Publication of NoVa Clean Energy Economy Report

Produced by GMU's David Hart and a small team. Some details:

The Clean Energy Report represents an effort by a small group at the George Mason University School of Public Policy to estimate the size and sketch the contours of the “clean energy economy” of northern Virginia. It is, by any definition, a rough draft. We relied on publicly available data in order to identify firms, government agencies, and other organizations that contribute to improving the region’s energy efficiency and expanding its renewable energy use. We have sought to make our methods and findings as transparent as possible.

The report and additional info are here. The authors are currently seeking feedback so if you want to help out take a look and see what, if anything, they're missing.

xkcd on standards proliferation

Schumpeter in Africa??

Few people will contest the assertion that most of the entrepreneurial growth in this century will take place in BRIC countries (actually mostly India and China).

But Africa?? Africa, we hear, has too many little nondescript inchoate domains with a big-man at the top calling themselves nation states, while still struggling to curve a synthetic national identity out of the vestiges of a colonial past.

I argue that all that is changing; has changed.

Africa is democratizing, Africa is integrating. Africa is growing up.
The so-called “Arab Spring” is in fact the tail end of a long African Summer.



The newest of the regional integration programs is COMESA-EAC-SADC Tripartite Summit. The Tripartite is an umbrella organization consisting of three of Africa’s Regional Economic Communities (REC’s), namely: the East Africa Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC).



COMESA-EAC-SADC Tripartite Summit will focus on expanding and integrating trade and include the establishment of Free Trade Areas (FTA’s), Custom Unions, Monetary Unions and Common Markets, as well as infrastructure development projects in transport, information and communications technology and energy.

With more than 527 million people and a Gross domestic product (GDP) of approximately 624 Billion US Dollars, the 26 member countries of the Tripartite make up 57% of the population of the African Union (AU) and just over 58% in terms of contribution to GDP.

Africa: 53 Countries, One Union – The New Challenges conference

‘Africa: 53 Countries, One Union – The New Challenges‘ conference will take place in Washington, DC on June 15 and 16, 2011.

Download the preliminary Conference Program

The main objective is to offer to senior policy makers and experts the opportunity to discuss the relevance of regional and continental integration in the solution of major African problems, including those generated by recent developments which now challenge our concepts of freedom and democracy.

The Conference will focus on the roles of the United Nations, African Union, European Union and the United States and China governments. International organizations such as the World Bank, African Development Bank, World Trade Organization, and Economic Commission for Africa will also be involved.

Some Growth

We're pleased to introduce the newest contributor to our blog, Jeremiah Mitoko, a PhD student at George Mason's School of Public Policy. He will be writing about entrepreneurship, development, investment, and microfinance in Kenya and Sub-Saharan Africa more broadly. We look forward to many new and exciting posts from Jeremiah.

The Silicon Valley of the East

From a supplement to National Journal (NJ), also reposted on the Atlantic's site, with a different title (Atlantic):

Fairfax County is home to a quarter of all immigrants in metropolitan Washington and to 40 percent of the area's foreign-born Indians. It's no wonder that on a recent Thursday night at Worldgate Centre, a strip mall one block north of the Dulles Toll Road, almost 20 South Asians--mostly young families or groups of young men--streamed through the glass doors in just a matter of minutes to catch a movie.

KiranTeja Chadalawada was with friends on his way to see the Telugu-language film 100 Percent Love. A 22-year-old immigrant from southern India who is pursuing a master's degree in telecommunications at George Mason, he moved to Fairfax County in 2009 for school because a friend from India recommended it. "A senior from college was studying here and said it was a great [place] to learn and get an internship," Chadalawada said. After racking up a few years of experience in Virginia, he hopes to start a company of his own--but not in Virginia: He and his pals "are looking to go back to India," he said.

Increasingly, the members of the next generation of Indian entrepreneurs are looking to the East. They feel pulled by India's economic vigor and also pushed out by the daunting rules for U.S. visas. Advocates of immigration find it foolish to force smart, ambitious people to leave the United States simply because they were born elsewhere, especially after American taxpayers have invested so much in educating them.

"These guys create jobs," said Michael McVicker, an immigration lawyer whose Reston, Va., office is near the Dulles Toll Road. "They've created jobs for thousands of people, the vast majority of whom are Americans."

