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State of the Union: Where's the Economic Growth?

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Tonight's State of the Union address will undoubtedly center on jobs, economic growth and competitiveness. As it happens, The Milken Institute released its 2010 State Tech and Science Index today, tracking which states "are excelling at growing and sustaining high-skilled jobs and economic growth."

(See also: What To Expect in Today's State of the Union Speech).

According to the Institute's data, the following states "are the engines of economic growth in the knowledge economy. The index, as it has since 2002, tracks and evaluates every state’s tech and science capabilities and their success at converting those assets into companies and high-paying jobs."

* MASSACHUSETTS

Massachusetts continued its reign at the top of the index with an overall score of 82.61, but has slipped from 84.9 in our inaugural 2002 index.

•Governor Deval Patrick was able to convince the Legislature to keep funding the state’s 10-year, $1.0 billion Life Sciences Initiative.

•The fiscal year 2011 budget includes $10 million for the Massachusetts Life Sciences Center charged with overseeing the effort, the same as FY 2010.

•Other initiatives include the Advanced Manufacturing Initiative, which provides low-cost loans to help companies adopt new innovations and purchase technologically advanced equipment;the MassChallengeVenture Funds Competition, which seeks to raise $25 million to support 25 to 30 start-ups per year; and a statewide consortium undertaking development of a $100 million greencomputing center in the western part of the state.

* MARYLAND

Maryland is in second place overall with a score of 77.05 (down from 80.04 in 2008), but took first in human capital capacity.

•In June, Governor Martin O’Malley proposed the InvestMaryland program, which would provide tax credits to insurance companies so they could invest either directly in start-up firms or through a venture capital firm.

•Additionally, the FY11 budget includes $8 million in tax credits for biotech firms and $10.4 million for stem cell research.

•The governor signed legislation that codifies the R&D tax credit through 2020.

* COLORADO

Colorado held its ground at third overall, but its score decreased from 78.32 to 75.73 this year.

•Governor Bill Ritter signed legislation that he believes will make the state “a national leader in the New Energy Economy.”

•Colorado’s Jobs Cabinet, convened by the governor, has released a series of recommendations in its “Economic Competitiveness through Collaboration, Talent Development and Innovation” report.

•Colorado is moving forward with developing a long-term plan for higher education, with Ritter stating that “the best economic development strategy and the best anti-poverty strategy is an education strategy.”

* CALIFORNIA

California held steady in fourth position with a score of 73.85, a slight decline from 74.62 in the 2008 index but a significant drop from 80.37 in the first index in 2002.

•Governor Arnold Schwarzenegger signed legislation in March 2010 that provides a sales tax exemption for equipment used by manufacturers in the clean-tech sector.

•California had been without a formal state economic development office since 2003, when it was a casualty of the last budget crisis. The governor corrected this by signing an executive order in April authorizing the Governor’s Office of Economic Development.

* UTAH

Utah shot up three spots to fifth, edging out 2008’s fifth-ranked Washington by 1.0 point with a score of 71.26.

•Medical devices are an important technology sector for the state with Brigham Young University playing a major role in promoting Utah’s life sciences sector.

•Utah Governor Gary Herbert announced the Utah Energy Initiative in his 2010 State of the State address.

* WASHINGTON

Washington slipped to sixth overall this year with its score sliding from 72.09 in 2008 to 70.23.

•Its strength in technology concentration and dynamism is attributable to Microsoft and its spin-offs, along with other start-up firms, positioning the Seattle area as one of the global centers of software.

•Seattle is no longer the corporate headquarters of Boeing, but retains a substantial amount of the firm’s employment and operations, and related suppliers.

* NEW HAMPSHIRE

New Hampshire gained ground in the overall rankings, jumping to seventh from ninth in 2008. The state ranked 13th in 2002 and has inched higher with every edition of our index.

•New Hampshire had strong positions in funding received from the National Science Foundation (NSF) and in State Technology Transfer Research (STTR) and Small Business Innovation Research (SBIR) awards.

•Governor John Lynch has made attracting and retaining young workers in New Hampshire a top priority, and his task force on the subject has released a detailed set of recommendations.

* VIRGINIA

Virginia remained in the top 10, but fell from sixth to eighth. Virginia registered its best performances in technology concentration and dynamism (fourth), and technology and science workforce (sixth).

•Virginia’s indigenous innovation ecosystem that spawns new firms is less extensive than those of Massachusetts and California.

•Governor Bob McDonnell has signed bills in support of his “jobs and opportunity agenda”that attempt to address this gap. The legislation will exempt capital gains taxes on investments in start-up tech or biotech firms.

* CONNECTICUT

Connecticut slipped two positions to ninth, with a remarkable eight-place leap in risk capital and entrepreneurial infrastructure. Connecticut recorded great gains in measures of access to venture capital.

•The presence of aerospace and financial services explains much of the high ranking.

•Governor Jodi Rell signed a jobs bill that provides a number of credits to investors in start-up businesses in designated sectors.

* DELAWARE

Delaware cracked the top 10, up from 14th in 2008. Delaware saw its biggest advance in risk capital and entrepreneurial infrastructure, rising seven places to 29th.

•The state plans to convert a former Chrysler plant into a center for high-tech laboratories, health sciences, alternative energy R&D, and other emerging industries.

•Governor Jack Markell outlined his vision for economic development in his State of the State Address in January 2010.

For more insight, click here to access the Milken Institute's website.
POSITION:  No positions in stocks mentioned.

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