Executive Summary

Government information technology is subject to a variety of rules, regulations, and procurement policies.  Computing is treated differently depending on whether the platform is based on desktops, laptops, mobile devices, or remote file servers known as cloud computing.  There are differences between the executive, legislative, and judicial branches of government, as well as in the level of privacy and security expected for various applications.  

Some people perceive higher security on desktop or laptop computers and lower security with the cloud because the latter’s information is stored remotely through third-party commercial providers.  In reality, though, there are serious security threats to all electronic information regardless of platform, and cloud server providers often take security more seriously than mass consumers or government officials employing weak passwords on their local computers. 

In this paper, I review current federal IT policy and discuss rules, practices, and procedures that limit innovation.  There are a variety of obstacles that make it difficult for policymakers to take full advantage of the technological revolution that has unfolded in recent years.  After outlining these issues, I make recommendations on policy changes required to improve the efficiency and effectiveness of federal computing. 

My specific recommendations include:

1. Public officials should develop more consistent rules on computing across desktop, laptop, mobile, and cloud platforms.  
2. The use of video, collaboration, and social networking should be authorized for congressional offices.  This would make legislative branch policy consistent with that of the executive branch.
3. Judicial branch computing should be modernized, with greater emphasis on cloud computing. 
4. There should be a more uniform certification process for federal agencies.  Right now, each agency is responsible for certifying its own applications.  It makes sense to have a “joint authorization board” with the power to review management services and certify particular products for use across the government. 
5. Congress should update the Electronic Communications Privacy Act to change the process by which law enforcement agents obtain electronic information.  Instead of using a prosecutor’s subpoena, legislation should require a “probable cause” search warrant that is approved by a judge.  This would provide greater safeguards in terms of online content, pictures, geolocation data, and e-mails.
6. Privacy rights should be placed on the same footing regardless of whether a person is using desktop or cloud computing.  It makes little sense to have weaker standards on one platform than another.  Consumers and government decision-makers expect the same level of protection whether they are accessing information on a desktop, laptop, mobile, or cloud storage system. 
7. Congress should amend the Computer Fraud and Abuse Act to strengthen penalties for unwanted intrusion into computing systems.  The law has inconsistent penalties and prosecutors have found that it is hard to prosecute cyber-crimes. 
8. Apps.gov represents a big step forward and government use should be expanded because it makes procurement easier and speeds public sector innovation.  It is a model of how the government can reinvent itself through digital technology in ways that improve efficiency and effectiveness.
9. Countries need to harmonize their laws on cloud computing so as to reduce current inconsistencies in regard to privacy, data storage, security processes, and personnel training,  
10. There should be mechanisms for data exchange that encourage portability across platforms.  We should avoid vendor lock-in that precludes data exchange.
11. Data on uptime, downtime, recover time, archiving, and maintenance schedules would help build public trust by providing information on computing performance.

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David Caprara, a Brookings nonresident fellow and expert on volunteering, says that John F. Kennedy’s call to service a half-century ago led to the founding of dozens of international aid organizations, and leaves a legacy of programs aimed at improving health, nutrition, education, living standards and peaceful cooperation around the globe.

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• @ Brookings Podcast: International Volunteers and the 50th Anniversary of the Peace Corps

This week, our nation reflects on the 50-year legacy of the Peace Corps, which President John F. Kennedy signed into law on September 22, 1961. The passing earlier this year of Sargent Shriver, the indefatigable founding director of the Peace Corps, furthered national and international recognition of America’s longstanding traditions of service to the world. The time is right to expand the national policy discussion to include a broadened array of global service actors inspired by the example of Peace Corps volunteers to address critical human needs.

The largest independent representative survey of Peace Corps volunteers to date is being released this week as part of the 50th anniversary assessments by Civic Enterprises and the National Peace Corps Association with Peter D. Hart Research Associates. The survey documents responses from 11,138 Peace Corps volunteers who served from 1961 to 2011.

Among the survey findings of the returned Peace Corps volunteers:

• 82 percent view Peace Corps service “effective in promoting a better understanding of Americans in the communities they served,” and 74 percent indicated they view it “helps the U.S. adapt to globalization.”

• 59 percent view their service as, “effective in meeting the needs for trained workers.”

• 98 percent would recommend Peace Corps service to their family members.

Enhanced international awareness among volunteers was underscored in prior research assessing international NGO service released at a Brookings-Washington University joint forum. The Center for Social Development (CSD) report found that cross-cultural service also contributes significantly to international social capital, by developing a group of volunteers abroad who can leverage additional resources and connections to coordinate humanitarian aid projects.
 
