New ‘Index of the Massachusetts Innovation Economy’ Focuses on the Future of Work
Twenty Second Edition Shows Commonwealth has Higher Output and STEM Grads Per-Capita than Competing Tech States
Report Shows Lag in VC Funding Growth Relative to Key Competitors and Slowing Innovation Job Growth
WESTBOROUGH – A newly released report card from the Commonwealth of Massachusetts’ lead tech-focused economic development agency shows that the state’s innovation economy continues to lead key competitors, but job growth in tech-focused sectors has slowed. The research report also tackles issues focused on “The Future of Work” incorporating commentaries from four executives from Continuing Education, Higher Education, Business, and Youth Education on ways the Commonwealth can better prepare students and workers for 21st Century jobs.
“Massachusetts is home to one of the most dynamic innovation economies in the country, representing nearly 40 percent of employment in the state, and our continued leadership and job growth requires a swift navigation of an accelerated innovation environment,” said Housing and Economic Development Secretary Mike Kennealy. “The Index offers important insight on our innovation ecosystem, growing competition from other states, and analysis around adapting to the rise of disruptive technologies with the potential to reshape entire industries. We are committed to leveraging analysis such as this as we work to continually strengthen our position through holistic investments and collaboration.”
The 22nd edition of the Index of the Massachusetts Innovation Economy found that Massachusetts continues to lead in key talent indicators and in research & development, two areas critical for tech-focused companies looking to grow their business. The Index compares the innovation economy in the Commonwealth of Massachusetts to 14 other Leading Technology States in six key areas, broken down into 22 separate indicators: Economic Impact, Business Development, Technology Development, Capital, Research, and Talent.
Key findings in the 22nd edition include:
- Robust Output: Output in key sectors in Massachusetts has grown in eight of the eleven tracked by the Index, with the eight that saw growth accounting for over 90 percent of all innovation economy output. Massachusetts also has higher per capita output than the LTS average in all key sectors except for Advanced Materials, the smallest of the eleven sectors in Massachusetts.
- Superior Workforce and Talent Pipeline: Massachusetts produced more than 121,000 college graduates (eighth in the U.S.), including 22,500 STEM grads, making it as the top state per-capita in both graduation measures. As of 2017, 48.7 percent of working age adults had at least a bachelor’s degree, keeping Massachusetts first nationally;
- Private Sector Drives R&D: While the Commonwealth has a strong academic research foundation, it’s the private sector that drives investment in research and development (R&D), with business accounting for 75 percent of R&D expenditures in Massachusetts. The Commonwealth also had the second highest overall level of R&D funding in the country in 2015 with $28.7 billion, well behind top state California ($125.1 billion), but solidly ahead of third place Texas ($23.7 billion). The Commonwealth’s leading healthcare and biotech sectors were boosted again by awards from the federal National Institutes of Health, with Mass-based researchers brining home $2.7 billion in total grants, the second highest total of any state.
“Massachusetts is blessed with a dynamic and evolving innovation economy, but we must remain vigilant to ensure conditions are right for continued growth and prosperity,” said Pat Larkin, Director of the Innovation Institute at MassTech.
While a top performer on many of the indicators tracked annually by the Index, Massachusetts does face some headwinds. As a report card on the health of the innovation economy statewide, the Index identified several areas of concern where Massachusetts could improve relative to other Leading Technology States and national trends:
- Lower Total Share of U.S. VC Funding: While Venture Capital Investment ($6.9 billion in 2016) showed strong total growth, the 3rd highest nationally and 5 percent growth year on year, the Commonwealth’s total share of national VC investment fell by 7.9 percent indicating that competition is increasing;
- Middling Innovation Economy (IE) Job Growth: From 2016-2017, Massachusetts Innovation Economy jobs increased by 1.5 percent, placing it 8th in the list of Leading Technology States on this measure, and only slightly higher than the Commonwealth’s overall job creation rate of 1.3 percent. However, over 37% of jobs in the Commonwealth are part of the Innovation Economy, a figure that is higher than any other state.
“Competitive advantage in the past does not guarantee success going forward, especially given the increasing pace of change in the Innovation Economy,” said Pat Flynn, Trustee Professor of Economics & Management at Bentley University and the chair of the Index Advisory Committee. “Educational institutions and training programs cannot operate with a ‘business as usual’ mindset in preparing talent for the future.”
Each year, the Index focuses on a topic critical to the Innovation Economy, with a focus this year on the Future of Work, including commentaries from leaders in K-12, post-secondary, and continuing education/retraining, as well as the business community. These contributed pieces focus on how organizations in Massachusetts should prepare students and employees for an economy dominated by increasingly capable and intelligent machines, a future summarized in research released by the McKinsey Global Institute, which estimates that half of all current work activities could be automated using currently demonstrated technologies. The four contributed essays from Massachusetts thought leaders include:
- Continuing Education/Retraining: Marybeth Campbell, Executive Director, SkillWorks;
- Business/Employers: John O'Leary, Manager, Deloitte Services LP, and State and Local Government Research Leader, Deloitte Center for Government Insights;
- Higher Education: Robert E. Johnson, Ph.D., Chancellor, University of Massachusetts Dartmouth; and
- K-12 Education: Cari Perchase, Principal, Marshall Simonds Middle School, Burlington, Massachusetts.
To download a copy of the Index or to access interactive copies of the graphs & charts from the report please visit masstech.org/index.
Launched in 1997, the 22nd edition of the Index continues the tradition of comparing Massachusetts’ performance to 14 other Leading Technology States, which were selected based on their significant levels of economic concentration and impact within the innovation economy. The online version of the Index includes interactive charts and graphs which allow users to more easily dig into the compiled data, which is sourced from a variety of government, non-profit, and private sector research studies that are collected throughout the year.
About the Innovation Institute at MassTech
The Innovation Institute is the entity that advances a core mission of the Massachusetts Technology Collaborative: improving the conditions for innovation and cluster growth across the Commonwealth. Created in 2003, the Innovation Institute intervenes in the economy in the following four ways:
- Conducts research and analysis that improves the states understandings of unmet needs and opportunities in the states innovation economy;
- Serves as convener and key strategic broker on the landscape;
- Manages high-value projects on behalf of the Commonwealth; and
- Makes strategic investments in support of innovation-based economic development.
In addition, the Innovation Institute provides support for priority industry clusters such as Big Data, Advanced Manufacturing, the Internet of Things (IoT), Cybersecurity, and Robotics; supports cluster growth through university investments; and manages specialty funds such as the Entrepreneur Mentorship Initiative, and the Global Entrepreneur in Residence (GEIR) Program. For more information visit https://innovation.masstech.org/.
Brian Noyes, MassTech
(508) 870-0312 X: 293, email@example.com