednesday, held at the R.I. Economic Development Corporation’s Providence headquarters, and attended by about 50 people.

Providence should focus on attracting select innovative industries, said Gabriel, applying lessons from Pittsburgh’s recent economic development. For instance, job creation in manufacturing businesses does not follow the model of the 1950s, in which large players defined the landscape. Instead, Gabriel said, most manufacturing firms today employ fewer than 20 people.

The key to developing the region is to draw certain industries, creating clusters of smaller manufacturing businesses, ones that attract private and public money.

Pittsburgh, which was entirely dependent upon the steel industry until the 1970s, has redeveloped a knowledge-based economy with help from the federal government and extensive foundation support, Gabriel said.

But while state and federal grants are crucial to economic growth, they should not be used to keep failing startup companies alive, she said. “The regions that actually have a lot of entrepreneurial activity and a lot of job creation just have a lot more failures as well.”

Gabriel spoke against real estate structures that encourage “expansion and sprawl” while “our urban cores are hollowing out.” She also noted that “our assumption that a rising tide lifts all boats is not true,” and economic growth often comes at the expense of low-income communities.

In response to questions from attendees, she said real estate governance is the “weakest link in our system” — a key point to local policymakers and developers at a time when oversight of the redevelopment of the Interstate 195 land has yet to be delegated.

Peter Alfonso, director of the National Science Foundation’s Experimental Program to Stimulate Competitive Research in Rhode Island, and vice president for research and economic development at the University of Rhode Island, also spoke at the meeting, noting that the state drew $30 million of NSF funding annually to core research centers between 2007 and 2010. Every grant dollar entering the state has a local economic impact of $1.70, Alfonso said.

Gov. Lincoln D. Chafee appeared at the beginning of the meeting to welcome Gabriel and note that he plans to visit Pittsburgh soon, but he left before Gabriel spoke.

The meeting Wednesday was the last one for David Farmer, Dean of the URI Graduate School of Oceanography, as STAC co-chair.