It was time for immigration reform a long time ago, but now is a fine time to get started.

Science Progress

A couple of FB friends have posted links to articles on Science Progress in the past couple of days, so I figured they're worth passing along here.

1. The first article covers elementary school teachers and the crisis in STEM education:

   Prospective teachers can typically obtain a license to teach elementary school without taking a rigorous college-level STEM class such as calculus, statistics, or chemistry, and without demonstrating a solid grasp of mathematics knowledge, scientific knowledge, or the nature of scientific inquiry. This is not a recipe for ensuring that students have successful early experiences with math and science, or for generating the curiosity and confidence in these topics that students need to pursue careers in STEM fields.

2. The second covers data driven vs hypothesis driven research:

   the change in approach is this: Instead of designing an experiment to test a defined, preconceived hypothesis, researchers first amass large banks of information and then wade through them with the aid of powerful computers to unearth biologically pertinent findings.

3. I'll add a third article, to make this a nicely numbered list. "Waves of Innovation" discusses innovation cycles:

   In As Time Goes By: From the Industrial Revolutions to the Information Revolution, a seminal work in cliometrics—the study of economic history—Chris Freeman and Francisco Louçã use historical data on technological advances, economic structure, salaries, and political unrest to derive a clear pattern linking innovation to the performance of the economy. These generational cycles of invention, expansion, and depression are called “Kondratiev waves” in honor of Nikolai Kondratiev, the Russian economist who first postulated their existence.

Some Links

1. Lessons From 175 Years of Innovation, in Fortune (via @TheBIF). A profile of Proctor & Gamble's Connect & Develop program and P&G's emphasis on open innovation. Here is an HBR study by two researchers within P&G.
   
2. For academic types, SSRN's CiteReader is pretty amazing. Check out a project update here.
3. Francis Fukuyama has been out promoting his latest book, The Origins of Political Order: From Prehuman Times to the French Revolution. He spoke at SAIS on Monday and the video is below.
4. Banerjee and Duflo's piece in Foreign Policy has been getting tons of press, befitting two scholars of their stature. Worth a read.
   

Frontier Economics

Brink Lindsay at Kauffman has a new paper titled Frontier Economics: Why Entrepreneurial Capitalism is Needed Now More than Ever (pdf). The gist is that, "the changing nature of economic growth means that prosperity is actually more, not less, reliant on free, competitive markets." And:

The richer nations get, the more they "rely on innovation to keep growth going – and, therefore, the more we need free-market policies that foster the creation of new businesses and the implementation of new ideas," Lindsey said in the report. "If we are to rise out of the current slump and launch a new, 21st-century boom, it is in the direction of freer, more competitive markets that our policies must turn."

The role of the frontier has been studied by Zoltan Acs and David Miller as well, although their conception is slightly different (see here for starters). Hopefully David will read the paper and offer his thoughts, although I imagine, like me, he'll mostly agree with the main ideas.

The Information Economy

From Google's new magazine/book, Think Quarterly:

In 2010, the human race created 800 exabytes of information, from tweets and Facebook updates to PowerPoint presentations and photographs. That’s 800 billion gigabytes, or the amount of data you can fit on 75 billion 16-gig iPads. To put that into context, between the dawn of civilisation and 2003, we only created five exabytes; now we’re creating that amount every two days. By 2020, that figure is predicted to sit at 53 zettabytes (53 trillion gigabytes) – an increase of 50 times.

The rest of the article is about Hal Varian, Google's 441st employee and Chief Economist.

For those in DC, James Gleick is talking about his newest book, The Information, at Politics and Prose at 7 pm. Here's one positive review. I've read the first chapter and so far it is very good.

Reinvisioning High School

By now we all know the Amy Chua story (WSJ):

Western parents try to respect their children's individuality, encouraging them to pursue their true passions, supporting their choices, and providing positive reinforcement and a nurturing environment. By contrast, the Chinese believe that the best way to protect their children is by preparing them for the future, letting them see what they're capable of, and arming them with skills, work habits and inner confidence that no one can ever take away.

