BY CY THANNIKARY

COMMENTARY

Now that we have a Governor-elect and a Lt. Governor-elect, it is time to develop a new comprehensive strategy to create jobs and promote economic growth in New Jersey. New Jersey needs a bold new initiative to address the highest unemployment rate (15.5%) in 38 years and to revive its ailing economy.

With decisive leadership of the new governor and the legislature, New Jersey's economy can be turned around, and sustain its competitive advantage in the global market place. The following proposal outlines such a strategic vision.

The main goal of this vision is to achieve maximum job growth within a short period of time without any incremental cost to the state treasury. To achieve that goal, initially, we need to concentrate on strengthening New Jersey's existing "strategic" industries, which have a potential for "growth" and is powerful enough to generate growth in other sectors of the economy when promoted. Such "strategic" industries include Pharmaceutical, Bio Tech and R&D companies and High-tech and computer firms. As many innovations are taking place in these industries, by promoting them we can create additional jobs ("multiplier effect") in other sectors of the economy and improve New Jersey's competitive advantage in the global market place. Here is what the state can do to achieve that goal.

Create a technology corridor: As most of these companies (7,500) are located in 13 counties within 50 miles radios from Princeton, designate that area as a technology corridor — call it a "Technopolis" — and promote these industries as a "clusters" to drive the economy forward. The government, then, takes the leadership to attract the suppliers, distributors, and specialized service providers of these industries to relocate to that area.

Such co-location of companies which have in-put, out-put relationships within a given industry (example, pharmaceuticals) benefits all companies in that cluster. It can save transaction cost, improve organizational learning through exchange of information among companies within the area and can stimulate vigorous competition among companies within the cluster which, in turn, can promote continuous product innovation, process improvement and cost savings. These activities would further strengthen New Jersey's and these industries' competitiveness globally.

To promote these industries, a public private partnership must be created. The governor on his part can open new markets for these industries for export, joint venture and partnership opportunities around the world through well orchestrated trade missions overseas. An expanded market for these companies will translate into more jobs here in New Jersey.

Further, the very creation of this Technopolis will send a strong message to the business community that New Jersey is serious about supporting technology industries. This could improve investor confidence in these companies and encourage foreign companies to establish a presence in New Jersey to take advantage of modern technologies and R&D infrastructure that are available in the area.(Today, Arizona, Oregon, Michigan, Pennsylvania and Massachusetts are following some version of the targeted industry cluster concept in their economic development initiatives).

Invest in our workers: To support the above initiative and to sustain New Jersey's competiveness, the state must make a commitment to train our workers to be the best in the world by 2015. We need to train our existing workforce to be knowledge workers of the 21st century. We need workers who can learn new technologies and can work cooperatively in a culturally diverse workplace. Such skills are especially required in industries such as bio-tech, information technology, health care and pharmaceutical industries and developing alternate energy and green technologies, where innovation and creativity are involved. (Other states such as Maryland, South Carolina and Wisconsin have started such programs almost 10 years ago).

To achieve this goal, we need to introduce a market driven education system as part of our global positioning strategy. With the financial support from President Obama's community college education development fund, our community colleges must be an integral part of this process. We need to develop a "second generation" Business-Education Partnerships to encourage businesses to invest in our community colleges and provide information on new skills needed in a given industry and help develop curricula accordingly in local schools. To reduce worker training cost, we need to encourage small companies to join forces to train their workers in skills that are common across an industry cluster. Create an interdepartmental "Accountability Office", reporting to the governor, to assure coordination of workforce development program and to its success with outcome measured such as worker productivity, product innovation, new market share and new market penetration.

Promote Innovation and Entrepreneurship: The 21st century economy is fueled by competition that is innovation-based, rather than resource-based. A key element of innovation is the promotion of research and development and the promotion of new business opportunities in the State. New Jersey being the home of 410,000 scientists and engineers and the 3rd largest technology region, it can be a leader in product innovation, especially in areas of bio-technology, pharmaceuticals, health delivery systems, engineering, information technology, renewable energy and green technologies.

In the area of health care alone, the federal fiscal stimulus package includes nearly $20 billion to create national health information (NHI) system. Federal funds are also available to promote alternate energy and related product developments. With these funds, New Jersey could spawn new companies to turn technology and ideas into consumer products and become a global leader in these industries.

To further support these efforts, New Jersey, along with a consortium of banking institutions, must create a venture capital fund, "New Jersey Innovation Capital Fund", modeled after the "Connecticut Innovation Inc" (CII), to invest in emerging nano-technology, Information and renewable energy technology companies. Further, the state can facilitate small and startup companies to enter into joint venture agreements with larger companies both domestically and internationally. These new companies could become the next generation of successful companies of the future and can create jobs for our citizens.

Given the critical need for economic development in the state to turn the economy around, this should be a high priority of the Governor.

(A detailed policy paper is available for further discussion upon request).

Cy Thannikary is the Fmr. Vice President for Policy and Strategic Initiatives & the Director of NJ Division of Economic Development at the New Jersey Commerce Commission. He can be reached by: E-mail:

Thannikary@Optonline.net

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