MTC Index Produces Mixed Results for State's Economy

The challenge for industry, academic leaders and policymakers in Massachusetts over the next few years is to translate the competitive strengths of the state's economy into new companies and new jobs, the ninth annual Index of the Massachusetts Innovation Economy indicates.

While many competitor states and countries have been working through public-private collaborations to develop long-term strategic plans for future investments, Massachusetts has not had a recent collaborative effort, the report notes. Now is the time, it argues for industry and academic leaders to join with policymakers in identifying, planning and investing in the state's competitive assets for the Commonwealth's future economic vitality. Findings of the 2005 index include:

• Life sciences research has expanded rapidly in recent years, leading to a substantial infusion of research funds into academic health centers. However, the state's leadership position in life sciences faces increasing competition from other leading technology states.
• While there has been a steady increase in the number of new business incorporations since 2000, there are still a number of barriers preventing new entrepreneurs from growing a business to a size where they can employ a large number of people.
• After nearly four years of decline, the Massachusetts economy generated a net increase in jobs in early 2004. However, seven of the nine industry clusters lost jobs in 2004, which is the product of both "cyclical and secular forces" that are unlikely to disappear.
• The state's economy continues demonstrated strengths in R&D and new business growth, although competitor states are working strategically to challenge the state's dominance in this area.

The highest growth rate in sales in Massachusetts has been in the Healthcare Technology cluster, which is the cluster that most other leading technology states have identified for strategic planning and investments as well, the report indicates. For example, California, New Jersey and Connecticut have already proposed or committed to substantial investments in life sciences and targeted funds for stem cell research.

Developed by the John Adams Innovation Institute, the index measures economic impact, the innovation process, and innovation potential. The index utilizes an innovation framework, which identifies a cluster's capacity or potential for innovation as an enabler of the innovation process. The framework is evaluated through changes in employment and wages and in business output. The framework also captures outside factors that influence overall success, including resources available, market demand and cluster environment.

The 2005 Index of the Massachusetts Innovation Economy is available from the Massachusetts Technology Collaborative at: http://www.mtpc.org/institute/the_index.htm

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/.