Today, California is the 5th largest economy in the world behind only the United States, China, Japan and Germany. The state’s economic growth rate is nearly double the U.S., and the Golden State continues to lead the nation in several key metrics, including job growth, foreign direct investments and venture capital deals. In addition, California has the largest corporate tax credit program in the country, the largest film credit, the largest tourism marketing budget and was the first state to offer online applications for business incentives. Moreover, Governor Brown’s climate action and sustainability goals are spurring innovation in emerging technologies that will reduce greenhouse gas emissions and energy consumption while laying the foundation for California’s ‘green’ economy.
Leading California’s activities to encourage private sector attraction and expansion is the Governor’s Office of Business and Economic Development (GO-Biz). GO-Biz is the one-stop shop for investors, businesses, site selection consultants and all economic development stakeholders interested in accessing resources or learning more about financing opportunities and incentives in California. The list of services offered at GO-Biz ranges from navigating federal, state and local incentives and permit requirements, connecting foreign investors with California projects, overseeing the state’s 14 Innovation Hubs (iHubs), and managing the state’s highly-successful California Competes Tax Credit program.
California’s reputation for innovation is well known. What may be surprising, however, is that the spirit of innovation is not just happening among the California-based companies that have become household names, but is alive and well in sectors and firms as diverse as manufacturing and agriculture. Throughout California, private industry, government and academia are working together to develop new and emerging technologies that will transform the way we commute, communicate, and treat disease. This triple helix model of collaboration is taking place through the GO-Biz led iHubs that act as incubators for entrepreneurs and innovators looking for supports that will lead them from concept to commercialization. The iHubs present an opportunity for those inside and outside of California to align their interests with a broad set of stakeholders in a specific region in order to meet shared objectives.
California’s successes have been noted by leading indicators like The Kauffman Foundation’s Index of Startup Activity in the United States, which reported that in 2017 California led the country in successful innovation and entrepreneurship. The Golden State is also home to the highest number of Inc. Magazine’s list of fastest-growing companies in America with 670. Moreover, last year alone, nearly every single sector contributed to the state’s economic growth, including manufacturing, which contributed $10 billion in output to the state’s $127 billion overall output.
Looking ahead, California is poised to lead the nation and compete on a global scale for market expansion in artificial intelligence, autonomous vehicles and cyber-resilience. Let’s take artificial intelligence as one example. According to U.S. News and World Report’s list of Best Graduate Schools, California lays claim to five of the top twenty schools in the country for advanced degrees in Artificial Intelligence, more than any other state. That means the future Artificial Intelligence workforce – the entrepreneurs, the coders, and engineers – will be educated in California and looking for opportunities to apply their ideas and talents in the state’s marketplace. Moreover, Orange, Los Angeles and San Diego Counties have accounted for $24 billion in Artificial Intelligence sector venture capital money during the last five years, alone. Taken together, whether a company is looking for seed, series A, B, or C funding or expanding and looking for next generation talent, California is uniquely positioned to support firms taking their operations to the next level.
And when firms hire new employees and invest in their operation locally, California provides incentives to support that growth. Those incentives range from workforce training funds to corporate tax credits offered through the California Competes Tax Credit Program.
What is the California Competes Tax Credit Program? For businesses planning job growth and investment, the California Competes Tax Credit program provides a credit against current and future tax liability based on a company’s projected net new jobs and capital investments in each year over a five year period. Since 2014, GO-Biz has allocated nearly $700 million to 928 companies projected to create 89,580 new jobs and make $16.2 billion in new investments. There are no restrictions on the size of companies or the geographic location within the state where they intend to do business.
For investors or businesses abroad, GO-Biz oversees activities related to the Governor’s international business and trade investment MOUs. These MOUs provide the framework for bilateral cooperation ensuring businesses, investors, researchers and educators have the resources and contacts they may need to build partnerships that will lead to economic opportunities. As mentioned above, California remains the number one state for attracting foreign direct investments and as of 2016, internationally-based companies employed 561,000 California workers and were responsible for 4.6 percent of the state’s total private-industry workforce.
These are only a snapshot of the opportunities and resources that California has to offer. When combining California’s economic development incentives, its broad reach on a global scale, and the culture of innovation with California’s top ranked colleges and universities, it is hard to find a place better prepared and equipped to meet the demands of a growing and highly-evolving global marketplace.
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