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South Carolina, Innovation, and the Mobility Revolution

The “mobility revolution” arrived before many realized that it was altering our environment, influencing our decisions, or had even identified it. In 2018, “mobility” is more than incorporating autonomous vehicles and delivery drones alongside the cars we drive and the trains we catch. In fact, it’s more about how people and goods move, what we have access to, which questions we ask and answer, and how we define innovation as a concept.

According to Morris Ellison, of the transatlantic law firm Womble Bond Dickinson, the “mobility revolution” is about opportunity. This past October, as part of Columbia World Affairs Council’s Distinguished Speakers Series, Ellison presented “Building a Transportation Innovation Center in South Carolina,” an analysis of the German-Israeli-American Innovation Triangle, the many factors available to South Carolina, and its emerging role as not only a national, but global, competitor in advanced manufacturing and technology research.

To all outward appearances, South Carolina is a small state that is simply attractive for tourism, especially the City of Charleston. However, few realize that it is increasingly technology, not tourism, driving the Charleston economy or just how attractive Charleston has become to the young workers who form the backbone of most knowledge based companies.

The past decade has propelled South Carolina onto the international stage. The state has led the country in foreign direct investment (“FDI”) in at least 3 of the past 5 years. International investment has tended to cluster around the Greenville, Columbia, and Charleston metro areas with over $16 billion of FDI being invested in South Carolina creating over 27,000 new jobs. In fact, nearly 1/3 of all jobs announced in South Carolina between 2011 and 2016 were the direct result of FDI. Conversely, as population rapidly increases across the state, the sprawling growth patterns present new challenges in rising infrastructure costs, traffic congestion, a lack of accessibility to public transportation, and less availability of the necessary workforce.

Morris Ellison.

Yet, to Ellison and others throughout the state, herein lies tremendous opportunity. South Carolina is far more accepting of change than it was just a decade ago and is small enough to facilitate internal collaboration amongst its many resources. In terms of the reaction to the unique circumstances surrounding the existing economy within the state, South Carolina is following the lead of another small state: the state of Israel. To much acclaim, South Carolina is the North American home to many foreign automotive manufacturers including Mercedes and Volvo in Charleston and, perhaps most famously, BMW in Greer. Likewise, virtually every American and German auto manufacturer has established an innovation center in Israel, known to many as the “start-up nation.” Various other American and German manufacturers have opened numerous R&D centers throughout Israel. From the real time GPS technology of Waze (purchased by Google in 2013 for approximately $1 billion) to the collision avoidance technology of Mobileye (purchased by Intel in 2017 for $15 billion) to the cyber technology of Argus Security (purchased by the German company Continental in 2017 for $430 million), Israeli technology tends to lead as the start-up nation impacting the world.

The first tech-related advancement manufactured by a German company often originates in an Israeli R&D center. These centers are scattered throughout the country. Helping South Carolina companies and policymakers familiarize themselves over the past seven years with the Israeli tech ecosystem, Ellison and others involved in the South Carolina Israel Collaboration have helped South Carolina benefit by examining multiple statewide policies used in Israel and many forms of advanced technical and financial assistance to develop and commercialize R&D centers, thus creating a network of public, private, and university organizations. As a direct result of the Collaboration’s efforts, South Carolina is now the only state in the United States which has a trade agreement with Israel that offers a built-in funding mechanism. Ellison notes, “Israel’s natural resource is knowledge and information, so Israeli companies’ markets are worldwide.” South Carolina affords companies with the opportunity to participate in an ecosystem in close proximity to the markets that they serve. Encouraging R&D centers to apply their knowledge to manufacturers allows manufacturers to develop more sophisticated products quickly in order to address rapid changes in the marketplace. The co-location of 1/3 of Boeing’s worldwide IT with its 787 manufacturing facility in North Charleston offers a case in point.

In theory, combining and consolidating the cooperative forces of research, development, innovation, and production increases the ability for companies to be nimble and adapt to changing technologies and markets. Pair this with the practical application of new “big data” collection techniques by data companies and public-sector initiatives, your company and, therefore, your innovation triangle are provided with insights that were once inconceivable.

However, developing South Carolina’s very own innovation triangle remains easier said than done. Ultimately, data analytics and automation cannot totally remove subjectivity, though artificial intelligence (“AI”) is trying to push the envelope as hard as it can. Designing and creating an environment that combines the suitable research initiatives, an available workforce, and the necessary capital investment seems otherwise improbable without the collaboration of private, public, and academic resources. Why haven’t we seen more of this collaboration in the United States? According to Ellison, “when it comes to knowledge-based companies, the metrics aren’t a good fit for how states recruit companies.” The primary metrics in recruitment are capital investment and numbers of jobs. Capital investment is taxed, albeit often at lower initial rates for new companies as a result of incentives. Start-ups don’t usually involve high capital investment. The jobs offered by a knowledge based company are often fewer, but usually offer a substantially higher rate of pay. However, the multiplier effect of knowledge based jobs is often 4 to 1 when compared with a 2 to 1 impact of manufacturing jobs. Incentives, which often take the form of tax credits, are not attractive to start-ups which are usually not making money and thereby are unconcerned with taxes.   

Regardless, to welcome and to embrace the change introduced by the “mobility revolution” and the state’s rapidly growing economy, South Carolina must assert itself as an innovative global competitor. As Morris Ellison put it, “The question is whether we want to compete in the evolving knowledge and advanced manufacturing economies. You guarantee failure by not trying.” Big data strategy, implementation, and the “mobility revolution” will only continue to improve the livability of our communities, transform our cities, and protect the environment. Concerns related to privacy, safety, and security has dramatically shaped public opinion, impeding the subsequent adoption of many innovative technologies and the solutions they offer. When the rate of innovation is unstoppable and even increased due to emerging technologies working to enhance the very rate itself, one has the choice of fewer or greater outcomes. South Carolina’s emergence and recent notoriety is clearly a testament to pursuing the latter. The touchstone of many technological advances is collaboration and cooperation. The question is, when will South Carolina identify synergy and its brainpower as its most abundant natural resources?

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