California slipped from second place to fourth and shows signs of faltering in its efforts to capture federal funding and build its future work force.
Massachusetts, which just passed a $1-billion life sciences bill to invest in high-tech infrastructure and research and development over the next 10 years, is in the best position of any state to achieve high-quality economic growth thanks to its vast array of technology and science assets, a new Milken Institute study shows.
Massachusetts ranks first in the Milken Institute's 2008 State Technology and Science Index, followed by Maryland, Colorado and California.
According to the report, regional competition for technology industries has increased since the last release of the Index in 2004. Not only are states vying with each other for human capital and resources, but countries like China and India are increasing the competition on a global level.
At the same time, the post-9/11 decrease in international graduate students and flat or decreased federal funding for research and development are applying negative pressure to states that are not making serious investments to build and retain these 21st century industries.
"States that have a vision and a plan for building and retaining high-wage jobs and viable industries are finding ways to invest in their science and technology assets," said Ross DeVol, director of Regional Economics at the Milken Institute, and lead author of the study. "The changes in this year's Index give a good measure of who is ahead in the increasing competition for scarce human capital and other resources needed for a successful industry."
The states in the best position to succeed in the technology-led information age are (with 2004 rankings):
1) Massachusetts (1)
2) Maryland (4)
3) Colorado (3)
4) California (2)
5) Washington (6)
6) Virginia (5)
7) Connecticut (10)
8) Utah (9)
9) New Hampshire (12)
10) Rhode Island (11)
Massachusetts's dominance in the rankings is related to its established strength in world-class research institutions, cutting-edge firms and its ability to leverage these assets in attracting and retaining a skilled work force. Massachusetts scores well ahead of the competition in these areas.
"This report is great news for Massachusetts and reflects our continuing commitment to the best science and technology," said Gov. Deval Patrick. "We know that to compete and win in a global economy we need a work force skilled in these areas."
Maryland moved up from fourth in this year's ranking, thanks to strong positions across the many indicators used by the Institute. In particular, the report cited an improvement in the ability to attract business into the state and new projects that link research institutions with industry to produce the most advanced products.
"With strong partnerships between the public and private sectors, and collaborative research with universities, federal and commercial partners, we have been able to create a strong technology industry in Maryland," said Gov. Martin O'Malley. "The results of the Milken Institute study are further evidence that Maryland is highly and increasingly competitive in drawing, retaining, and growing technology-based businesses."
Colorado held its position in third place, just under Maryland's score. California, however, slipped from second place to fourth and, according to the report, shows signs of faltering in its efforts to capture federal funding and build its future work force. In particular, the report said the decline in "standardized test scores and a low proportion of its population with bachelor's degrees" could significantly hamper the ability to provide a skilled work force to take advantage of its financial and industrial strength.
Several states made dramatic improvements in the update of the Index. North Dakota showed the greatest gains, moving up 14 positions to 31st. This rise is due in large part to a state initiative to develop "Centers of Excellence," which was implemented in 2004. The state provides matching funds to universities and colleges that join the program and commit to regional development in science and technology.
Other big movers in the Index are Hawaii, up 11 spots to 28th, and Alabama,
which moved up seven positions. On the other hand, Mississippi has the dubious position of being ranked 50th again and West Virginia slid from 46th to 49th place.
Because states can no longer succeed with a low-skill, low-cost economic development formula, they must compete globally on the basis of new ideas, new products and new markets, along with superior productivity growth, the report states. The future will belong to those regions that can develop a thriving technology industry in a wide variety of fast-growing fields including biotech, clean technology, nanotechnology, communications and next-generation computer applications. The Index takes an objective measure of just how prepared each state is to take advantage of these opportunities.
The 2008 State Technology and Science Index looks at 77 unique indicators that are categorized into five major components: Research and Development Inputs, Risk Capital and Entrepreneurial Infrastructure, Human Capital Investment, Technology and Science Work Force, and Technology Concentration and Dynamism. It is one of the most comprehensive examinations of state technology and science assets ever compiled. A companion report that offers an in-depth look at California's technology and science industry is also available. The study was made possible in part through the generous support of Goodwin Procter LLP.