The latest report from Bloomberg provides proof if any was needed of the link between education, research and innovation. The Bloomberg US Innovation Index ranks Massachusetts as the number one state for innovation in the US in 2015, followed by California, Washington, New Jersey and Connecticut. The least innovative states are Mississippi, West Virginia and South Dakota.
California was a very close second, only by 0.03 point, probably as a result of the index measuring high-tech density via number of companies, rather than market capital. The index scored each of the 50 states on a 0-100 scale across six equally weighted metrics: R&D intensity; productivity; high-tech density; concentration of science, technology, engineering and mathematics (STEM) employment; science and engineering degree holders; and patent activity.
The index illustrates how universities are essential for local economies. According to Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, the major, world-ranked institutions have played a big role in terms of churning out some very, very well-qualified, bright people, feeding an innovative atmosphere.
Massachusetts Institute of Technology (MIT) is an example of an institute that has provided a ripple effect for the local economy. He said that MIT graduates have produced around 400 startup businesses over the past few decades, including Massachusetts-based electronics maker Bose Corp., which then creates a ‘cluster’ of companies that are attracted to the strong business environment and in turn propel the labor market and growth.
He adds that innovation often leads to job creation, and mostly high-skilled job creation; however there are other jobs that come with it to service that economy as the labor force grows – for example, they need haircuts, they need landscapers, and so on.
North Dakota, which is placed at number 40 in the index, illustrates what happens when economic growth is concentrated in one industry. The crash in oil prices has hobbled the state and soured the business environment, which might have otherwise attracted more companies from other industries, Behravesh said. But states at the bottom of the ladder aren’t doomed to weak growth and a lack of economic vitality.
Behravesh adds that there are some things that state governments can do to make their states more attractive to research and development, including R&D tax credits. “State governments — if they carefully target areas where they think they have a bit of a competitive advantage — they could develop a cluster around their universities, as well.”
For the full table listing from Bloomberg, click here.
