State Maintains R&D Leadership, Says New Innovation Economy Index
BOSTON – The echoes of the COVID-19 global health crisis were apparent in the latest edition of The Index of the Massachusetts Innovation Economy, a report that tracks the strength of the Commonwealth’s tech and innovation sectors.
Even with net job losses in nine of 11 key tech sectors in 2020, the Massachusetts tech and innovation economy continued to be a top state in terms of total R&D investment ($36 billion in 2018, second only to California), record venture capital investment ($15.8 billion in 2020), and increased investment in higher education per student (up 29.4% since 2015).
Despite the data capturing the worst of the COVID-19 recession, all three of the sectors below were well above their 2015 employment levels, with the first two having actually added jobs during 2020:
• Biopharmaceuticals and Medical Devices (+37.8% since 2015);
• Scientific, Technical, & Management Services (+25.4% since 2015); and
• Software & Communications Services (+16.8% since 2015).
The 2021 Index found the following areas were bright spots for the innovation economy:
• A marked increase in higher education investment, with appropriations per student up 29.4% since 2015, greater than any of the LTS save for California;
• Highest number of degrees conferred per capita among the LTS (18.1 per 1,000 residents);
• 47.6% of the workforce has at least a bachelor’s degree, higher than any other state and well above the U.S. average of 34.4%.
R&D and VC Investment Rising:
• Massachusetts is one of the leading producers of patents per capita, with 1,275 utility patents per million residents in 2020, second in the LTS;
• Of the 5 LTS with more than $1 billion in annual investment in 2015, Massachusetts saw the fastest growth in VC funding, up 88.3 percent from 2015 to 2020.
• $3.3 billion in National Institutes of Health (NIH) funding in Massachusetts in 2020;
• $5,659 of NIH funding per $1 million GDP;
• 11 Massachusetts research institutions received more than $100 million in NIH funding in 2020.
“While the pandemic’s impacts were stark, the investments made by the private and public sectors continue to fuel growth in the areas that are driving our innovation economy,” said Pat Larkin, director of the Innovation Institute at MassTech. “On education, we’ve seen the clear rise in higher-ed investment by the state, which is a key driver for our talent development pipeline. The Index also points to the potential for further strengthening, as the state expands Innovation Pathways programs at the K-12 level, efforts which will further train students for careers in advanced manufacturing and robotics, which desperately need talent.”
All 10 leading tech states saw net job losses in key sectors during 2020, including in Massachusetts. Since 2015, the Commonwealth’s innovation job losses were concentrated in a few key manufacturing sectors, including: Diversified Industrial Manufacturing (- 6.9%); Advanced Materials (-7.4%); and Computer & Communications Hardware (-16.9%).
To download a copy of the Index of the Massachusetts Innovation Economy, or to access interactive copies of the graphs and charts from the report, visit masstech.org/index.