My view: Thomas W. Still

Economic development is back in vogue in Madison. Unwilling to raise taxes and uncertain if spending cuts alone will balance the state budget, Democrats and Republicans alike have pinned their hopes on "growing" the economy. If only Wisconsin's economy would create more high-quality jobs, the Capitol's

In theory, that's been correct ever since Adam Smith wrote The Wealth of Nations. In practice, accelerating the sluggish Wisconsin economy won't be easy - and the results cannot be celebrated overnight. If the policymakers expect a quick fix, they've set themselves up for a fall. But if their goal is long-term sustainable growth, their patience will likely be rewarded.

Gov. Jim Doyle and the Republican Legislature might have good reason to expect great things during the coming budget cycle if all the recovery pieces were already in place. Unfortunately, those pieces are spread like a jigsaw puzzle on a coffee table, and it will take a steady hand to complete the picture. Here's why:

Taxes are high and the regulatory structure is showing its age. Wisconsin is still among the highest taxing states, even if Doyle and the Legislature make good on their promise not to raise taxes. Many state laws and regulations discourage new business formation or expansion - especially Wisconsin's outdated securities and incorporation laws. It can be an unpredictable state in which to do business.

Other states have invested far more in economic development. According to the Biotechnology Industry Organization, more than 40 states have biotech initiatives and 16 are using tobacco lawsuit settlement money to help pay for it. Michigan has set aside $50 million a year from its tobacco money to seed biotech investments in its Ann Arbor-East Lansing-Detroit corridor. Wisconsin's share of the tobacco settlement was used to reduce the deficit - yet an estimated $3 billion in red ink remains.

Wisconsin isn't a magnet for investment capital. The state attracted about $85 million in venture capital in 2001, according to the National Venture Capital Association. Minnesota landed more than six times as much and Illinois nearly tenfold that amount. Sure, Illinois is a much bigger state, but Minnesota is virtually a census clone.

So, is Wisconsin doomed to be a New Economy basket case? Fear not. It has many competitive advantages. However, progress will take time, and the economic rebound may not happen in time to erase the 20032005 budget deficit. Here are the building blocks for long-term growth:

Most states are envious of Wisconsin's research and manufacturing base. The Brookings Institution reported last year that too many states and regions are trying to spin a high-tech future from less than whole cloth. Regions without indigenous R&D or industry are at a disadvantage in attracting investment, even if government seeds the clouds. "The apparent scale of research funding required for becoming a biotechnology center may be beyond the reach of most metropolitan areas," Brookings reported. Wisconsin has the nation's No. 2 research university in the UW-Madison, other research centers in Milwaukee and Marshfield, a number of companies with strong R&D departments and a tech transfer system anchored by the Wisconsin Alumni Research Foundation.

There are signs of growing investment activity. The 2002 Wisconsin Life Sciences Venture Conference in Madison attracted 25 venture firms, mostly from other states. The State of Wisconsin Investment Board is investing $100 million in venture funds, and Madison entrepreneur and Promega Inc. founder Bill Linton has put another $50 million on the table. A survey conducted by Profits Journal and Grant Thornton showed that Wisconsin received $73.7 million in all types of investments in the third quarter of 2000, marking a turnaround in such activity. We're finally getting noticed.

A strategy for global competitiveness is emerging. It's not important for Madison to compete with Milwaukee or Eau Claire with La Crosse, but it's vital that Wisconsin and the Upper Midwest produce high-end goods and services that will be purchased by a world market. Efforts are under way to leverage the resources of the ChicagoMilwaukee-Madison-Twin Cities corridor, which has as many "knowledge-based" workers as metro New York. Interstates 90 and 94 link the Upper Midwest's "IQ Corridor," a region with enough capital and intellectual property to become a global leader in selected technologies. The emergence of innovation clusters and regional centers of excellence, as recommended by the Wisconsin Technology Council's "Vision 2020" plan, will help Wisconsin find specific opportunities and avoid the generic replication of strategies used elsewhere.

Wisconsin's economic future won't be secured in this state budget cycle - or even the next. Positioning Wisconsin in the emerging knowledge-based economy will take five to 20 years, but the work must start now. Wisconsin won't win this game by skating to where the puck is today, but by quickly moving to where it will be tomorrow.