FOR IMMEDIATE RELEASE
Newly Released Index of the Mass. Innovation Economy Finds R&D, Talent Critical Components to Commonwealth’s Success
20th Anniversary Index Compares Massachusetts to 14 Competing States in 22 Key Indicators
Rise in Total R&D Expenditures, Venture Capital Highlights Investment in Innovation
Slowdowns Apparent in Federal Academic R&D Funding, International Exports
BOSTON – The 20th anniversary edition of The Index of the Massachusetts Innovation Economy shows that the Commonwealth’s innovation-focused sectors are powered by similar drivers today as they were over two decades ago – strength in talent & workforce, as well as investments in research & development that are competitive with the largest U.S. states. The newly released Index shows that innovation job sectors have held steady with overall job gains in Massachusetts, posting 2.3 percent job growth between Q1-2015 and Q1-2016, and that venture capital investment in Commonwealth companies grew by 25 percent in 2015, faster than in California.
The 2016 Index shows that the Commonwealth is still a top performer when compared to 14 other ‘Leading Technology States’, bolstered by our well-trained workforce, private investment in research & development, and a recent rise in Venture Capital investment.
“As a state we are racking up accolades – from Bloomberg to US News & World Report – highlighting our innovation, competition and growth,” said Housing and Economic Development Secretary Jay Ash. “We also know we cannot rest on past awards and need to continue investing in what makes us strong: workforce training, R&D funding, and supporting an innovation ecosystem that has produced some of the most ingenious companies on the planet.”
Massachusetts had the second highest overall level of R&D funding of any state in the U.S. in 2014 ($27.98 billion), well behind first-place California ($114.98 billion), but slightly ahead of third-place Texas ($22.49 billion), and led the other 14 states in ‘R&D spending as a percent of GDP’ (5.86 percent). In 2014, 76 percent of R&D expenditures in Massachusetts came from private industry, above the overall U.S. average of roughly 71.3 percent, but 8th when compared to the breakdown in the other Leading Technology States.
“For 20 years, the Index has been a bellwether for our innovation economy, helping us score Massachusetts against our leading competitors and to provide a snapshot of where we stand out, but also where we can improve,” stated Tim Connelly, Executive Director/CEO of the Massachusetts Technology Collaborative, which has published the Index since its inception in 1997. “This year’s report is no different, as it shows that for a relatively small state, Massachusetts is a leader when it comes to investments in critical R&D, a fact which companies like GE and others have recognized.”
While the Commonwealth maintained its overall share of federal funding for ‘R&D to universities, colleges, and non-profits,’ the gross dollar amount awarded to Massachusetts declined by 20.7 percent from 2010-2014.
Several other findings:
- Superior Workforce and Talent Pipeline: 46.6 percent of working age adults in Massachusetts had at least a bachelor’s degree as of 2014 and 67.5 percent of working age adults have at least some college education. The Commonwealth also produced 2,698 STEM degrees per million residents, a measure in which Massachusetts continues to lead the LTS;
- Attractive Investment Destination: Venture capital investment in Massachusetts grew by 25percent in 2015, faster than in California, and reached a total of $5.8 billion. Venture Capital invested in Massachusetts firms increased by nearly $3 billion from 2013-2015. The Biotechnology (38.8 percent) and Software (28.6 percent) sectors accounted for the majority of total Venture Capital funding in 2015;
In addition to the slowdown in Federal Academic R&D investment mentioned above, another area of potential concern is a decline in ‘International Exports’ from Massachusetts, which declined by $2 billion in 2015 and placed Massachusetts as 3rd third lowest in the LTS terms of ‘Exports as a Share of a GDP’ (5.3 percent). In fact, Massachusetts, Connecticut, and New Jersey were the only states among the LTS where exports as a percentage of GDP are still below 2009 levels, according to the Index.
"Our colleges and universities, R&D, venture capital, and a talented workforce have been instrumental in driving the Massachusetts Innovation Economy over the past two decades,” said Patricia Flynn, Trustee Professor of Economics & Management at Bentley University and Chair of the Innovation Index Advisory Committee. “They also position the state well to compete in the ever-evolving global economy."
The findings in the Index echo the recent recognition from U.S. News & World Report, which rated Massachusetts as the top U.S. state overall in a variety of rankings, including a first in “Education” and a fifth for “Economy,” as well as second for “Business Environment” and fourth for “Employment”. In December, Bloomberg Business ranked Massachusetts as the #1 ‘Most Innovative State in America’ for 2016 and the Milken Institute ranked the Commonwealth the top state in its 2016 State Tech and Science Index, the eighth report in a row that Massachusetts came out on top.
Launched in 1997, this is the 20th anniversary edition of the Index of the Massachusetts Innovation Economy, which compares Massachusetts’ performance to a group of fourteen states, collectively identified as the Leading Technology States (LTS), which have significant levels of economic concentration and impact within the innovation economy. The Massachusetts innovation economy is then compared to the LTS in six key areas, including:
- Economic Impact;
- Business Development;
- Technology Development;
- Research; and
To download a copy of the Index or to access copies of the charts from the research, visit masstech.org/index.
The Massachusetts Technology Collaborative is an innovative public agency working to enhance economic growth, accelerate technology use and adoption, and harness the value of research by engaging in meaningful collaborations across academia, industry, and government. From improving our health care systems and expanding high-speed internet across the state to fostering emerging industry clusters, MassTech is driving innovation and supporting a vibrant economy across the Commonwealth.
For more information visit masstech.org.
MEDIA CONTACT: Brian Noyes, MassTech, (508) 870-0312 X: 293, noyes (at) masstech.org