Impacts of the broadened field of global and local volunteers are being demonstrated in critical issue areas such as basic hygiene and malaria reduction by Peace Corps and Malaria No More in Senegal, and a promising demonstration project led by Omnimed and Makarere University in Kampala, Uganda. The Omnimed model has utilized an innovative combination of international medical volunteers, supported by Volunteers for Prosperity at USAID and Peace Corps, to train and equip local village volunteers in Community Health Teams in sustaining malaria prevention. By expanding this network of public and private partners, and empowering local social entrepreneurs and village volunteers, potential exists to spread effective, results-based malaria health service corps across Sub-Saharan Africa and worldwide.

A steadily growing recognition of the importance of the wider landscape of volunteers— including NGOs, faith-based institutions, corporations and universities—is furthering goals for multi-sector inclusion in international service that Peace Corps’ founding director Sargent Shriver articulated to President Kennedy in his original 1961 report.

The Call to Peace and accompanying Service World recommendations represent a fresh call to action which should be taken up by foundations and both national parties to develop innovative and results-oriented solutions to today’s challenges of development and peace.

In the past decade, a remarkable shift has occurred in the development landscape. Specifically, acknowledgment of the central role of the private sector in contributing to, even driving, economic growth and global development has grown rapidly. The data on financial flows are dramatic, indicating reversal of the relative roles of official development assistance and private financial flows. This shift is also reflected in the way development is framed and discussed, never more starkly than in the Addis Abba Action Agenda and the new set of Sustainable Development Goals (SDGs). The Millennium Development Goals (MDGs), which the SDGs follow, focused on official development assistance. In contrast, while the new set of global goals does not ignore the role of official development assistance, they reorient attention to the role of the business sector (and mobilizing host country resources).

The U.S. Agency for International Development (USAID) has been in the vanguard of donors in recognizing the important role of the private sector to development, most notably via the agency’s launch in 2001 of a program targeted on public-private partnerships (PPPs) and the estimated 1,600 USAID PPPs initiated since then. This paper provides a quantitative and qualitative presentation of USAID’s public-private partnerships and business sector participation in those PPPs. The analysis offered here is based on USAID’s PPP data set covering 2001-2014 and interviews with executives of 17 U.S. corporations that have engaged in PPPs with USAID.

The genesis of this paper is the considerable discussion by USAID and the international development community about USAID’s PPPs, but the dearth of information on what these partnerships entail. USAID’s 2014 release (updated in 2015) of a data set describing nearly 1,500 USAID PPPs since 2001 offers an opportunity to analyze the nature of those PPPs.

On a conceptual level, public-private partnerships are a win-win, even a win-win-win, as they often involve three types of organizations: a public agency, a for-profit business, and a nonprofit entity. PPPs use public resources to leverage private resources and expertise to advance a public purpose. In turn, non-public sectors—both businesses and nongovernmental organizations (NGOs)—use their funds and expertise to leverage government resources, clout, and experience to advance their own objectives, consistent with a PPP’s overall public purpose. The data from the USAID data set confirm this conceptual mutual reinforcement of public and private goals.

The goal is to utilize USAID’s recently released data set to draw conclusions on the nature of PPPs, the level of business sector engagement, and, utilizing interviews, to describe corporate perspectives on partnership with USAID.

The arguments regarding “why” PPPs are an important instrument of development are well established. This paper presents data on the “what”: what kinds of PPPs have been implemented and in what countries, sectors, and income contexts. There are other research and publications on the “how” of partnership construction and implementation. What remains missing are hard data and analysis, beyond the anecdotal, as to whether PPPs make a difference—in short, is the trouble of forming these sometimes complex alliances worth the impact that results from them?

The goal of this paper is not to provide commentary on impact since those data are not currently available on a broad scale. Similarly, this paper does not recommend replicable models or case studies (which can be found elsewhere), though these are important and can help new entrants to join and grow the field. Rather, the goal is to utilize USAID’s recently released data set to draw conclusions on the nature of PPPs, the level of business sector engagement, and, utilizing interviews, to describe corporate perspectives on partnership with USAID.

The decision to target this research on business sector partners’ engagement in PPPs—rather than on the civil society, foundation, or public partners—is based on several factors. First, USAID’s references to its PPPs tend to focus on the business sector partners, sometimes to the exclusion of other types of partners; we want to understand the role of the partners that USAID identifies as so important to PPP composition. Second, in recent years much has been written and discussed about corporate shared value, and we want to assess the extent to which shared value plays a role in USAID’s PPPs in practice.

