I-Q Corridor is the stuff of dreamers. Oh, but what a dream!

Ever heard of the I-Q Corridor? Unless you’re an economic development geek, probably not.

The concept, first penned in a little-noticed Wisconsin Technology Council white paper, envisions an economic superhighway of sorts connecting the Twin Cities, Madison, Wis. and Chicago along interstates 90 and 94. The “I” stands for ideas, innovation, investment, intellectual property while the “Q” represents quality of life, education, workforce and environment.

Ideally, Minnesota, Wisconsin and Illinois would work together to spur research and innovation, and attract talent and companies to the corridor. They will pool money on projects that will ultimately benefit everyone.

“The ‘I-Q Corridor’ is more than a branding slogan. It’s a place where Midwest technology, values and people meet the global economy,” the paper says.

Sounds good … on paper. The problem with regional economic development is that states often worry too much about themselves to care about the other guy. Instead of cooperation, states spend most of their time trying to steal away their neighbor’s best talent and technology.

“States can’t overcome their inherent parochialism,” especially when it comes to jobs and taxpayer money, said Matt Kramer, a former chief of staff to Gov. Tim Pawlenty and commissioner of the Department of Employment and Economic Development in Minnesota.

“Why would Minnesota spend money to help Wisconsin or vice versa?” said Kramer, who now leads the Office of Business Relations at the University of Minnesota.

However, three recent developments give credibility to an I-Q Corridor:

Angel Tax Credits — Politicians have made much noise about Wisconsin stealing away promising  startups with its tax credits for angel investors. That worry, in part, has fueled the passage of a five-year, $58 million tax credit in Minnesota and a $10 million credit in Illinois. While less generous than Wisconsin, these new programs should better even the playing field.

Minnesota — The state recently passed a bill that establishes a Science and Technology Authority. By consolidating the hodgepodge efforts within Minnesota to cultivate high-tech economic development, the authority could make it easier for Minnesota to cooperate with other states.

High Speed Rail — Both Minnesota and Wisconsin are making big pushes to establish a high-speed rail link between the Twin Cities and Chicago. In January, Minnesota transportation officials released a plan that puts the cost of such a link to over $1 billion.

A high speed Minneapolis to Chicago route would be a big boost to the concept of an I-Q Corridor, said Peter Bianco, director of lifescience business development at Nilan Lewis Johnson, who travels frequently to Madison, Wis.

While the Twin Cities is home to a prominent medical device industry, Wisconsin, through its angel investors and the Wisconsin Alumni Research Fund, has become a hotbed of biotechnology and diagnostics, he said.

And Chicago, which hosted the annual BIO conventions this year and 2006, provides financial muscle, prestigious medical centers and the Argonne National Laboratory, operated by the U.S. Department of Energy.

The three regions need each other’s talent, technology and money to compete on a global level, especially as medical devices and biotechnology begin to merge, Bianco said.

Money is especially critical because early stage venture capital is so hard to find these days in any state not named Massachusetts and California. In January, the Brookings Institute, a prominent think tank based in Washington, D.C., released a paper that called for the creation of a $1 billion to $2 billion Great Lakes 21st Century Fund that would invest in early stage startups throughout the region.

“The fund should be designed to allow public funding to complement private investing in ways that ultimately yield both financial returns for investors — essential if venture investment is to be sustained — as well as long-term economic benefits for the Great Lakes region at large,” the paper said.

“Will it alone turn the Great Lakes economy around? Not by a long shot. But it will help leverage the region’s substantial resources and promising opportunities for venture capital investing, and in turn help the region grow, and retain, the new businesses and jobs it needs to ensure a more prosperous and secure future.”

In some ways, borders are artificial since Minnesota and Wisconsin already exchange people and ideas on a regular basis. For instance, Rapid Diagnostek recently moved to Hudson, Wis. because of the state’s tax credits. But its founders still live just across the river in the Twin Cities.

Aside from the tax credits, “I don’t think it makes much of a difference,” Kramer said.