The 2017 Index of the Massachusetts Innovation Economy shows that the Commonwealth is still a top state for innovation, bolstered by our well-trained and talented workers, network of top-tier colleges and universities, and a research & development (R&D)enterprise that, compared to the size of our economy, is second to none. Despite the continued improvement of other states and a handful of challenges faced by the Commonwealth, based on the Massachusetts Technology Collaborative’s analysis of 22 indicators that cover the categories of Economic Impact, Research, Technology & Business Development, Capital, and Talent, we found several areas where Massachusetts’ performance continues to stand out:
- Superior Workforce and Talent Pipeline: 47.3% of working age adults in Massachusetts had at least a bachelor’s degree as of 2015 (1st nationally) while also producing more than 118,000 college graduates (10th nationally);
- STEM Leadership: Massachusetts produced 19,500 STEM graduates in 2015 (10th nationally) and more STEM graduates per capita than any state in the country; and
- Powered by R&D: Massachusetts had the second highest overall level of R&D funding in the country in 2015 ($28.7 billion), ahead of third-place Texas ($23.7 billion). Given its much smaller size relative to its nearest competitors California (#1) and Texas (#3), the gross R&D numbers show how Massachusetts ‘punches above its weight’ when it comes to these investments. The vast majority of which come from private industry (75%).
While a top performer on many metrics, Massachusetts does face some headwinds. The Index also shows several areas where Massachusetts needs to improve relative to other Leading Technology States (LTS) and national trends facing Massachusetts and most LTS, including:
- Venture Capital Investment Correction: Venture capital (VC) investment in Massachusetts fell by 7% in 2016 to a total of $6.2B, but saw a much smaller decrease than California (down 18%). Twelve (12) of the 15 LTS saw declines in VC investment in 2016.
- Middling Innovation Economy (IE) Job Growth: From Q1 2016-Q1 2017, Massachusetts Innovation Economy jobs increased by 1.4%, similar to the Commonwealth’s overall rate of job creation of 1.5%. Massachusetts placed 7th in the LTS on this measure.
- Positive, but Declining, Net Migration: Massachusetts attracted a net of +15,000 new residents from elsewhere in 2016, down from +32,000 in 2013. Massachusetts is 6th among the LTS in net migration as a % of the population.
This year’s Index contains a Special Analysis section focused on “Massachusetts and Convergence, which takes a look at the increasing trend toward “interaction and overlap between different technology areas and industry sectors” both among and within firms, and how this change is and will shape the Massachusetts Innovation Economy over the years to come. We’ve also included a collection of commentaries from thought leaders within the Commonwealth on how they think the state should prepare for the coming convergence.
For this edition, continued from 2016, the Index has kept the expanded field of LTS, comparing Massachusetts with 14 other states. All but one of the 2016 LTS made the list in 2017, with new-comer Florida replacing Missouri, page 16. We have included profiles for each state that list key data points, economic sectors, major universities & research institutions, and a selection of representative Innovation Economy companies. We have also provided three examples of unique economic development initiatives that impact and support the development of the Innovation Economy for each LTS member, pages 17-22.
For Index key findings download our flyer:
The Index is an important tool enabling stakeholders and policymakers to engage in dialogue, and to ask and answer: What will it take to preserve, enhance, strengthen and grow the industry clusters of the knowledge based innovation economy in Massachusetts?
For questions or to learn more about the Innovation Index please contact William Fuqua.