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Massachusetts Leads in STEM Degrees, But Students Losing Interest

April 21, 2010

Massachusetts ranks first in the country in patents per capita, SBIR awards and in R&D spending as a percent of gross domestic product (GDP), according to the latest version of the Index of the Massachusetts Innovation Economy. Though the report finds that the state's innovation economy is growing and, in many ways, suffered less than others during the economic crisis, it recommends taking action to increase student interest in STEM careers and to help launch new businesses.

Published annually since 1997, the index evaluates Massachusetts' performance in innovative and growing industry compared to its peer states, including California, Connecticut, Illinois, Maryland, Minnesota, New Jersey, New York, Pennsylvania and Virginia. International comparisons are used throughout this year's edition to reflect the global nature of the state's innovation economy and peers. The 2009 report provides data on 11 key industries within the innovation economy using 25 economic indicators. Key industries include advanced materials, bio-pharma and medical, business services, computer and communications hardware, defense manufacturing and instrumentation, diversified industrial manufacturing, financial services, healthcare delivery, postsecondary education, "scientific, technology and management services" and software and communications services.

Though the economic crisis led to job losses in Massachusetts and around the country, jobs in the state's key innovation clusters were lost at about half the rate as in other industries. Employment in healthcare delivery in postsecondary education increased over 2008, as it did in nearly all peer states. The lower job loss rates led to a slight increase in the concentration of innovation jobs. Jobs in key innovation industries grew from 36.5 percent of state employment to 37 percent. Employment in financial services, computer and communications hardware, software and communications services, bio-pharma and medical devices and healthcare delivery have all grown at a faster rate than the rest of the country since 2004. Massachusetts continues to have the highest percentage of life, physical and social science occupations in the country and ranks second (behind Virginia) in information technology occupations.

The state trails only California in total R&D performed by universities, hospitals and nonprofits, and leads in industrial R&D investment as a share of GDP. In 2007, the most recent year for which data is available, Massachusetts universities, hospitals and nonprofits performed $4.6 billion in R&D, while industrial R&D equaled seven percent of state GDP. The state continues to lead the country in SBIR awards per capita. In 2008, 13.2 percent of all SBIR funding went to Massachusetts companies. Though the state's share is down from 18.1 percent in 2000, Massachusetts is second only to California in total award funding. Massachusetts received $35 in SBIR funding per capita, the highest per capita rate in the country. The second-ranking states, Maryland and Virginia, received $15 per capita.

The report identifies several potential areas for improvement in the state's economy. New business incorporations were down by 7.2 percent in 2008 and trailed behind most other leading high-tech states in new companies and jobs. Initial public offering and venture deals were down as a result of the economic crisis. Massachusetts companies received 35 percent less capital in 2009 than in the previous year. Despite granting the largest number of STEM degrees in the country, Massachusetts' students also are showing less interest in STEM fields. High school seniors were less likely to express an interest in Computer and Information Science and Engineering or in Health Professions and Biological Sciences than seniors in the rest of the country. Despite this lack of interest, Massachusetts high school students continue to perform better than their counterparts in the rest of the country on STEM-related exams.

Read the latest Index of the Massachusetts Innovation Economy at: http://web27.streamhoster.com/mtc/index_2009.pdf