The pressure on the 50 states to attract jobs, money and a talented workforce has been building for decades. It’s now singularly intense. Huge new overseas competitors like China and India are competing for the same pools of cash and people as California, Indiana and the rest. Moreover, some international players like Singapore, Finland and Ireland are demonstrating remarkable prowess at strategically planning for economic growth. Meanwhile, the speed with which innovation spreads makes no competitive lead secure.
As a result, today states must accelerate their efforts or risk becoming economic backwaters. Specifically, they must become places where new ideas are discovered, invented or given their first big break.
The good news is that new ideas are virtually limitless. Ideas don’t need to be attracted from other places; each state can discover its own. For a growing number of states, this quest has taken the form of investing state dollars in research and development (R&D). R&D is the key to an innovation treasure chest that contains new ideas, new products, new technologies and new ways of doing business. In advanced economies, it is the tried and true route to prosperity.
When it comes to funding R&D, states are the newest players in the game, and the smallest. But while the actual money available from states is dwarfed by that offered by industry and the federal government, states have the capacity to influence the future in a dramatic fashion. Industry tends to fund narrowly, and federal investments have plummeted as a share of total R&D. Of particular significance to governors, their staffs and other stakeholders: states' direct involvement in R&D can spur innovations that serve specific economic and social needs within their own borders.
How is this accomplished? Many of the answers have been uncovered through 50-state research conducted over the last six months by the Pew Center on the States, an initiative of The Pew Charitable Trusts, and the National Governors Association. This report is the product of that work.