Regional Innovation System 2016-11-02T01:53:44+00:00

Regional Innovation System

Innovation is a key factor in economic growth and development, especially important for the emergence of knowledge-based economies. Entrepreneurship is another driver of economic growth and reflects a dynamic economy. Good indicators of innovation and entrepre­neurship are difficult to identify. However, trends in patents and establishment data are indicators of knowledge-creation and entrepreneurial activity. 

Data for this indicator was obtained from the United States Patent and Trademark Office (USPTO) and the Bureau of Economic Analysis (BEA). Patent data was obtained from the USPTO for all three NSJV counties. This data was then divided by the sum of employment for the three counties obtained from the BEA.

This graph shows the number of utility patents generated per 10,000 employees for the NSJV, SSJV, Greater Sacramento, the Greater Bay Area, and the United States. The graph is displayed as a logarithmic scale which means that every increase of one stands for a doubling of the number of patents per employee. Therefore, the “10” line is ten times the amount of patents per employee of the “1” line. In 2005 the NSJV and SSJV produced approximately the same number of patents per employee, lagging way behind Greater Sacramento and producing only 3% of the patents per employee that the Bay Area produced. By 2015 the NSJV had separated itself from the SSJV, producing almost twice the number of patents per employee. It is difficult for the NSJV, in which agriculture and logistics are the major sectors, to compete with the more knowledge based economy of the Bay Area and Silicon Valley in terms of patent generation. 

Data for this indicator was obtained from the Census Bureau’s Statistics of U.S. Businesses (SUSB), and population estimates. Establishment entry by year was obtained from SUSB and was divided by the population of the respective year. The resulting number was then multiplied by 10,000 to reach the number of new establishments per 10,000 residents.

This graph shows the number of new establishments started per 10,000 residents. Start-up establishment peaked in 2007 just prior to the Great Recession. The rate of start-ups then fell until 2011 for California, and 2012 for the NSJV counties. In all years the three NSJV counties had lower start-up rates than California as a whole. The California rate benefits from tech-heavy areas such as the Bay Area and Silicon Valley where start-ups are much more commonplace than in the production centered NSJV. New, and small firms are important for economic growth, accounting for more than 60% of new jobs created in the past decade. The fact that the NSJV has lower start-up creation puts the region at a disadvantage against the rest of California. 

Data for this indicator was obtained from the Census Bureau’s Statistics of U.S. Businesses (SUSB). The number of establishment entries for each year was divided by total establishments to obtain the establishment birth rate.

Establishment births generate job opportunities, economic activity and can attract visitors and new residents to an area. Establishment deaths help the economy more efficiently allocate its scare resources in to more productive sectors, leading to efficiency gains.

This graph shows the birth and death rate of establishments measured as the percent of total establishments that were created (birth) and went out of business (death) in 2013. This is a similar measure to the “Trends in start-up intensity” graph, also in this subcategory, and shows that the NSJV is lagging behind both the United States and California in this measure. Both establishment births and deaths are important to the health of the economy.

Data for this indicator was obtained from the Census Bureau’s Statistics of U.S. Businesses (SUSB). Establishment birth rates were calculated as describes above. Death rates were calculated in the same fashion using establishment death, and total establishment data.

This graph shows the churn rate for establishments in the NSJV. Churn is defined as the sum of the percent of establishment birth and death. After peaking in 2007 (the same year where start-up intensity peaked), the churn rate has trended down through 2013. The decrease in the churn rate came mostly from a decrease in the establishment death rate. While there are benefits to the death of establishments, a higher birth rate than death rate is a sign of economic prosperity as it shows the regional economy can successfully hold more businesses. The churn rate fell from a high of 13.9% to 9.2%.

Data for this indicator was obtained from the Census Bureau’s Nonemployer Statistics and County Business Patterns (CBP). The nonemployer and employer establishments were summed from the Nonemployer Statistics and CBP to calculate total establishments in each county, and added together to arrive at the NSJV total. The number of nonemployer establishments were then divided by total establishments. 

This graph shows the percent of total establishments made up of nonemployer establishments. Nonemployer establishments are those that have no paid employees, has annual business receipts of $1,000 or more, and is subject to federal income taxes. Most nonemployer establishments are independent contractors, or sole proprietorships. In the NSJV transportation (commercial trucking) is a population type of nonemployer establishment. The NSJV has a higher percent of total establishments made up of nonemployer establishments than the United States as a whole, but a lower percent than California. In all three geographies the percent of nonemployer establishments has increased in all years since 2012. A possible explanation for this is that while the economy has been recovering, it is still difficult to find meaningful employment so more people are choosing to work as independent contractors.

Data for this indicator was obtained from the Census Bureau’s Statistics of U.S. Businesses (SUSB)

This graph shows the percent of jobs in the NSJV located at establishments of various sizes. It shows that for all establishments in the NSJV only 19% of all jobs are located at establishments that have less than 20 employees. This is despite the fact that over 75% of establishments have no paid employees. Almost half of all jobs in the NSJV are at establishments with over 500 employees. Although establishments with fewer than 20 employees make up only 19% of all jobs that number jumps to 40% when only examining newly created establishments, and 39% when only examining recently closed establishments. This makes sense as recently created and closed establishments overwhelmingly tend to be small.

U.S. Census Bureau

This graph shows the percent of all establishments by the number of employees working for the establishment. Compared to the surrounding regions and the United States the NSJV has fewer establishments with 1 to 4 employees. The NSJV also has more establishments with between 5 and 99 employees than the surrounding regions and the United States. The NSJV and SSJV are very similar in terms of the employment makeup of establishments, differencing themselves from the Greater Bay Area, Sacramento, and the United States which are all very similar with each other.