Massachusetts, Maine Innovation Indices Assess States' Readiness for the Economic Downturn

State governments are poised to play a vital role in the economic recovery through their use of federally-appropriated funds and through their internal policy responses to the global crisis. Several states are focusing on innovation as a means of recovery. Massachusetts and Maine both recently released the latest editions of their annual innovation indices. These annual publications have long helped to clarify trends in the innovation economy and provided assessment of their performance relative to other states. This year these indices take on new significance as state governments search for potential paths out of the economic crisis.

Massachusetts
In the seventh edition of the Index of the Massachusetts Innovation Economy, Gov. Deval Patrick, MIT professor Richard K. Lester and six other prominent industry and academic leaders argue for the necessity of increased investments in research and high-tech industry to propel the state through the difficult times ahead. Lester suggests that the state should follow an innovation strategy that focuses on "sustaining the flows of capital, knowledge and people" that are vital to competitiveness but can suffer during times of economic hardship.

This year's data set does not yet reflect the effects of the crisis, but it does identify areas of strength for the state and negative trends that will have to be remedied to sustain growth. The report uses eleven indicators to benchmark the state's innovation economy against nine other leading technology states, including California, Connecticut, Illinois, Minnesota, New Jersey, New York, North Carolina, Pennsylvania and Virginia. Massachusetts remains the top state in SBIR awards per capita, though its share of the national total is declining. The state also leads in per-capita patents, per-capita engineering degrees granted and educational attainment.

Areas of concern identified in the report include flat growth in real median household income and a significant erosion in real wages between 2003 and 2007. Massachusetts also has a lower number of two-year college graduates than the other states in the study, creating a labor shortage for new and expanding companies.

The 2008 Index of the Massachusetts Innovation Economy is available at: http://www.masstech.org/institute/index2008-21909.pdf.

Maine
Over the years the Maine Innovation Index has helped state policymakers evaluate the effectiveness of their innovation strategy and compare their performance to that of similar states. This year, the Maine's Office of Innovation begins a year-long project to create a new Science and Technology Action Plan to succeed the current plan, designed in 2005. The new plan will guide Maine's TBED initiatives in the coming years and will rely on data compiled in the index.

To evaluate Maine's competitiveness, the index uses 25 indicators grouped in five categories: R&D capacity, innovation capacity, employment & output capacity, education capacity and connectivity capacity.  Over the past five years, the state has outperformed its EPSCoR peers in increasing its education capacity and its broadband infrastructure. Maine also continues to do well in attracting SBIR/STTR funding and in the performance of its nonprofit R&D labs.

Areas targeted for improvement in the index include total, industry and academic R&D performance, venture capital investment, patenting activity and entrepreneurial activity.

The 2009 Maine Innovation Index is available at: http://www.maineinnovation.com/r&e/pdfs/MOI_2009_Full_report_for_WEB.pdf.