What will it take to make Maine’s future prosperous?

It will require indigenous development of 21st-century technologies that add value to the state’s unique natural resources, especially its expansive forests and long coastline.

A glimpse of that future can be seen at the Technology Research Center in Old Town, opened in 2012. A public-private partnership led by University of Maine’s Forest Bioproducts Research Institute, the facility provides space and equipment to researchers seeking new ways of turning wood, grass and biomass into fuel, plastics and other useful products.

Another glimpse can be seen in Eastport, where the nation’s first tidal energy project was initiated last year, also through a public-private partnership between a Maine company and the U.S. Department of Energy. When fully developed, it will utilize Cobscook Bay’s powerful tides to turn 20 underwater turbines and produce electricity for about 1,200 homes.

Yet another glimpse can be seen at the Mt. Desert Island Biological Laboratory, where scientists study the ability of sharks, skates and other forms of marine life to regenerate damaged limbs, organs and tissues in order to determine if such regenerative abilities can be genetically replicated in mammals.

Of course, Maine has been exploiting its natural resources for centuries through logging, fishing and farming. But over-reliance on merely harvesting and selling commodities is an endeavor fraught with risk and a sure way to perpetuate a stagnant economy. Intense global competition, erratic price shifts, currency fluctuations and exhaustion of resources (such as fishing stocks) can depress an extractive industry overnight.

That’s why technological innovation is needed to add value to commodities by making them into proprietary products that create new and more profitable markets.

It’s not surprising that Gov. Paul LePage and most GOP legislators consider lower income tax rates, reduced energy costs and looser environmental regulations the keys to attracting business and creating prosperity here. After all, it’s the Republican bromide for all that ails the American economy.

The solution to rebooting Maine’s economy, however, is likely to be more complex and counter-intuitive.

A road map, if not a detailed plan, on how to achieve economic success at a national level is contained in Harvard Business School professor Michael E. Porter’s 1990 classic study, “The Competitive Advantage of Nations.” To an extent, the road map is also applicable to a political subdivision of a nation like Maine.

In a nutshell, Porter’s theory, one backed by his extensive research, is that every nation has unique cultural and geographic advantages which, if properly exploited, can cause its economy to flourish.

Though economists have historically sought comparative advantages only in “factor costs,” such as a large low-wage labor pool or devalued currency, which make a country’s exports cheaper, Porter emphasizes that factor-cost advantages are temporary. Long-term advantages are those which leverage culture and geography, through relentless innovation of products and processes, into national strengths.

As an example, Porter points to Japan, a country with few natural resources and densely populated cities, where dwellings are small, energy costs high and consumers technologically sophisticated. These factors created a robust domestic market for compact, hi-tech, energy-efficient consumer appliances, electronics and cars following the Korean War. Japanese companies excelled in satisfying this demand at home and ultimately became leaders in these sectors internationally.

Thus Japan’s economic negatives of high energy costs and scarcity of natural resources and space were turned into positives, leading not only to design and production of goods which were smaller and required less energy and materials, but to more efficient manufacturing processes.

If this model worked for Japan, then Maine should encourage, rather than discourage, extensive use of alternative energies – tidal, wind and biomass – even if these sources are more expensive in the short run than natural gas. That’s because, in addition to enhancing environmental quality, their widespread commercialization can eventually spawn indigenous renewable energy technologies and products that can be sold outside the state and country.

In Porter’s view, a nation’s success in exploiting its unique advantages also depends upon clustering of an industry’s competitors and allied businesses (such as parts and service suppliers) in geographic regions where synergies can occur.

Clustering fosters more intense competition, innovation and cross-fertilization and builds partnerships with higher educational and research institutions. California’s Silicon Valley, nicknamed for the chemical element that made manufacture of semi-conductors commercially viable, is a notable example of this phenomenon.

At first glance, Maine appears to be a poor candidate both for clustering and for competitive advanced industries. It’s a geographically large, rural, sparsely populated state with
only a few urban population centers. It’s remote from many markets and has high heating and electricity costs.

However, both its coast and its inland highway corridor (running from Biddeford-Saco and Portland to Lewiston-Auburn and Bangor) have the potential to become clusters. They enjoy proximity to natural resources, adequate road, rail and water transportation connections, and excellent universities, colleges and research labs that can partner with cutting-edge industries.

What can state government do to promote Maine’s future economy? It can improve education in science, technology, engineering and math, establish targeted tax incentives, provide financial support for research and development labs, and upgrade transportation in regions of the state with the potential to become clusters.

Maine will probably never be home to another Silicon Valley. The digital revolution has passed it by. But with some assistance from state government and the right mindset in the business and higher education communities, it may one day be able to boast a Cellulose or Seaweed Valley.

Elliott L. Epstein,a local attorney, is founder of Museum L-Aand an adjunct history instructor at Central Maine Community College. He is the author of “Lucifer’s Child,”a recently published book about the 1984 oven-death murder of Angela Palmer.Hemay be reached epsteinel@yahoo.com.

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