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 percent 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 percent since 2015);
- Scientific, Technical, & Management Services (+25.4 percent since 2015); and
- Software & Communications Services (+16.8 percent since 2015).
Secretary Mike Kennealy, the chair of the MassTech Collaborative board of directors, provided the introduction to the newest Index, highlighting in the welcome letter the utility of the Index and its importance in evaluating the economy.
“For 25 years, the Index has provided an important benchmark for the performance and growth of the Commonwealth’s Innovation Economy, which accounts for nearly 40% of jobs in our state,” Secretary Kennealy wrote. “While the Commonwealth’s economy is poised to return to its pre-pandemic strength, more work remains to address a shortage of skilled talent, a gap in equity and diversity, and a high cost of living, especially housing. The Baker- Polito Administration continues to put resources and thought leadership toward addressing these challenges, and leveraging Massachusetts’ core strengths to usher in a more equitable recovery and future.”
The Index of the Massachusetts Innovation Economy has been published by the Massachusetts Technology Collaborative annually since 1997. The newly released report card from the Commonwealth’s tech and innovation economic development agency compares Massachusetts to a group of ‘Leading Technology States’ or LTS, providing a benchmark for the Massachusetts innovation economy.
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 percent 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 percent 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 percent.
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.
Massachusetts Leads in Healthcare Research:
- $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 percent);
- Advanced Materials (-7.4 percent); and
- Computer & Communications Hardware (-16.9 percent).
Launched in 1997, the 24th edition of the Index continues the tradition of comparing Massachusetts’ performance to 9 other Leading Technology States (LTS), which were selected based on their significant levels of economic concentration and impact within the innovation economy. The online version of the Index includes interactive charts and graphs which allow users to more easily dig into the compiled data, which is sourced from a variety of government, non-profit, and private sector research studies that are collected throughout the year.
The Index comes out on the heels of the Information Technology & Innovation Foundation (ITIF) ranking Massachusetts first in the organization’s new report on “North American Subnational Innovation Competitiveness.” That study, which compared 92 states and provinces on 13 measures, including the “extent to which each state’s economy is knowledge-based, globalized, and innovation ready,” highlighting the Commonwealth’s continued global leadership in tech and innovation.
To download a copy of the Index of the Massachusetts Innovation Economy, or to access interactive copies of the graphs & charts from the report, please visit masstech.org/index.
About the Innovation Institute at the Massachusetts Technology Collaborative
The MassTech Collaborative is a quasi-public economic development agency that strengthens the competitiveness of the tech and innovation economy by driving strategic investments, partnerships, and insights that harness the talent of Massachusetts. The Innovation Institute is the division of MassTech that advances its core mission of innovation and cluster growth across the Commonwealth. Created in 2003, the Innovation Institute intervenes in the economy in the following four ways:
- Conducts research and analysis that improves the state’s understandings of unmet needs and opportunities in the innovation economy;
- Serves as convener and key strategic broker on the landscape;
- Manages high-value projects on behalf of the Commonwealth; and
- Makes strategic investments in support of innovation-based economic development.
For more information, visit https://innovation.masstech.org/.
Brian Noyes, MassTech