The paper is divided into five sections. Section I is a consolidation of the principal data and findings of the research. Section II provides an in-depth “data picture” of USAID PPPs drawn from quantitative analysis of the USAID PPP data set and is primarily descriptive of PPPs to date. Section III moves beyond description and provides analysis of PPPs and business sector alignment. It contains the results of coding certain relevant fields in the data set to mine for information on the presence of business partners, commercial interests (i.e., shared value), and business sector partner expertise in PPPs. Section IV summarizes findings from a series of interviews of corporate executives on partnering with USAID. Section V presents recommendations for USAID’s partnership-making.

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Brookings today releases a report USAID’s Public-Private Partnerships: A Data Picture and Review of Business Engagement, which will be the subject of a public discussion on March 8 featuring a panel of Jane Nelson (Harvard University), Ann Mei Chang (U.S. Agency for International Development (USAID)), Johanna Nesseth Tuttle (Chevron Corp.), and Sarah Thorn (Wal-Mart Stores Inc.).

The report is based on USAID’s database of 1,481 public-private partnerships (PPPs) from 2001 to 2014 and a series of corporate interviews.

The value of those partnerships totals $16.5 billion, two-thirds from non-U.S. government sources – private companies, nongovernmental organizations (NGOs), foundations, and non-U.S. public institutions. Over 4000 organizations have served as resource partners in these PPPs.  Fifty-three percent are business entities, 32 percent are from the non-profit world, and 25 percent are public institutions. Eighty-five organizations have participated in five or more PPPs, led by Microsoft (62), Coca Cola (36), and Chevron (33).

The partnerships are relatively evenly distributed among three major regions—Africa, Latin American/Caribbean, and Asia—but 36 percent of the value of all PPPs is from partnerships that are global in reach.

In analyzing the data, the researchers found that 77 percent of PPPs included one or more business partner, and that 83 percent of these partnerships are connected to a business partner’s commercial interest (either shared value or more indirect strategic interest). In almost 80 percent of those PPPs, the business partner contributes some form of corporate expertise to the partnership.

The purpose of the March 8 panel discussion is to examine the report but also to go beyond by addressing outstanding questions like: how should the impact of public-private partnerships be identified, measured, and evaluated? Is shared value the Holy Grail linking corporate interest to public goods and achieving sustainable results? Where do public-private partnerships fit in USAID’s strategy for engaging the private sector in development, particularly in light of the emphasis on the role of business in advancing the new set of Sustainable Development Goals?

We hope you can join us for what should prove to be an engaging discussion.

Introduction

During 2006, the United States saw a considerable upswing in the number of new mortgage defaults and foreclosure filings. By 2007, that upswing had become a tidal wave. Today, national homeownership rates are falling, while more than a million American families have already lost their homes to foreclosure. Across the country, boarded houses are appearing on once stable blocks. Some of the hardest hit communities are in older industrial cities, particularly Midwestern cities such as Cleveland, Detroit, and Indianapolis.

Although most media attention has focused on the role of the federal government in stemming this crisis, states have the legal powers, financial resources, and political will to mitigate its impact. Some state governments have taken action, negotiating compacts with mortgage lenders, enacting state laws regulating mortgage lending, and creating so-called “rescue funds.” Governors such as Schwarzenegger in California, Strickland in Ohio, and Patrick in Massachusetts have taken the lead on this issue. State action so far, however, has just begun to address a still unfolding, multidimensional crisis. If the issue is to be addressed successfully and at least some of its damage mitigated, better designed, comprehensive strategies are needed.

This paper describes how state government can tackle both the immediate problems caused by the wave of mortgage foreclosures and prevent the same thing from happening again. After a short overview of the crisis and its effect on America’s towns and cities, the paper outlines options available to state government, and offers ten specific action steps, representing the most appropriate and potentially effective strategies available for coping with the varying dimensions of the problem.

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Introduction

Ohio has already taken important steps to address the state’s ongoing foreclosure crisis, yet the crisis continues, causing distress for thousands of families and individuals, and destabilizing cities, towns and neighborhoods across the state. Therefore, the state, its local governments and private stakeholders need to do still more to deal more effectively with the crisis and its impacts on the state’s housing stock, cities and neighborhoods.

