The Golden State is living up to its nickname, with California ranking as the most innovative economy in America.
That’s according to Bloomberg’s newest U.S. State Innovation Index based on six equally-weighted metrics: research and development intensity, productivity, clusters of companies in technology, “STEM” jobs, populous with degrees in science and engineering disciplines, and patent activity.
Massachusetts, Washington, Connecticut and Maryland followed California at the top of the innovation scale to round out the top five.
California topped the 2019 Bloomberg gauge with a total score of 94 out of 100. It placed among the top five for all categories except STEM (science, technology, engineering and mathematics) job concentration in part because the state has a large and diverse labor pool.
About 15 percent of the S&P 500 companies are headquartered in the Golden State, including Apple Inc., Alphabet Inc. and Facebook Inc., which can tap into the brain power of places such as Stanford University, California Institute of Technology, University of California-Berkeley and UCLA, in addition to attracting educated global job-seekers with lucrative opportunities and compensation.
Coastal Hubs
Massachusetts was just behind at 93.8 and ranked highest in the metric measuring both the number of high-tech public companies headquartered there as well as the percentage of tech firms receiving venture-capital funding. The state was No. 1 in the 2016 innovation ranking.
“A lot of it is led by the Boston area. It’s not only the large amount of high-quality human capital that is generated out of the area, but it’s that being translated into R&D,” said Joe Lee, a research analyst at Milken Institute.
Massachusetts-based companies in the S&P 500 include General Electric Co., Raytheon Co. and Biogen Inc. The state is also the academic home to Harvard University, Wellesley College and Massachusetts Institute of Technology. The state also performed well in R&D, where nearly six percent of its economic capital was allocated.
Washington, the home base for Microsoft Corp and Amazon.com Inc., was the only other state to score more than 90.