The economic growth strategy in Maine has changed. For years the state has talked about attracting companies to move here and employ workers laid off in the pulp and shoe industries. But pessimists have said that our costs are too high, especially energy costs and taxes, and our business climate is unfriendly. It has been a hard sell.

Now the state is thinking differently. Can we grow our own? Where are we already strong and growing?

The increased globalization of the world economy is making things tough for companies across the United States, but maybe it will play to our state's strengths. We can't compete with costs of textiles in China or pulp from Brazil, but there are some areas where Maine is world class, like boatbuilding. Maine has been building boats for over 400 years. We lost our preeminence in1858, when we refused to adopt the iron-clad hull. But now, with the industry's investment several years ago in composite technology, we are back to competing for the most advanced Navy ships and racing yachts.

The recent success of the boat builders has encouraged Gov. John Baldacci to propose an $8 million Cluster Development Fund in the budget that is now being discussed in Augusta. Groups of companies, their suppliers and affiliated groups would compete for these funds based on their ability to grow as a sector and create jobs. The money can be used for marketing, such as for Maine food companies, or for a combined warehouse or whatever the industry sector itself puts forth.

In anticipation of this cluster fund, Maine's sectors have started to organize themselves -- and it turns out that there are many promising clusters emerging in ambitious ways.

Last month, 25 disability insurance underwriters, brokers and consultants got together. The premise: somewhere between 25 and 40 percent of all disability insurance in the country is written out of Portland, Maine. What can be done to be sure that industry flourishes here? There is a specialty food cluster that began meeting last fall which includes the Washington County company that makes Bar Harbor Chowder. A software testing capability has been growing in the mid-coast and traditional paper producers have begun a focus on specialty paper.

In the Western Mountains, a group is forming to consider how to make the North Woods a world-class tourist destination. Each of these Maine clusters has been built on something that gives it a distinct competitive advantage, whether it is the coast and forests or a unique technology.

This is where the Research and Development Bond comes in. Last Monday the governor announced a bond package that includes a significant investment in R&D. Somewhere between $125 million and $150 million, depending on whose recommendation you take, will be awarded through a competitive process with reviews by outside third parties and administered by Maine Technology Institute. This investment is what will make Maine's technology-driven industries competitive.

It will help sectors such as bio-fuel, tidal energy and composites work with industry to create world-class products. One of the key criteria for awarding the money will be how it will help create jobs.

These two funds are not business as usual in Maine. They rely on our own companies, not government, to define what is needed; they are awarded by third party competitive review; they require collaboration between the industry, the University of Maine, the community colleges, the workforce boards and economic development entities. They focus on growing our most promising sectors here in Maine, and then using them as a magnet to attract new employers to the state.

The best news is that this could actually work. Maine has about 610,000 jobs. Just over 500,000 are in the private sector. Most of those jobs (70 percent) are local businesses -- restaurants, dry cleaners, car repair, which will grow if the "traded businesses" are adding jobs. That leaves about 150,000 jobs in "traded businesses," producing goods and services which are sold outside the local area. If we get traction in just seven to 10 Maine-based clusters, we should see strong, sustainable growth in jobs and wages throughout the state.

The decision to approve these funds is now in the hands of the Legislature. Will they bow to budget pressures and use this money to fill gaps in short-term special interest needs? Will they restrict the bond package to a size too small to make these investments in growth? The state is poised to claim its place as a player in the global economy, but it won't happen without a substantial commitment of investment in the long-term economic health of Maine.

Karen G. Mills is a venture capitalist and Chair of the Council on Jobs, Innovation and the Economy. The Council's final report was issued March 15th and can be found at http://www.maine.gov/governor/baldacci/policy/mainers_working_for_maine.html