1.1 Motivation
“In the second half of the twentieth century, a new and quintessentially American type of community emerged in the United States: the city of knowledge. These places were engines of scientific production, filled with high-tech industries, homes for scientific workers and their families, with research universities at their heart. They were the birthplaces of great technological innovations that have transformed the way we work and live, homes for entrepreneurship, and, at times, astounding wealth. Cities of knowledge made the metropolitan areas in which they were located more economically successful during the twentieth century, and they promise to continue to do so in the twenty-first.”
Research plays a key role in defining a region’s future economic prosperity. From Silicon Valley to Silicon Alley in New York, the Research Triangle in North Carolina to Kendall Square in Boston/Cambridge, there are countless examples over the past several decades of how research drives innovation, attracts jobs, and fosters economic growth.
Due to the difficulty of gathering comprehensive, long-term data that tracks the larger economic and societal impacts of research, previous studies typically focus on indicators of short-term economic activity, such as the direct level of research and development (R&D) expenditures, the amount of employment generated by those expenditures, and the indirect multiplier effect such expenditures have on a local economy. Some of the most recent and rigorous analyses of the immediate economic impact of research come from the STAR METRICS Initiative, which was led by the National Science Foundation (NSF), National Institutes of Health (NIH), and the Office of Science and Technology Policy (OSTP).1
Just as important, but more difficult to track, is the long-term impact of research on a region’s economic prosperity. Universities attract and train talented students in the latest technologies. As urban studies theorist Richard Florida and others caution, an increasingly mobile creative class makes it more important to attract and retain talented students and future knowledge workers.2 For example, a recent study of (living) Massachusetts Institute of Technology alumni found that those alumni have started more than 25,800 active companies that “employ 3.3 million people and generate annual world revenues of nearly $2 trillion.” Of those 25,800 companies, 6,900 are headquartered in Massachusetts and generate worldwide sales of about $164 million.3 Likewise, a similar study of Stanford University alumni found that those alumni have created 18,000 firms that are headquartered in California, generating annual worldwide sales of about $1.27 trillion. 4
More importantly, research conducted in universities and national labs provide the seed for future breakthrough innovations. As Mariana Mazzucato describes in her book, “The Entrepreneurial State: Debunking Public vs. Private Sector Myths,” many of the key technological breakthroughs that created modern products such as the Internet and mobile telephony. 5
States with strong research ecosystems are able to attract, grow, and retain large, innovative companies and high-wage jobs. Firms seek to co-locate next to universities and other highly innovative firms within the same or complementary industries to benefit from knowledge spillovers. As economist Enrico Moretti notes from an interview with the CEO of ECOtality, an emerging clean-tech company, it is important for companies “to be close to the action 6 The action is where the most innovative research is happening.
Given budget constraints, investing more money in research is not necessarily the most practical option for many states. Moreover, as federal funding for research stagnates and calls for greater accountability on research spending increase, it is important for states and universities to do more with less, to collaborate and pool their research resources with others, and to showcase how they are doing so.
Through analyzing trends in a state’s research performance, this report outlines a process to help policymakers and research decision-makers identify in what areas and along what dimensions their states have research strengths and where they can improve.
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