At Year 5: Ohio's Third Frontier Investments Yielding 10:1 Leverage, 41,000 jobs

Halfway through its money and its first decade, Ohio's Third Frontier Initiative has helped generate a $6.6 billion impact for the state, according to an independent assessment released by the Ohio Department of Development (ODOD) on Tuesday. The report also credits the initiative's investments for creating 41,300 jobs within Ohio over the past five years. Making an Impact: Assessing the Benefits of Ohio's Investment in Technology-Based Economic Development Programsprovides a supporting backdrop as Gov. Ted Strickland and the state legislature consider whether or not to place a possible extension of the Third Frontier Initiative on the May 2010 ballot. A large component of the Third Frontier's funding comes from a $500 million bond package Ohio voters passed four years ago.

Original Report
The 10:1 leverage estimate is based on the $681 million the state spent from 2003 to 2008 for a variety of programs targeting multiple stages in the research, development and commercialization pipeline. The state funds were matched directly by $4.2 billion in investments from industry, federal, foundation, and local sources. An additional $2.4 billion of indirect and induced impacts were estimated based on an econometric model, resulting in the cumulative $6.6 billion impact estimate to date.

The authors believe the current portfolio of tech-based economic development initiatives has been effective and the continuation of the state's Third Frontier Program is warranted, but some shift in priorities should occur. The report recommends greater emphasis on entrepreneurial support programs as well as efforts to attract companies related to Ohio's established technology clusters.

Large research centers largely focused within the state universities and private research institutions received the majority of the first investments. Of the total funds awarded through Ohio's Third Frontier Initiative from 2003 to 2008, 76 percent were for improving university-industry-nonprofit research collaboration, while 13 percent supported tech entrepreneurs, 10 percent assisted product development, and less than 1 percent was used for attracting companies and student placement efforts. Other impact metrics as identified in the report include:

• High-tech employment increased by 19,200 jobs from 2004 to 2008, representing a 4 percent increase. Non-high-tech employment decreased by 7,250 jobs over this same period, declining .2 percent;
• In 2008, high-tech employment in Ohio was brought in-line with the national average, pegged at 9.5 percent of total employment; In FY08, the 13 state-supported technology incubators housed 270 startup companies with $262 million in sales and grants and $121 million in equity investments; and,
• Licensing income to Ohio's universities more than doubled from $16.1 million in 2002 to $39.6 million in 2007.
• While the report presents the impact of Ohio's TBED efforts in aggregate, it also provides analyses for the individual programs that comprise the state's portfolio of initiatives.