Around the turn of the century, a sizable number of states began asking a practical question: How well were they positioned to compete in an economy increasingly shaped by science and technology? Innovation indices offered a way to answer this question. Massachusetts issued its first Innovation Economy Index in 1997. North Carolina followed with Tracking Innovation in 2000, and Alaska, Maine, Maryland, Mississippi, New Hampshire, Washington and nearly a dozen other states produced similar assessments during the next several years.
Most of the early indices were built around a similar set of measures. They counted research and development expenditures, patents, venture capital investments, technology companies, university degrees, scientists and engineers, and high-technology employment. Some also tracked productivity, exports, wages, and income. Together, the measures were intended to show whether a state possessed the research base, talent, capital, and businesses needed to compete in a knowledge-based economy. And, most often, the states benchmarked their performance on those indicators against a number of neighboring and/or similar states.
At the time, this approach fit the way states thought about technology-based economic development. Their strategies often focused on building research capacity, helping universities move discoveries into the marketplace, attracting high-technology companies, and expanding access to venture capital. Innovation was typically described as a sequence: research led to invention, commercialization, company formation, and ultimately economic growth. The indices showed where a state stood along that path.
Twenty-five years later, most of those original measures remain relevant and in use. R&D, patents, venture capital, technical talent, and high-technology employment still reveal important differences among states. What has changed is the context in which they are interpreted. Innovation is now understood less as a simple progression and more as the product of relationships among researchers, entrepreneurs, investors, established companies, educational institutions, governments, and intermediary organizations.
Recent indices reflect this broader view. They still track resources such as research funding and talent, but they place greater emphasis on the connections between innovation inputs and outcomes, including whether research is being commercialized and new technologies are being adopted. They also examine the conditions that help entrepreneurs and established companies put new knowledge to use. Rather than relying on a single-year ranking, many follow performance over time. Broadband access, business formation, talent migration, and university-industry collaboration now appear alongside the more familiar measures. Some reports also consider diversity, cost of living, manufacturing strength, and differences among regions within a state.
The geographic scale has also changed. Early indices usually treated the state as a single economy. Current innovation measurement tools increasingly look below the state or national level, using county, metropolitan, regional, and innovation-cluster data to show where innovation activity is concentrated and how performance varies within a larger economy. That shift recognizes that innovation assets are rarely distributed evenly within a state. A strong statewide ranking can coexist with large areas that have little access to research institutions, risk capital, technical workers, or entrepreneurial support.
Oregon, Illinois, and North Carolina show how differently today’s innovation indices can approach the same basic task.
Business Oregon released its seventh Innovation Index in 2024, continuing a series that began in 2004. The report uses 18 measures grouped under commercialization, business environment, and skills and talent. In addition to R&D, patents, venture capital, and high-technology employment, it examines entrepreneurship, business growth, manufacturing output, educational attainment, SBIR/STTR awards, and university invention disclosures. Oregon ranked seventh overall and placed in roughly the top third of states on 14 of the 18 measures. Looking only at that result would suggest a strong position. However, the trend data told a more complicated story. Oregon ranked in the bottom third on eight of the 17 measures for which five-year changes could be calculated. Business Oregon described the state as performing well across many dimensions without leading on most of them.
That comparison between current performance and direction of change represents an important advance over earlier state report cards. A state can rank highly because of research institutions, industries, and investments built over decades while losing ground to faster-moving competitors. Another state may remain in the middle of the rankings while making substantial progress. Tracking both position and movement produces a more useful picture than either measure alone.
Illinois has taken a different approach. The Illinois Science and Technology Coalition maintains an Innovation Index as an ongoing collection of reports on R&D, STEM talent, and university-supported entrepreneurship rather than combining all measures into a single comprehensive ranking. Its 2024 R&D Index found that Illinois ranked 10th nationally, with $21.6 billion in total R&D activity. However, its five-year R&D growth rate ranked 41st among the states and the District of Columbia, while R&D intensity remained below the national average.
The Illinois model points to another change in innovation measurement. Instead of trying to summarize an entire innovation economy in one number, it examines particular components in greater depth. This approach makes it easier to identify the source of a problem. While Illinois has major research institutions or R&D activity, its challenge is that research activity is not growing as quickly as it is nationally and remains relatively modest compared with the size of the state economy.
North Carolina’s 2026 Tracking Innovation report represents a more comprehensive model. The tenth report in a series that began in 2000 includes 41 measures covering economic well-being, R&D, commercialization, innovative organizations, education and workforce, and environment and infrastructure. It compares the state with national averages and other states, follows most measures back to approximately 2000, and includes county-level information where data are available.
North Carolina ranks ninth using the report’s score-based methodology and performs at or above the national average on 21 measures. More important than the ranking, however, is what the individual measures reveal. The state combines strong academic research and university commercialization with below-average business R&D, patents, venture capital, wages, and income. County-level results show that research, capital, patents, and technology employment remain heavily concentrated in a small number of counties, even as more counties begin to show strengths on individual measures.
Taken together, the three reports show that there is no longer a single model for a state innovation index. Some are expanding to include more of the economic and institutional environment surrounding innovation. Others are concentrating on particular elements within the system rather than forcing every measure into a single score.
Even with broader measures and better data, important gaps remain. Patent counts show how much inventive activity is taking place, but not necessarily whether those inventions have commercial value. Venture capital captures only one source of business financing. A single product can dominate licensing income. Startup counts reveal little about whether companies survive, grow, remain in the state, or create good jobs. R&D spending shows the resources devoted to discovery but not necessarily whether discoveries reach existing companies or solve regional problems.
Innovation indices still matter, but not because they can tell us whether a state ranks seventh, ninth, or 10th. Small shifts in rank may reflect revised data, methodological choices, or changes elsewhere. The more useful questions are harder and more consequential: Is the state improving? Which parts of its innovation system are driving that progress? Where is activity concentrated? Are its research and entrepreneurial assets producing stronger companies, better jobs, and higher living standards? And, for TBED practitoners and policymakers, what might we do in the future to improve these metrics?