A Guest Commentary  

 
Brian McGowan
Deputy Secretary of Economic Development and Commerce
State of California Business Transportation and Housing Agency                                                    
                                                                                                                                                                           
As the current global economic crisis unfolds, it is important for Californians to remember
that the world is watching what we do. California has a competitive advantage in times like
these.  Economic disruptions such as this challenge the status quo thereby presenting opportunities
for innovative thinkers and new business practices. California is unmatched when it comes to
innovation and its ability to inspire new ideas, new industries, new technologies and new ways
of thinking.

Governor Schwarzenegger often refers to California as a nation state. California’s strength
lies in the size, diversity and adaptability of its economy as well as in the talent and diversity
of its population.  California has the high-tech industries of Silicon Valley, the biotech industries
of San Diego and the San Francisco Bay area, the agricultural technology industry of the Central
Valley, the entertainment industry of Los Angeles making it the 8th largest economy in the world.
When one sector is struggling, other sectors help cushion the blow.

Rising fuel costs and increasing global population are creating a new opportunity for California.
As our state began its economic ascendancy with the Gold Rush, California is now poised to get
a new shot in the arm from a Green Rush - the exploding green-tech revolution. A recent study
by the U.S. Conference of Mayors estimates there will be 4.2 million green jobs nationwide just
in the next 20 years. California is on the cutting-edge when it comes to solar technology,
alternative-fuel vehicles, energy-efficient products, green buildings and more.
                                       
As a State, we have demonstrated the ability to achieve sustainable economic growth while
protecting the environment. In fact, California has one of the lowest per capita greenhouse
gas (GHG) emissions and highest GDPs in the nation. The Governor has set a goal of increasing
California's renewable energy sources to 20 percent by 2010, and he supports reaching 33-
percent by 2020. According to an economic study released by the University of California at
Berkeley and Next 10, California's environmental policies will create as many as 403,000
jobs in the next 12 years and household incomes will increase by $48 billion. A separate
economic study by Navigant Consulting, Inc. estimated that 214,000 permanent jobs
in the solar energy sector alone will be generated in California. It is a fact that countries
that have "greened" their economies grow at a faster rate than those that have not.

California companies receive more investment in clean technology than anywhere else
in the country. Since 1990, the green business establishments in the state have grown by
84 percent and employment has doubled.  Announced recently, Tesla Motors decided to
locate its manufacturing facility for its new fully-electric Model S vehicle in California:
move over Detroit, California could be the next Motor City.

California is also home to several of the most dynamic bioscience regions in the country
with over 3,000 biomedical technology companies with estimated annual revenues of $73
billion – metropolitan San Diego, San Francisco Bay Area and Greater Los Angeles,
employing over 200,000 persons. California's share of biotechnology venture capital
accounts for nearly half of all biotechnology venture capital investment in the U.S.
Proposition 71 committed $3 billion to stem cell research. With these funds, we are
now investing more in embryonic stem cell research than any nation in the world. To
date, 168 research grants totaling more than $530 million have been approved. Recently,
$271 million was distributed to 12 institutions to build research labs throughout the state
and it leveraged approximately $880 million in additional funds.

                            

We also have a burgeoning civilian space industry in the Mojave Desert with Burt Rutan's
Scaled Composites and the first civilian designed and built space craft. California has also
inspired companies like Hewlett-Packard, Marc Andreessen's Netscape, Jeff Bezos' Amazon.com,
Jerry Yang's Yahoo. Pierre Omidyar's eBay started in 1997, today supports the livelihoods of 1.3
million people. How many other game-changing companies are incubating right now in a garage
or laboratory somewhere in California?

California has more than fifteen thousand miles of highways and freeways, twelve cargo
airports and eleven cargo seaports, eighteen foreign trade zones and thirty-nine enterprise
zones, four national laboratories (more than any other state) and three out of the ten NASA
research centers. California was recently chosen to be the official partner state for the CeBIT
2009 Conference: the world's largest technology trade expo held in Germany next Spring. This
is the first time a State, not a nation was chosen.  We are home to over 100 Nobel Laureates
and boast more research and development investment than any other state. Most importantly,
Californians are the most creative, innovative and optimistic people in the world.

