States Compete to be “Home” of Innovation

Economic woes continue to permeate front-page news, presidential candidates’ agendas, and water-cooler conversations. In our knowledge-based economy, states are committing major capital and human resources to remain competitive

A report released last week at the BIO 2008 Convention by the Milken Institute, the State Technology and Science Index 2008, takes a comprehensive look at each state’s ability to deal with the shifting nature of the economy and assesses science and technology assets that could be leveraged to promote economic development.

In the Milken Institute study, the states are ranked based on 77 individual indicators in five categories: research and development; risk capital and entrepreneurial infrastructure; human capital investment; technology and science workforce: and technology concentration and dynamism.

• Massachusetts tops the list and “continues to set the pace for other states in terms of technology and science capabilities.” A hotbed of research, world-renowned research universities and cutting-edge firms fuel the state’s economy. On June 16, Massachusetts Governor Deval L. Patrick signed a bill that commits $1 billion into the state's growing life sciences industry over the next decade. The bill includes $250 million in tax incentives for companies, $250 million in grants, and $500 million for infrastructure, much of which is earmarked for the state university system.
  
  According to the Boston Globe, “though biotech still only accounts for a little more than 1 percent of the state's workforce, Patrick has focused on nurturing the life sciences industry because of its growth potential, high salaries, and ability to pump money into the economy.”
• Ranking a close second is Maryland, which moved up from 4th place in the 2004 index. The same day Massachusetts signed its $1 billion life sciences bill, Governor Martin O’Malley unveiled its BIO 2020 Initiative, an effort that will invest $1.1 billion in the state’s bioscience industry over the next 10 years to attract and grow biotechnology companies in Maryland.
  
  In announcing this new initiative, Gov. O’Malley said, “At the end of the day, our greatness as a State and as a people will be determined by how we meet the essential challenge of the present. How we invest in our capabilities for healing this fragile and ever smaller world of ours.”
• Colorado remains in third place. California places fourth, slipping from 2nd place in the 2004 index. Fifth place goes to Washington. For a complete list of state rankings, download a copy of the Milken Institute report.

“States that have a vision and a plan for building and retaining high-wage jobs and viable industries are finding ways to invest in their science and technology assets,” said Ross DeVol, director of Regional Economics at the Milken Institute, and lead author of the study. “The changes in this year’s Index give a good measure of who is ahead in the increasing competition for scarce human capital and other resources needed for a successful industry.”

The report highlighted a new challenge that arose as an unintended consequence of post 9-11 security restrictions on student visas. International graduate student enrollment in U.S. universities has declined, limiting the opportunity to attract the world’s top talents into American institutions. The nation faces the possibility of losing human capital overseas.

This forces states to compete to draw both human and financial capital from other states.
And, with more states scoring near the mean, competition between states is expected to intensify.

However, the main threat to any state’s position emanates from abroad. It is more important than ever for states to remain focused on fostering innovation and entrepreneurship to ensure the nation’s leadership in this fast-paced global industry – “especially as the national economy enters a challenging period.”

Cecilia Arradaza, Communications Director, FasterCures