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Region strives but still trails in innovation, entrepreneurship

grubaugh new picBy DENNIS GRUBAUGH
    Harried people read only the headlines, but those who really want to know what’s going on will read the whole story.
    Take our region, for instance, so inexorably linked to the St. Louis metropolitan area. Most people have at least a passing familiarity of the day-to-day routine, but how many, I wonder, really understand what makes the region click?
    I read with interest a new report from East-West Gateway Council of Governments, the bi-state region’s planning people. In what they call “Where We Stand,” a look at St. Louis’ fiscal health, analysts have amassed statistics that show how the region ranks compared to the Top 50 metropolitan statistical areas in the country.
    The latest report, one of a series, looks specifically at innovation and entrepreneurship. Some of the results are about what you’d expect. Others are quite telling.
    For instance, St. Louis is lagging in productivity, which is one of the most widely used measures of innovation. Productivity growth occurs when a company or individual is able to produce more goods or services with the same quantity of labor or capital equipment. It’s measured by gross domestic product per employee. According to the U.S. Bureau of Economic Analysis, St. Louis is now 38th out of 50. Generally, productivity can grow in one of two ways, the report says, and that is through job training and improvements to capital equipment.
    The region, however, is doing better in manufacturing productivity, which has steadily increased and was last logged at 15th out of 50. Such productivity is measured as the value of output per hour of labor.
    Inventions of new products was also cited in the report. Between 2000 and 2012, more than 7,000 patents were granted in the region, many for inventions related to life sciences. The companies with the most patents were Boeing, Monsanto, Washington University, Mallinckrodt and Emerson Electric.
    And, while that sounds impressive, it only got St. Louis at No. 32 out of 50. There’s been growth, but not as much as the nation’s largest cities.
    There has been an increase in venture capital, which is an important funding source for innovative activity. Annual venture capital investments in 2015 and 2016 were roughly twice the amount of investments of the previous five years. In 2016, the region attracted $240 million in such investment.
    That’s important because venture capital plugged into one company often inspires more companies to enter the market.
    Small-business startups may be the most dynamic statistic of those represented in the report. St. Louis falls No. 7.
     Some 4,876 new businesses were created in the region in 2014, the most recent year tracked. That was the highest rate of creation since 2005. However, many of those were in the health-care and social assistance industry — lower paying for the most part — and when they are factored out, St. Louis’ startup rate drops substantially.
    Business survival is not so rosy, compared to the rest. St. Louis, which sees 75.2 percent of its new businesses survive beyond a year, falls No. 45 on the Top 50. It’s only slightly better for businesses surviving five years — 46.9 percent of businesses, and 41st out of 50.
    There is no real way for a simple man to formulate a score card in all this. I would say if it wasn’t for the remarkable work being done by some of the region’s 19 business incubators and 11 accelerators and 23 funding and business investment organizations, the numbers would not be as good as they are.
    But it would behoove leaders to pay attention to the trends. The cities that are at the top of these lists are there for a reason. Locals need to look to the communities they’re trailing and find out why.
    Dennis Grubaugh is editor and partner of the Illinois Business Journal. He can be reached at or (618) 977-6865.

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