What is often termed the “foreclosure crisis” is actually a multi-dimensional crisis, in which the collapse of the housing bubble, the devastation caused by the lax and often irresponsible credit practices that accompanied and perpetuated that bubble, the resulting freeze on commercial and consumer credit, and the worldwide recession are interwoven, and can only with great difficulty be untangled. In Ohio, those forces are further exacerbated by profound changes to the state’s historical economic underpinnings. Ohio cannot solve the crisis by itself, but it can significantly mitigate its impact on people, neighborhoods, and towns and cities. These mitigating efforts will also help preserve the value of homes and neighborhoods in the state, and place Ohio in a stronger position to benefit from the future economic recovery.

The paper begins with a short summary of current conditions and the actions the state has already taken to address the wave of foreclosures, followed by a discussion of areas for future action. This discussion will address mitigating both the individual and community impacts of foreclosure, but will give particular emphasis to the critical issue of softening the blow of foreclosure on communities, which up to now has been less of a focus for state action.

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An important federal program that tends to fly under the radar received some unprecedented real estate this past weekend--an enormous spread on page A1 of Sunday’s New York Times.

Jason DeParle’s article, and some nifty interactive maps on the Times website, portray the recent rapid growth of the food stamp program, now officially known as the Supplemental Nutrition Assistance Program, or by its rather unfortunate acronym, SNAP. DeParle documents how, in the wake of welfare reform in the mid-1990s, successive administrations--from Clinton to Bush, and now Obama--have worked in a bipartisan fashion to erase the stigma that once haunted the program, and ensure that eligible families receive access to its benefits.

Because welfare reform transformed what was an individual entitlement into a block grant to states, cash welfare caseloads in many states have remained relatively flat despite the worst recession in generations. As a result, food stamps--which remain a federal entitlement--have become an even more important countercyclical tool for fighting poverty, and enrollment has expanded by about one-third since 2007. DeParle charts that rise over the past two years across a broad cross-section of U.S. communities, all of which are feeling the economic pain of rising foreclosures, mounting job losses, and declining family incomes.

Of particular note, the article discusses the significant increases in food stamp receipt occurring in many suburban communities, now that a majority of the nation’s metropolitan poor live outside central cities. Indeed, the counties in which food stamp receipt has doubled, and which have at least 5,000 recipients today, are largely suburbs--around Atlanta, Florida’s Gulf Coast, Austin, and Youngstown. As my colleagues Elizabeth Kneebone and Emily Garr reported earlier this year, however, increases in food stamp enrollment in outer suburban counties have been somewhat lower than might be expected based on the rapid unemployment increases they have suffered. Lack of familiarity, distance to the nearest welfare office, stigma, or real eligibility differences may be to blame for under-enrollment in these farther-out areas.

All of which is to say, as food stamps become the de facto federal support system for millions of families during the next few years of elevated unemployment, plugging participation gaps in suburbia may be an important new frontier for fighting hunger and poverty in America.

Last week, we showed how the share of the nation’s venture capital going to the Bay Area has actually increased over the last decade and posed the question: Are San Francisco and Silicon Valley good models for most cities to imitate? And with the answer being “no,” what strategies should cities employ to bolster local capital networks?

The answer depends upon regions’ technical strengths—different technologies imply different venture capital strategies. A common assumption is that most cities look like Silicon Valley with software monopolizing venture funding, but in many places a mix of different technologies are far more important. Metropolitan level venture capital data from 2005 to 2015 from Pitchbook illustrates how different cities require different strategies.

In Cleveland, for example, more than three-quarters of deals are in clinical care services and medical devices driven by Cleveland Clinic’s world-renowned success in identifying and funding companies creating novel health care technologies. However, software and medical technologies require very different venture capital strategies. Software companies need upfront funding but can scale quickly with few additional funding rounds. Medical technologies require FDA approval and clinical trials, costly and lengthy processes, implying the need to consider whether regional venture capital efforts can provide not only seed funding but multiple rounds. If not, promising health care companies may flame out or relocated elsewhere.

Pittsburgh, on the other hand, has a far more mixed portfolio than either Cleveland or the Bay Area, one of the most diverse in the country. Pittsburgh’s top 10 technologies funded over the last decade include laboratory services, energy exploration, battery storage, medical devices, software, and electronic equipment—with none making up more than one-fifth the metro area’s portfolio. Pittsburgh’s mix of educational and non-profit institutions like Carnegie Mellon University, University of Pittsburgh and UPMC support research in engineering, software, medical technologies, and therapeutics. In addition private companies like Google, Alcoa, and the shale gas boom have provided the region with a blend of market opportunities that are extremely different than that of the Bay Area.

