Florida TaxWatch Economic Commentary
Economy heating up in South Florida
Over the past few years Florida’s economy has been on the rise, finally shaking off the economic pain from the great recession. This positive growth has helped stimulate development in South Florida in particular. In a recent survey, more than 80% of small businesses in South Florida reported that they expect to meet or exceed their 2015 revenue targets.1And the economic growth is not limited to small businesses; the South Florida Region has also seen a growth in sectors such as construction, financial services, innovation, and more.
Innovation Development a Priority
Small businesses play an important role in helping an economy grow. Small businesses, which are usually created and run by entrepreneurs, are the most likely companies to exhibit significant growth, strengthening employment and money flow into an area. One factor that has led to the success of small businesses in South Florida is the priority of advancing innovation in the region. Leading the innovation charge in South Florida is the Research Park at Florida Atlantic University (FAU). In 2014, 671 new jobs were created as a result of businesses using the services available at the park, with average salaries at companies located in the park reaching $87,000 per year.2 Additionally, businesses associated with the research park were able to gain 37 new patents in 2014, as well as raise nearly $50 million in external capital.3
This increase in innovation is vital to the growth of South Florida’s economy, as innovation is an attractive investment for foreign and domestic investors. Andrew Duffel, President and CEO of the FAU Research Park, has touted the international growth of companies located in the research park. International growth provides a new avenue through which money can flow into the region, helping expand growth in all sectors of the economy, and South Florida is well positioned to capitalize on foreign investment. According to Duffel, “South Florida’s large metropolitan area and two ocean cable landing sites, as well as its proximity to the Latin American markets, make it an attractive location.”4
Innovation is not just important when it comes to who chooses to invest, it also has strong economic power after the money has been invested. According to a study out of the Massachusetts Institute of Technology, the innovation sector has the largest multiplier effect of any sector nationally.5 This claim is backed by California-Berkeley professor of economics and author of The New Geography of Jobs, Enrico Moretti, who explains that due to the high multiplier effect that is found with investment in innovation, each new high-tech job in the U.S. created five additional jobs in the service economy.6 With these opportunities for job creation and economic growth, innovation has had, and will continue to have, a positive impact on South Florida’s economy.
1 Gehrke-White, Donna. “Survey: Small Business Revenue Goals on Track, but Optimism Lags.” Sun Sentinel. Web.
2 Duffell, Andrew. “South Florida’s Growing International Technology Footprint.” Forward Florida. June 14, 2015. Web.
5 Brokaw, Leslie. “The Multiplier Effect of Innovation Jobs.” sloanreview.mit.edu/. 6 June 2012. Web.
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