Massachusetts’ innovation economy has weathered the pandemic and its impacts better than other states, according to a new report from the MassTech Collaborative.
The new Index of the Massachusetts Innovation Economy report found that while there were net job losses in nine of 11 key tech sectors in 2020, Massachusetts was a top state in total R&D investment, venture capital investment and investment in higher education per student. This follows the publication of a report from the Information Technology & Innovation Foundation naming Massachusetts as the top tech and innovation region in North America.
“For what this commonwealth has gone through, along with the country with the disruptions of the pandemic, we weathered it better than most,” said Patrick Larkin, deputy director at MassTech and director of its Innovation Institute.
The numbers behind the report
The state’s higher education system was among its strengths highlighted in the report. MassTech found an increase in higher education investment, with funding per student was up 29.4% since 2015. Massachusetts conferred the highest number of degrees per capita among other leading technology states. Around 48% of the Bay State’s workforce has at least a bachelor’s degree, which is higher than any other state.
Massachusetts innovators are also some of the leading producers of patents. In 2020, the state had 1,275 utility patents per million residents.
Venture capital has also been a standout factor for Massachusetts. Of five leading technology states with more than $1 billion in annual investment in 2015, Massachusetts had the fastest growth in venture capital. Funding increased 88.3% from 2015 to 2020.
As the pandemic led to increased investment in life sciences and health care, Massachusetts companies and organizations were huge beneficiaries. The National Institutes of Health provided $3.3 billion in funding to Massachusetts in 2020, and 11 research institutions in the state received more than $100 million in funding.
Larkin said the state’s diversity of sectors also provided the resiliency it needed during a challenging few years. He said the state learned from the collapse of the minicomputer and mainframe industries in the 1990s, and because of that Massachusetts is better equipped to deal with highs and lows in different industries.
“We went from the Massachusetts miracle to a real devastating economy,” Larkin said. “At that time, in a very natural sense, all the talent that existed in those legacy institutions spread out in a number of sectors.”
Future of the state’s innovation economy
Despite the strength of the state’s innovation economy, Larkin said there are ways it could be improved. He said some of these changes would need to happen outside of the innovation sector, like reducing the cost of housing and expanding broadband infrastructure.
Overall, Larkin said the Baker-Polito administration has done important work building the state’s innovation economy. However, before they leave office, he would like to see their economic development bill pass with a few key items, including matching funds for federal grant opportunities in the technology and innovation industry and funding for a new innovation program to make investments in research and emerging technologies.
Like many, Larkin is watching national and global trends that predict an impending economic downturn. He said Massachusetts will not avoid these trends and there could be significant pains ahead for the state.
“What we can anticipate based on historical data is that the diversity of our economy, the resiliency that we have seen during the pandemic downturn, will indicate that we should be able to survive better than most,” Larkin said.
Sign up for The Beat, BostInno’s free daily innovation newsletter from BostInno reporter Hannah Green. See past examples here.