Equally important to the type of technologies funded is how venture capital deals are funded. In the Bay Area private venture capital firms represent the vast majority of funding both in terms of numbers of deals and overall value. Deals from accelerators and universities together equal less than one-tenth of what is invested by private venture capital firms. Given the many private investment firms in the Bay Area, universities and accelerators are better at creating and incubating technologies instead of funding them. Unfortunately, other markets lack such private sector assets and try to jumpstart investments through other methods.

Over the last decade, Pittsburgh made just 3 percent as many total venture deals as the Bay Area, but breaking that figure down by the funding source, universities outperformed in Pittsburgh. There they funded nearly 30 percent as many deals as universities did in San Francisco and Silicon Valley, a rate 10 times as high as would be expected based the Bay Area “norm.” One reason for this is Pittsburgh is relatively new to venture funding and may have more research assets than private venture capital firms. Therefore, university funds could fill an important capital gap.

A common worry is these non-private sector deals are poor investments that private firms, with superior market intelligence, simply refused to make. This argument is most persuasive in regions like the Bay Area where there is no shortage of private capital to fund good ideas. However in other regions these investments can prove to be smart precursors to private funding. Also, rarely do public institutions make investment decisions. Instead, public dollars are funneled through private investment firms to kick start regional activity. For example, Philadelphia’s new StartUp PHL fund is paid for by taxpayer dollars but investment decisions are made by First Capital, the city’s largest private venture capital fund. The fund requires recipients to stay in the city for at least six months after funding, with the hope to increase the number of growing technology companies in Philadelphia.

Cleveland and Pittsburgh are specific examples of a general point. Cities have unique technology competencies and pathways to venture capital. Economic strategies to attract outside, and bolster local capital, should reflect those attributes and not simply default to what seems to have worked in the Bay Area. 

Last week, we showed how the share of the nation’s venture capital going to the Bay Area has actually increased over the last decade and posed the question: Are San Francisco and Silicon Valley good models for most cities to imitate? And with the answer being “no,” what strategies should cities employ to bolster local capital networks?

The answer depends upon regions’ technical strengths—different technologies imply different venture capital strategies. A common assumption is that most cities look like Silicon Valley with software monopolizing venture funding, but in many places a mix of different technologies are far more important. Metropolitan level venture capital data from 2005 to 2015 from Pitchbook illustrates how different cities require different strategies.

In Cleveland, for example, more than three-quarters of deals are in clinical care services and medical devices driven by Cleveland Clinic’s world-renowned success in identifying and funding companies creating novel health care technologies. However, software and medical technologies require very different venture capital strategies. Software companies need upfront funding but can scale quickly with few additional funding rounds. Medical technologies require FDA approval and clinical trials, costly and lengthy processes, implying the need to consider whether regional venture capital efforts can provide not only seed funding but multiple rounds. If not, promising health care companies may flame out or relocated elsewhere.

Pittsburgh, on the other hand, has a far more mixed portfolio than either Cleveland or the Bay Area, one of the most diverse in the country. Pittsburgh’s top 10 technologies funded over the last decade include laboratory services, energy exploration, battery storage, medical devices, software, and electronic equipment—with none making up more than one-fifth the metro area’s portfolio. Pittsburgh’s mix of educational and non-profit institutions like Carnegie Mellon University, University of Pittsburgh and UPMC support research in engineering, software, medical technologies, and therapeutics. In addition private companies like Google, Alcoa, and the shale gas boom have provided the region with a blend of market opportunities that are extremely different than that of the Bay Area.

Equally important to the type of technologies funded is how venture capital deals are funded. In the Bay Area private venture capital firms represent the vast majority of funding both in terms of numbers of deals and overall value. Deals from accelerators and universities together equal less than one-tenth of what is invested by private venture capital firms. Given the many private investment firms in the Bay Area, universities and accelerators are better at creating and incubating technologies instead of funding them. Unfortunately, other markets lack such private sector assets and try to jumpstart investments through other methods.

Over the last decade, Pittsburgh made just 3 percent as many total venture deals as the Bay Area, but breaking that figure down by the funding source, universities outperformed in Pittsburgh. There they funded nearly 30 percent as many deals as universities did in San Francisco and Silicon Valley, a rate 10 times as high as would be expected based the Bay Area “norm.” One reason for this is Pittsburgh is relatively new to venture funding and may have more research assets than private venture capital firms. Therefore, university funds could fill an important capital gap.

