conomic summit focuses on future of Minnesota business

by Peter Frost

While the U.S. economy’s current state seemingly couldn’t be better, University, state and business leaders are assembling today at St. Paul’s River Centre to take stock of Minnesota’s economic situation and make sure it is on the right track.
The 2000 Summit on Minnesota’s Economy will focus on the key issues and warning signs affecting the state’s long-term economic objectives.
Some state business leaders are concerned that pressures from the “new economy,” a changing work force and increasing globalization pose a threat to Minnesota’s traditionally strong economy.
And, according to the numbers, they have plenty to be concerned about.
With the recent loss of major companies like Honeywell and Norwest Bank to their respective merges, the state has seen its 15 Fortune 500 companies shrink to 11 in the last 10 years.
Minnesota now ranks 28th nationally in public stock offerings and 34th in new company growth, while watching its share of the nation’s initial public offering market fall to 1.6 percent in 1999.
Because of these dismal figures, the state has seen an exodus of venture capital in recent years.
“Over the last three or four years, there has been a growing concern in Minnesota that we are losing our edge in frontier technologies,” said Varadarajan Chari, chair of the University economics department and a presenter at the summit.
“All that kind of came to a head when some studies were released that showed that Minnesota, indeed, was losing its edge in venture capital to other areas of the nation,” he said.
In recent years, Minnesota has fallen victim to places like Silicon Valley, Boston, and Austin, Texas, in terms of receiving venture capital.
These areas, plump with educated workers fresh out of college, have flourished in the high-tech sector and, in effect, garnered a large percentage of the nation’s venture capital money.
And although 10 new technology-based companies popped up in the state in fiscal year 1999-2000, and local tech firms employ nearly 200,000 Minnesotans, the state isn’t keeping pace with the tech meccas.
In lieu of these warning signals, Carlson School Dean David Kidwell gave a well-publicized speech last March which heightened concerns of some local leaders, including University President Mark Yudof.
Yudof, who organized the summit, realized the University is Minnesota’s main source of educated workers and research, and should play an integral role in the development of the state’s new economic strategies and development.
Along with Yudof, keynote speakers also include Gov. Jesse Ventura and The Wall Street Journal’s Alan Murray.
“The new economy is a ‘knowledge-based’ economy, hence places like the University will play a more central role than in the past,” Chari said.
In order for the University to play an increased role in the economy, it essentially needs more funding, said Charles Muscoplat, dean of the College of Agricultural, Food, and Environmental Sciences and summit co-chairman.
“Educational institutions — all the way from K-12 to universities — need to be bolstered so that they are able to continue doing cutting-edge research, and producing the state’s skilled work force,” Muscoplat said.
But, although Muscoplat and Chari both said additional educational funding is essential for Minnesota’s economic success, they dismiss the notion that the summit was created to enhance the resources the University receives.
“We’d simply like to hold an open forum for discussion on Minnesota’s economy,” Muscoplat said. “We want to shed light on some of the issues we are going to face in the next few years.”
Organizers hope the summit will provide a place for University leaders, state government and members of the private sector to team up and make use of each other’s resources — which also happens to be part of Ventura’s “Big Plan.”
“The discussion that results from bringing all of the cultures together is a key component of the plan,” said Kit Borgman, communications director of the Minnesota Department of Trade and Economic Development.
“Collaboration and partnerships are very important — especially with education, state and business,” she said.
Borgman said Minnesota doesn’t have all the resources of Silicon Valley, but the state has everything in place to continue to be successful in the future.
“There are some dark clouds on the horizon that we need to prepare for,” she said. “It’s just a matter of keeping ahead of pace.”

Peter Frost covers business and welcomes comments to [email protected] He also can be reached at (612)-627-4070 x3215.