The world needs California more than ever and our future is bright. We create new industries
and inspire people from all over the world.  As we lead California into the future, we are also
showing the nation and the world how to get there.

                                       California Facts

Culture of Innovation.  California is a leader in innovation.  New ideas are a natural part of
life in the Golden State.  California supports creativity with a superior educational system and
job training that produces an unrivaled, highly skilled labor force.

• In 2007, the State had 2.3 million students enrolled in 474 colleges  and universities that
   conferred 373,000 degrees.  In addition, California has 621 members in the National
   Academy of Sciences. Further, there are 109 Nobel laureates who have taught at
   California universities, 55 who graduated from California universities, and 164 who are
   affiliated with California universities
• California continues to be the nation’s leading high-tech state, with nearly 1 million high-tech
   workers – about one-sixth of all U.S. high-tech workers
• The State’s high-tech exports totaled over $52 billion in 2006 – ranked first nationwide – and
   high-tech goods represent 41% of the State’s annual exports
• These assets were recognized in Business Facilities Magazine, which announced in its July 2007
   issue that California is home to two of the cities in the United States with the “Most Educated
   Workforce”:  San Diego (#4) and Sacramento (#12)

Research and Development and Venture Capital.  California is a center of research and
development (R&D) spending, funded, in large part, by venture capital (VC).

• California offers a 24% R&D tax credit to businesses and leads the nation in R&D and VC investment
• In the second quarter of 2007, California companies received more than $3.2 billion, or 46% of all
   VC dollars invested in the United States
• Top sectors receiving VC funding are software, biotechnology, energy, medical devices and
   telecommunications
• R&D expenditures at universities and colleges totaled $6.49 billion in FY 2006.  In 2005, industrial
   R&D totaled $50.6 billion, and ranked first in the nation

Large and Growing Market.  California is an attractive market for business and remains the number
one state for attracting foreign direct investment. 

• In 2006, the State produced more than $1.73 trillion in goods and services 
• California's population exceeded 36.4 million persons on August 31, 2007, and continues to grow in
   size and diversity, representing 12% (one out of every nine persons) of the United States population
• Currently, only three minority markets at the state level exceed $100 billion in buying power annually,
   and two of them are in California: 
        Hispanic buying power comprises $228 billion in California and California's
        Asian consumer market totals $150 billion
• Its large consumer market forms a solid basis for the high technology, biotechnology, food and
   agriculture, apparel, and entertainment industries.
• California boasts 18 foreign trade zones and 42 enterprise zones

Strong Business Environment.  To be successful over the long haul, a state needs capable
entrepreneurs and the risk capital to support the conversion of research into commercially viable
technology products and services. California tops many business lists.

• In the June 2008 survey, California scored number one in the nation on the Milken Institute’s
   Risk Capital and Entrepreneurial Infrastructure (RCEI) Composite Index 
• In 2007, Forbes.com announced in its online publication that California led all states in the
   categories of “200 Best Small Companies” and “Fastest-growing Tech Companies"
• In the most recent listing of Entrepreneur Magazine’s Young Millionaires (under 40) issue,
   four of the twelve profiles were from California -- more than any other state listed
• In addition, in June 2008, 52 California companies were ranked among FORTUNE Magazine’s
   prestigious FORTUNE 500 list of America's largest corporations ranked within states

Infrastructure.  While there is much to be done to rebuild the State’s infrastructure, California is
globally connected through a world-class infrastructure.

• California’s infrastructure includes more than 15,000 miles of highways and freeways, 11 cargo
   airports, and 11 cargo seaports

Climate and Natural Resources.  California’s climate and its diverse natural resource riches sustain
healthy and active lifestyles for its citizens, world-class tourist attractions, abundant agriculture including
its globally recognized viticulture, and green energy production. 

• The State offers natural and scenic beauty in 31 national parks, 280 state parks, 1,100 coastline miles,
   and over 100 wilderness areas
• California has 21 professional sports teams, over 1,000 golf courses, and more theme parks and
   amusement parks than any other state
• It is home to the most towns on CNN Money Magazine’s 2007 list of Best Places to Live and continues
   to be the U.S. leader in tourism, with annual tourism-related revenues approaching $100 billion