A common worry is these non-private sector deals are poor investments that private firms, with superior market intelligence, simply refused to make. This argument is most persuasive in regions like the Bay Area where there is no shortage of private capital to fund good ideas. However in other regions these investments can prove to be smart precursors to private funding. Also, rarely do public institutions make investment decisions. Instead, public dollars are funneled through private investment firms to kick start regional activity. For example, Philadelphia’s new StartUp PHL fund is paid for by taxpayer dollars but investment decisions are made by First Capital, the city’s largest private venture capital fund. The fund requires recipients to stay in the city for at least six months after funding, with the hope to increase the number of growing technology companies in Philadelphia.

Cleveland and Pittsburgh are specific examples of a general point. Cities have unique technology competencies and pathways to venture capital. Economic strategies to attract outside, and bolster local capital, should reflect those attributes and not simply default to what seems to have worked in the Bay Area. 

Last week, we showed how the share of the nation’s venture capital going to the Bay Area has actually increased over the last decade and posed the question: Are San Francisco and Silicon Valley good models for most cities to imitate? And with the answer being “no,” what strategies should cities employ to bolster local capital networks?

The answer depends upon regions’ technical strengths—different technologies imply different venture capital strategies. A common assumption is that most cities look like Silicon Valley with software monopolizing venture funding, but in many places a mix of different technologies are far more important. Metropolitan level venture capital data from 2005 to 2015 from Pitchbook illustrates how different cities require different strategies.

In Cleveland, for example, more than three-quarters of deals are in clinical care services and medical devices driven by Cleveland Clinic’s world-renowned success in identifying and funding companies creating novel health care technologies. However, software and medical technologies require very different venture capital strategies. Software companies need upfront funding but can scale quickly with few additional funding rounds. Medical technologies require FDA approval and clinical trials, costly and lengthy processes, implying the need to consider whether regional venture capital efforts can provide not only seed funding but multiple rounds. If not, promising health care companies may flame out or relocated elsewhere.

Pittsburgh, on the other hand, has a far more mixed portfolio than either Cleveland or the Bay Area, one of the most diverse in the country. Pittsburgh’s top 10 technologies funded over the last decade include laboratory services, energy exploration, battery storage, medical devices, software, and electronic equipment—with none making up more than one-fifth the metro area’s portfolio. Pittsburgh’s mix of educational and non-profit institutions like Carnegie Mellon University, University of Pittsburgh and UPMC support research in engineering, software, medical technologies, and therapeutics. In addition private companies like Google, Alcoa, and the shale gas boom have provided the region with a blend of market opportunities that are extremely different than that of the Bay Area.

Equally important to the type of technologies funded is how venture capital deals are funded. In the Bay Area private venture capital firms represent the vast majority of funding both in terms of numbers of deals and overall value. Deals from accelerators and universities together equal less than one-tenth of what is invested by private venture capital firms. Given the many private investment firms in the Bay Area, universities and accelerators are better at creating and incubating technologies instead of funding them. Unfortunately, other markets lack such private sector assets and try to jumpstart investments through other methods.

Over the last decade, Pittsburgh made just 3 percent as many total venture deals as the Bay Area, but breaking that figure down by the funding source, universities outperformed in Pittsburgh. There they funded nearly 30 percent as many deals as universities did in San Francisco and Silicon Valley, a rate 10 times as high as would be expected based the Bay Area “norm.” One reason for this is Pittsburgh is relatively new to venture funding and may have more research assets than private venture capital firms. Therefore, university funds could fill an important capital gap.

A common worry is these non-private sector deals are poor investments that private firms, with superior market intelligence, simply refused to make. This argument is most persuasive in regions like the Bay Area where there is no shortage of private capital to fund good ideas. However in other regions these investments can prove to be smart precursors to private funding. Also, rarely do public institutions make investment decisions. Instead, public dollars are funneled through private investment firms to kick start regional activity. For example, Philadelphia’s new StartUp PHL fund is paid for by taxpayer dollars but investment decisions are made by First Capital, the city’s largest private venture capital fund. The fund requires recipients to stay in the city for at least six months after funding, with the hope to increase the number of growing technology companies in Philadelphia.

Cleveland and Pittsburgh are specific examples of a general point. Cities have unique technology competencies and pathways to venture capital. Economic strategies to attract outside, and bolster local capital, should reflect those attributes and not simply default to what seems to have worked in the Bay Area. 

