As the Great Recession recedes in our rearview mirrors, it is becoming ever more apparent that innovative activities are determining an increasing proportion of the long-term economic growth of cities, metropolitan areas, regions, states, and even nations. The State Technology and Science Index (STSI) was created nearly two decades ago in order to track and evaluate every state's tech and science capabilities, and their success at converting these assets into companies and high-paying jobs.http://statetechandscience.org/
How a state fares in the index does not directly correlate to current economic performance and overall job creation, but it does clearly indicate whether a state is likely to create high-paying and future-proof positions. For the U.S. economy to thrive in over the long haul, it must out-innovate and out-commercialize its competitors. That process is executed at the state or regional level.
The index computes and measures 107 individual indicators relative to population, gross state product (GSP), number of establishments, percent change, and other factors. Data sources include government agencies, foundations, and private sources. They are then sorted into five composites:
Research and Development Inputs: A state's R&D capacity is examined to see if it has facilities that can attract funding and create innovations that can be commercialized. The category includes measures such as industrial, academic, and federal R&D; Small Business Innovation Research awards; and the Small Business Technology Transfer program, among others.http://hub.jhu.edu/2015/12/09/research-funding-leader-nsf-survey/
Risk Capital and Entrepreneurial Infrastructure: The entrepreneurial capacity and risk capital infrastructure of states are the ingredients that determine the success rate of converting research into commercially viable technology services and products. Several measures of venture capital activity as well as entrepreneurial pursuits, including patenting activity, business formations, and initial public offerings are included.
Human Capital Investment: Human capital is the most important intangible asset of a regional or state economy. Indicators that suggest the skill levels of the current and future workforce are analyzed. Examples include the number of bachelor's, master's, and doctorate degrees relative to a state's population, and measures specific to science, engineering, and technology degrees.http://www.creativeclass.com/rfcgdb/articles/national%20journal%20Rise%20of%20the%20Creative%20Class.pdf
Technology and Science Workforce: The intensity of the technology and science workforce indicates whether states have sufficient depth of high-end technical talent. Intensity is derived from the share of employment in a particular field relative to total state employment. There are 47 occupation categories in three main areas: computer and information sciences, life and physical sciences, and engineering.
Technology Concentration and Dynamism: By measuring technology growth, we are able to assess how effective policymakers and other stakeholders have been at transforming regional assets into regional prosperity. This includes measures such as the percent of establishments, employment, and payrolls that are in high-tech categories. It also measures growth in a number of technology categories.
Massachusetts is first - once again - in the Milken Institute's State Technology and Science Index 2016. With a score of 83.7 (out of a possible 100 if a state were to score first on all metrics), more than three points ahead of its nearest competitor, the Bay State proved once again that its extensive university and private-sector research assets are fertile breeding grounds for innovation.
The top ten (with their previous index rankings in 2014):
1.Massachusetts (1)
2.Colorado (4)
3.Maryland (2)
4.California (3)
5.Washington (6)
6.Connecticut (9)
7.Minnesota (12)
8.Utah (5)
9.Virginia (7)
10.Delaware (10)
Colorado climbed to second place from fourth, with an impressive jump from sixth to first in Human Capital Investment. With 14 public and 17 private universities, Colorado is training a high-skill workforce attractive to tech companies. Although California dipped one notch from 2014, the Golden State still has an unrivaled ecosystem for research commercialization.
Washington climbed one place to fifth in the latest rankings. While cutbacks in the aerospace and defense sectors loom, expanding employment in e-commerce and cloud computing support the state's impressive concentration of payroll and employment in high-tech industries, the highest of any state. Minnesota entered the top ten for the first time in more than a decade, soaring five notches to seventh place. The jump is evidence of how the state is fast becoming a Midwestern leader in the tech world.
With a drop of nine ranks, New York went from 11th place to number 20. Drops in three of the major composites brought the Empire State down, including a 12 rank drop in Technology Concentration and Dynamism.
The states with the weakest innovation assets and ecosystems for starting and growing innovative firms face a bleak future unless changes are made. West Virginia, Arkansas, Mississippi, Kentucky, and Louisiana make up the bottom five in this year's STSI. They are the least knowledge-intensive and their residents exhibit weak entrepreneurial skills. All of them have undertaken efforts to change their position in technology and science but have limited success.
A renewed commitment to making investments in research, entrepreneurship, and human capital are necessary. These states and others must focus attention on investing and improving their current and future residents' economic fortunes. The United States must remain the innovation leader in the world to maintain our standard of living and for our children's. https://www.brookings.edu/research/americas-advanced-industries-new-trends/