LOS ANGELES, Dec. 18, 2018 - Massachusetts retained its No. 1 ranking in the Milken Institute's 2018 State Technology and Science Index, a biennial assessment of states' capabilities and competitiveness in a tech-focused economy.
The top four states were unchanged from the 2016 index. Colorado ranked No. 2, followed by No. 3 Maryland and No. 4 California. Fifth-place Utah was the only new member of the top five. Utah rose to fifth from eighth on the strength of rapid employment growth in technology and science. Washington fell to sixth from fifth.
2018 State Technology and Science Index top-10
1. Massachusetts (86.25)
2. Colorado (80.08)
3. Maryland (79.24)
4. California (78.08)
5. Utah (75.27)
6. Washington (74.60)
7. Delaware (66.13)
8. Minnesota (63.11)
9. New Hampshire (62.34)
10. Oregon (61.76)
Complete results are available online at http://www.milkeninstitute.org
"The success stories of states profiled in this year's index reflect sustained efforts to not only build but to maintain their ecosystem," said Kevin Klowden, executive director of the Milken Institute Center for Regional Economics. "Making the changes that are necessary to perform well on the State Technology and Science Index can contribute to stronger long-term economic performance."
Massachusetts benefitted from the presence of major research universities, the availability of venture capital, entrepreneurial expertise, and a tech-oriented workforce, according to the report. The state was first in three of the index's five composite indexes and finished third in another. Massachusetts continues to strengthen its position in tech and science by increasing public funding of neuroscience research, cybersecurity innovation, and startup development.
Utah's move to fifth was driven by tech-sector employment growth - the fastest in the nation - averaging 4.3 percent annually. The state also had the most university graduates with degrees in science and engineering - 15.4 per 1,000 students. Utah stood out for the success of its universities in spinning research into commercial ventures.
Delaware rose to seventh from 10th, strengthened by an increase in venture capital invested in technology companies. The Legislature authorized a 25 percent tax credit for small companies (those with fewer than 25 employees) engaged in research and development in specific high-tech fields. The state ranks fifth in the number of business startups with 53.4 per 1,000 residents.
The State Technology and Science Index provides a benchmark for policymakers to evaluate their state's capabilities and formulate strategies for improving STEM education, attracting businesses, and creating jobs in the tech sector. Indices considered in the report include the number of patents issued and doctoral degrees granted in each state.
"Investing in human capital and developing a STEM workforce is crucial for regional economies that want to attract large technology companies and the jobs they bring," explains Minoli Ratnatunga, Milken Institute's director of regional economics research.
In addition to the index, the report offers case studies that examine issues such as non-compete contracts that limit employee mobility, along with access to higher education in building a vibrant, adaptable workforce.
Drawing on this data, the report recommends four steps policymakers can take to improve their state's competitiveness:
- Increase scholarships and other financial aid to lower the cost of higher education for in-state students who plan STEM careers.
- Better align STEM curriculums to make it easier for students to transfer credits from lower-cost two-year colleges to four-year institutions.
- Encourage partnerships between higher-education institutions and private companies to provide students with work experience to improve workforce readiness and job placement.
- Make employee noncompete laws less restrictive to encourage a freer exchange of ideas and talent among tech companies.
The index draws on data from government and private sources dating from 2015 to 2017, including the Bureau of Labor Statistics, the National Science Foundation, the Small Business Administration, the American Community Survey, and Moody's Analytics.
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About the Milken Institute
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