Last week, we showed how the share of the nation’s venture capital going to the Bay Area has actually increased over the last decade and posed the question: Are San Francisco and Silicon Valley good models for most cities to imitate? And with the answer being “no,” what strategies should cities employ to bolster local capital networks?

The answer depends upon regions’ technical strengths—different technologies imply different venture capital strategies. A common assumption is that most cities look like Silicon Valley with software monopolizing venture funding, but in many places a mix of different technologies are far more important. Metropolitan level venture capital data from 2005 to 2015 from Pitchbook illustrates how different cities require different strategies.

In Cleveland, for example, more than three-quarters of deals are in clinical care services and medical devices driven by Cleveland Clinic’s world-renowned success in identifying and funding companies creating novel health care technologies. However, software and medical technologies require very different venture capital strategies. Software companies need upfront funding but can scale quickly with few additional funding rounds. Medical technologies require FDA approval and clinical trials, costly and lengthy processes, implying the need to consider whether regional venture capital efforts can provide not only seed funding but multiple rounds. If not, promising health care companies may flame out or relocated elsewhere.

Pittsburgh, on the other hand, has a far more mixed portfolio than either Cleveland or the Bay Area, one of the most diverse in the country. Pittsburgh’s top 10 technologies funded over the last decade include laboratory services, energy exploration, battery storage, medical devices, software, and electronic equipment—with none making up more than one-fifth the metro area’s portfolio. Pittsburgh’s mix of educational and non-profit institutions like Carnegie Mellon University, University of Pittsburgh and UPMC support research in engineering, software, medical technologies, and therapeutics. In addition private companies like Google, Alcoa, and the shale gas boom have provided the region with a blend of market opportunities that are extremely different than that of the Bay Area.

Equally important to the type of technologies funded is how venture capital deals are funded. In the Bay Area private venture capital firms represent the vast majority of funding both in terms of numbers of deals and overall value. Deals from accelerators and universities together equal less than one-tenth of what is invested by private venture capital firms. Given the many private investment firms in the Bay Area, universities and accelerators are better at creating and incubating technologies instead of funding them. Unfortunately, other markets lack such private sector assets and try to jumpstart investments through other methods.

Over the last decade, Pittsburgh made just 3 percent as many total venture deals as the Bay Area, but breaking that figure down by the funding source, universities outperformed in Pittsburgh. There they funded nearly 30 percent as many deals as universities did in San Francisco and Silicon Valley, a rate 10 times as high as would be expected based the Bay Area “norm.” One reason for this is Pittsburgh is relatively new to venture funding and may have more research assets than private venture capital firms. Therefore, university funds could fill an important capital gap.

A common worry is these non-private sector deals are poor investments that private firms, with superior market intelligence, simply refused to make. This argument is most persuasive in regions like the Bay Area where there is no shortage of private capital to fund good ideas. However in other regions these investments can prove to be smart precursors to private funding. Also, rarely do public institutions make investment decisions. Instead, public dollars are funneled through private investment firms to kick start regional activity. For example, Philadelphia’s new StartUp PHL fund is paid for by taxpayer dollars but investment decisions are made by First Capital, the city’s largest private venture capital fund. The fund requires recipients to stay in the city for at least six months after funding, with the hope to increase the number of growing technology companies in Philadelphia.

Cleveland and Pittsburgh are specific examples of a general point. Cities have unique technology competencies and pathways to venture capital. Economic strategies to attract outside, and bolster local capital, should reflect those attributes and not simply default to what seems to have worked in the Bay Area. 

Event Information

In an era of fluid geopolitics and geoeconomics, challenges to the global order abound: from ever-changing terrorism, to massive refugee flows, a stubbornly sluggish world economy, and the specter of global pandemics. Against this backdrop, the question of whether leader summitry—either the G-7 or G-20 incarnations—can supply needed international governance is all the more relevant. This question is particularly significant for East Asia this year as Japan and China, two economic giants that are sometimes perceived as political rivals, respectively host the G-7 and G-20 summits. 

On April 18, the Center for East Asia Policy Studies and the Project on International Order and Strategy co-hosted a discussion on the continued relevancy and efficacy of the leader summit framework, Japan’s and China’s priorities as summit hosts, and whether these East Asian neighbors will hold parallel but completely separate summits or utilize these summits as an opportunity to cooperate on issues of mutual, and global, interest.

Join the conversation on Twitter using #G7G20Asia

Audio

• Japan’s G-7 and China’s G-20 chairmanships: Bridges or stovepipes in leader summitry?

