Progress Disappointing Despite Thoughtful Initiatives in Indiana, Report Says

While Indiana has demonstrated strong competitiveness in industry and university R&D and performed well in entrepreneurial programs, the state lags most of its regional competitors and many of the 50 states in terms of production of new innovation workers and educational attainment, says a new report from Techpoint and the Indiana Chamber of Commerce.

The report, Indiana Technology Profile, benchmarks the state's progress against five peer states and all 50 states using 23 metrics in four broad categories, which include education and workforce, dynamism, digital infrastructure, and research and creativity. Results indicate that despite good effort and thoughtful initiatives, Indiana's progress has been disappointing, and there are clear challenges ahead, the report states.

For nine metrics, Indiana improved in rank from 2001 to 2005. However, for the remaining 14, it slipped relative to other U.S. states or did not move at all, according to the report. The lack of educational attainment is particularly disconcerting, the report says, given the strong presence of higher education institutions throughout the state, the report says. In 2005, Indiana ranked 44th in bachelor degree attainment, compared to its peer state Minnesota, which ranked 11th and Illinois, which ranked 13th. In physical S&E degrees, Indiana ranked 36, compared to Michigan, which ranked 9 and Illinois, which ranked 29.

Indiana also has not performed well in its high-tech share of the advanced manufacturing sector, which is a critical pillar of Indiana's high-tech economic development, according to the report. Even though its share of this sector has increased by 5 percent over the past five years, its competitive position among the 50 states has not changed. The national average growth in the high-tech share of manufacturing has been 15 percent, the report states.

In terms of entrepreneurial programs, however, Indiana is positioned in the top half of all states at 18. Its peer states' average rank is 24. In addition, Indiana has obtained a good competitive position with regard to private industry R&D and business activity related to university-led research. The authors stress that the state's competitive advantage lies in high-tech manufacturing, innovative activities at universities, and entrepreneurial programs and R&D activities by industry.

Of particular interest, the authors say, is the performance of states such as Idaho, South Dakota and Utah. The authors found these states providing examples that could guide Indiana leaders and decision makers. The report offers five "break away" strategies along with big move initiatives to be considered by policymakers as the state seeks to improve its competitiveness and overall economic performance.

How the state's revamped economic development efforts perform based on the report's findings remains to be seen. Wrapping up his first year in office, Indiana Gov. Mitch Daniels has made economic development a priority for his administration, specifically setting the objective for higher personal income throughout the state. In early 2005, Gov. Daniels signed into law a comprehensive overhaul of the state's economic development office that replaced the Department of Commerce with the new Indiana Economic Development Corporation (IEDC). Modeled much after the Michigan Economic Development Corporation, IEDC is a public-private partnership governed by a 12-member board and chaired by the governor.

Earlier this year, the General Assembly passed all of the governor's proposals to reinvigorate the state's economy, which include opening the EDGE tax credit to businesses of all sizes, increasing the R&D tax credit and updating the tax code, and assisting local communities to prepare and market properties prior to sale to create more rapid job creation.

Indiana Technology Profile was presented at the Indiana Technology Summit 8, and is available at: http://www2.indystar.com/images/graphics/2005/11/1101_techreport.pdf

Links to this paper and more than 3,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at http://www.tbedresourcecenter.org/.