In today's NYT, Susan Engel reports on a small group of students who created their own high school curriculum. Despite Chua's depiction, the American school system provides students with virtually no say in curriculum development. Maybe some lazy Western kids will do a school play or have a sleepover, but it rarely occurs to educators to ask students what they want to read and study; there is simply no individuality in American education. As Engel writes (NYT):

The students in the Independent Project are remarkable but not because they are exceptionally motivated or unusually talented. They are remarkable because they demonstrate the kinds of learning and personal growth that are possible when teenagers feel ownership of their high school experience, when they learn things that matter to them and when they learn together. In such a setting, school capitalizes on rather than thwarts the intensity and engagement that teenagers usually reserve for sports, protest or friendship.

It's also worth going back to her article from last year, Playing to Learn, for another interesting take on education reform.

How Seriously Should We Take the Coase Theorem?

Economist Ed Glaeser, in Triumph of the City, writes:

Cities should replace the current lengthy and uncertain permitting process with a simple system of fees. If tall heights create costs by blocking light or views, then form a reasonable estimate of those costs and charge the builder appropriately. If certain activities are noxious to neighbors, then we should estimate the social costs and charge builders for them, just as we should charge drivers for the costs of their congestion. Those taxes could then be given to the people who are suffering, such as the neighbors who lose light from a new construction project.

Planetizen's response (I took the above quote from them as well) sums up the animosity against Coase: "But should developers be able to build whatever they want by giving a one-time payout to the neighbors? That sacrifices comprehensive, intentional planning for a one-time infusion of cash, and later generations may not thank us."

The fact that it sacrifices comprehensive planning is, of course, precisely Glaeser's point. There are generational issues to consider, and how you price the present value of perpetuities can be complicated, but the proposal shouldn't be dismissed outright. Just further proof that the Coase Theorem is an economic idea that's hard to popularize.

The Dispersion of Hourly Wages

CBO just issued a report, Changes in the Distribution of Workers' Hourly Wages Between 1979 and 2009, that contains some interesting data on the economic return to education (Summary, Full Report, blog post), which is pretty easy to see the in the figure below:

Can we Hope for Stable Democracy in Egypt?

As a back of the envelope guide, here's a quick check. According to Przeworski, et al (1996):

If a country, any randomly selected country, is to have a democratic regime next year, what conditions should be present in that country and around the world this year? The answer is: democracy, affluence, growth with moderate inflation, declining inequality, a favorable international climate, and parliamentary institutions.

More specifically:

Poor democracies, those under $1,000, have a 0.22 probability of dying in a year after their income falls (giving them a life expectancy of less than five years) and a 0.08 probability (or an expected life of 12.5 years) if their income rises. Between $1,000 and $6,000--the middle range--democracies are less sensitive to growth but more likely to die if they stagnate: they die at the rate of 0.059 when they decline, so that their expected life is about 17 years, and at the rate of 0.027, with an expected life of about 37 years, when they grow.

Egypt's per capita GDP is estimated at just over $6,000 for 2010.* Therefore, if the transition goes okay over the next few months and genuine, contestable elections are held in the fall, the prospects for continued democratic rule don't look too bad. This is especially true if the new government is able to tap into the large pool of skilled labor and create the opportunities for entrepreneurship and innovation that their people deserve.

* I have not adjusted the data for inflation. Przeworski et al use annual per-capita income, expressed in purchasing power parity (PPP) U.S. dollars in 1985 international prices, as given by version 5.5 of the Penn World Tables. I simply looked up per capita GDP in current international prices, so the data may overstate Egypt's prospects a bit. The IMF maintains the most recent data, available here.

What can we know?

Recent events in Egypt (#Jan25), Tunisia and Jordan remind us that human behavior makes prediction possible over certain dimensions, but not others, such as time. To wit, here are a few great minds on the inevitability of the Egyptian protests:

“The events of the past two weeks in Egypt were not a surprise, but no one could have predicted the timing,” said Osman, one of a few authors whose new Egypt-related books come at a fortuitous time. “A socio-political eruption in Egypt, from within the middle classes, led by the youths, was inescapable."

“I have much to say, and the last chapter in my book talks about my view that neoliberal Cairo under Mubarak is a like a bomb in the tomb of a longer Egyptian history,” AlSayyad wrote in an email. “I predicted in the ‘Cairo’ book, as well as in my ‘The Fundamentalist City’ book released back in November, that it will ultimately detonate. I just could not have expected it to happen so soon.”