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20160418_g7g20_transcript

Choosing a health plan on one of the new public or private exchanges is no easy task. That’s especially true for those with medical conditions who want to be very sure the plan they enroll in will provide the services they need.

This challenge is not unique to buying health plans, however. It’s always hard for consumers to buy complex and technical services or products when they have little or no expertise in the field. Health insurance can be especially daunting, with so many factors to consider, and even the terminology can be confusing.

Standardizing choices and terms can be helpful to a point. Grouping health plans according to premiums and out-of-pocket costs – bronze, silver, gold and platinum plans – has worked well in the public exchanges. But standardization will always be in tension with innovation, and the reality is that most exchanges will carry a larger inventory of plans than what the typical consumer wants to scroll through. So the question of “choice architecture” – how the plans are filtered or screened – will come to the fore. 

Consumers will have many questions.  What is the price? How do I assess the trade-off between lower premiums and higher cost sharing? Is my doctor in the plan’s network? Are the drugs I take in the formulary (whatever that is)? Things can get real complicated real fast, and it can feel like there are too many, not too few, choices. No wonder some call that “choice anxiety”.

But that view overlooks how technology is likely to reduce choice anxiety in health care, just as it has for other complicated searches.  It used to take a librarian to find an obscure article or a travel agent to plan a vacation. Today a few keystrokes on Google locates the article, and Travelocity makes vacation planning a cakewalk, with everything from on-time flight arrival data to pictures of hotel rooms and customer reviews arranged by star ratings.

Expect technology to have the same dramatic impact on buying health coverage in the near future. There are several reasons for this:

The presentation of consumer information will get better. When large new markets for products and services are created and the demand for buyers’ information rises sharply, the incentive for entrepreneurs – both for-profit and nonprofit – to provide customer-friendly information also rises. We’ve already seen this in parts of the health care market where there has been plenty of choice. Millions of federal employees have for many years been able choose among a wide range of plans with differing benefits.  Many have turned to the highly regarded Consumers’ Checkbook to help them understand and readily compare plans in the federal program.

Checkbook has launched a similar comparison tool for the  Illinois exchange and recently won the Robert Wood Johnson Foundation’s (RWJF) first "Plan Choice Challenge," a nationwide competition to design a technology application that helps people choose their best health plan options.

Navigation technology will make searches simple and quick.  Most consumers don’t want to spend a lot of time comparing plans; they want to find the best buy for their situation as quickly as possible.  That’s why brokers have traditionally encouraged employers to offer their employees a carefully limited set of shopping choices, but we expect plan navigation technology to constantly improve the shopping experience in ways that will help customers search a larger inventory and still make choices more easily.   Stride Health, a San Francisco startup and finalist in the RWJF Challenge, has developed a recommendation technology that searches massive data sets on networks and formularies in seconds to help consumers find a “match” that fits their budget and health care needs.  (Full disclosure – author Joel Ario is an investor).  

Stride is one of more than 40 “web brokers” that has met federal consumer protection and privacy standards enabling it to work with the federal exchange to enroll subsidy-eligible individuals in coverage.  Expect increasing collaboration between public exchanges and private vendors, with a surge of apps and gadgets to make navigation easier and easier in health exchanges.

Technology will allow choices to be tailored to medical history.  Advances in technology won’t just make it technically easier to pick and choose by price and reputation. These advances will also empower Americans to base their choices on their likely medical needs. Today, tailoring your coverage to your medical condition usually means trying to get a doctor– or several doctors– to help you figure out what you should look for in a plan. Even with that help, for the average person it’s still a hit-or-miss proposition. But new forms of choice technology are beginning to utilize questions about medical history to guide buyers towards the plans that are most suited to their condition.  

Checkbook and Stride already allow consumers to enter more detailed health histories and get more sophisticated assistance, and this will only improve as exchanges publish more data in machine readable formats.   Expect more and increasingly sophisticated customized navigators, especially as patients get more access to their electronic medical records.  Also expect sellers to respond with products than bundle services to meet the new demand.

Does this mean that an iPhone app will be all that’s needed to ensure that every consumer can find his or her perfect plan? Not quite.  Health insurance marketplaces will continue to present thorny regulatory challenges.  Insurance regulators will need to guard against unfair practices, such as insurers’ designing benefit plans to drive away applicants with certain health conditions; privacy concerns will be raised whenever apps ask for medical history; and new forms of provider integration will test antitrust doctrine.

But one thing is clear. Improving technology will soon make picking the right health plan a far more precise and simple process – easy enough for many of our children to do on their smart phones or whatever gadget comes next.