Region gets low scores in innovation

The report was released by the Ewing Marion Kauffman Foundationof Kansas City and the Information Technology and Innovation Foundation as part of EntrepreneurshipWeek USA.

"This study shows the value that entrepreneurs can bring to state economies," said Carl Schramm, president and chief executive of the Kauffman Foundation.

The bursting of the dot-com bubble and the recession of 2001 did not dispel the notion that the nation's economy is transforming in a fundamental way, Schramm said.

Factories laden with heavy machinery once were a key to driving national livelihoods. Today, however, countries and states that are thriving tend to rely increasingly on innovative ideas, giving them an edge in a global marketplace.

The economy has become extremely reliant upon so-called knowledge workers, Schramm said.

Managerial and professional positions as a portion of total employment have grown to become the largest single category of workers, climbing to 34.8 percent in 2003.

The report's findings - indicating that states best positioned for this new economy tend to enjoy higher per capita incomes - should attract attention from governors and other leaders, Schramm said. Poor student performance, weakening incentives for investment in research and development, and declining federal support for some forms of research all are troubling.

"There are some key weaknesses that states and the United States must remedy," Schramm said.

Overall, states in the Midwest, the Great Plains and the South tended to face the greatest challenges in transforming their economies, according to the research.

Massachusetts, New Jersey, Maryland and California once again were among the leaders in nurturing entrepreneurs, innovation and information technology ventures.

"Places that have lagged behind are places that historically have not invested in education, infrastructure and skills," said Robert Atkinson, president of the innovation foundation and primary author of the report.

The index uses 26 factors to measure states on their success in developing such things as knowledge jobs, fast-growing industries and companies positioned to compete around the world.

Particularly low scores in categories such as work force education, entrepreneurial activity, broadband telecommunications and exporting goods and services contributed to Missouri's back-of-the-pack ranking.

Kansas also tallied low marks in several key areas, though the state also showed notable progress. When it came to new patents, adjusted for the size of the state, and broadband telecommunications, Kansas' improvement between 2002 and 2007 was among the best in the country.

"Each state has some strengths it can build on," Atkinson said.

The report offers policy recommendations, largely focusing on stimulating research, nurturing entrepreneurs and developing more highly talented and trained professionals.

Instead of offering tax breaks or other deals to relocating corporations, states are likely to enjoy greater success through investing in work force development and innovation research.

"States need to rethink how they do incentives," Atkinson said.

Identifying the fastest-growing companies in a state and then asking executives what barriers they face or what assistance they require also can be important guides for state action.

Missouri officials said the report's findings bolstered the case for making greater investments in innovation, such as the Lewis and Clark Discovery Initiative proposed by Gov. Matt Blunt, said Spence Jackson, a spokesman in the Missouri Department of Economic Development.

"It is vital that we take advantage of the state's investment in higher education," Jackson said.

The state has taken additional actions recently, such as a new package of job-creation incentives and support of promising companies such as Proteon Therapeuticsin Kansas City, that probably are not fully reflected in the new report, Jackson said.

"We believe they will have a positive impact on our state's economy for many years to come," Jackson said.

ON THE WEB To see the 2007 State New Economy Index, go to www.kauffman.org /neweconomy

To reach Jason Gertzen, call (816) 234-4899 or send e-mail to jgertzen@kcstar.com.