Both quotes come from this piece in the Washington Post. And from Twitter, we get the succinct (@auerswald):

How predictable was #Egypt #Jan25? Put heat on, water will boil. Seal lid, pot will explode. Moment unpredictable. Outcome not.

Also see this longer post, which includes a great quote by Gregory Bateson. The CIA expressed similar views (Wired). The inevitability of human freedom has become a resurgent topic given recent events and it is a theme we will explore in future posts.

2010 State Technology and Science Index

From the Milken Institute. The subtitle is: Enduring Lessons for the Intangible Economy. The background:

The 2010 State Technology and Science Index looks at 79 unique indicators that are categorized into five major components: Research and Development Inputs, Risk Capital and Entrepreneurial Infrastructure, Human Capital Investment, Technology and Science Work Force, and Technology Concentration and Dynamism. It is one of the most comprehensive examinations of state technology and science assets ever compiled.

The top 10 (with previous index rankings in 2008):
1. Massachusetts (1)
2. Maryland (2)
3. Colorado (3)
4. California (4)
5. Utah (8)
6. Washington (5)
7. New Hampshire (9)
8. Virginia (6)
9. Connecticut (7)
10. Delaware (14)

The report and executive summary can be found here.

Celebrating Entrepreneurship

If you think the Lemelson Center for the Study of Invention and Innovation is a national treasure that should be expanded and scaled up, then you might want to support The Center for Entrepreneurship and Innovation (@InnovationontheMall). The organizers:

... propose that a new Center for Entrepreneurship & Innovation on the National Mall occupy the now vacant Arts & Industries Building. The Center would restore the building’s original mission: to showcase to the public and encourage excitement about understanding the concepts underlying innovation and the process of invention.

The original purpose of the Arts & Industries building, to showcase and celebrate American ingenuity, will be adapted fluidly for a new mission. Exhibits, educational programs, and convenings will catalyze and convey transformational new ideas creating value for society.

Check it out and spread the word!

Innovation and Competition

Here in DC it is restaurant week, which can be a fun time of year. Normally high priced restaurants offer a three course fixed price (pre fixe if you must) menu for the comparably affordable price of $20/35 for lunch/dinner. I've been looking for a few good vegetarian options since my wife has been a lifelong vegetarian. Flipping through OpenTable's listing I was struck by how little innovation there is in the food industry at the moment.

First, I should say that it is nice that so many restaurants do offer at least some semblance of a veggie option, however the clustering was kind of shocking. Virtually every restaurant, almost regardless of the type of cuisine, is offering a mushroom risotto for its main course. Nothing against this, but would you really want to eat at six different fancy restaurants in search of the perfect mushroom risotto?

This isn't limited solely to vegetarian food of course. Virtually every self-respecting haute cuisine restaurateur is offering a beet salad now. It hits all the trendy points: it's seasonal, local, and in most cases organic. Since chefs are a transient lot they tend to incorporate many of their competitors' best dishes into their new restaurants, with a few modest modifications to avoid allegations of outright theft. Think pork belly too, which is now on the wane but was a de facto requirement on restaurant menus just a bit ago.

What's interesting from an entrepreneurial standpoint is that this situation is only a temporary equilibrium. It won't be long before some enterprising restaurateur recognizes the lack of novelty in restaurant menus today and will come up with something new and great. Or new and terrible - the restaurant industry is nothing if not volatile. Even at a small, local scale, entrepreneurial vision drives change and improves and enlarges the options that we as consumers can choose from. Or to borrow a phrase (thecomingprosperity):

... sustained prosperity depends on novelty. It depends on invention in the face of change. It depends on creativity with limited resources.

More fundamentally--most fundamentally--sustained and sustainable prosperity depends on entrepreneurs.

Some Recent Articles on Innovation

David Warsh's latest article on Economic Principals asks whether a new round of technical innovation can tackle problems of climate change. He answers this by reviewing the contributions of previous innovation theorists like Nelson, Rosenberg, and Arrow. Worth a quick read.

Elsewhere, the Minnesota Fed's quarterly publication The Region has an interesting survey article on the relationship between trade and innovative capabilities:

“For the last decade or so, the idea that international trade might have extra benefits because it stimulates innovation by firms that export has been a strongly held view among economists,” observed Minneapolis Fed consultant Andy Atkeson in a recent interview. “But what we’re finding, in fact, is that these ‘extra benefits’ don’t really exist.”