So you’d think doing cutting-edge research gets you an edge in innovation and economic development? Places that do more R&D should be big economic winners, no?
Given Silicon Valley’s prominence, you would think California dominates. And in one sense it does: California conducts roughly $60 billion in R&D, far outdistancing its nearest competitors – Michigan, Massachusetts, New Jersey, Texas, and Illinois, which conduct between $10-15 billion in R&D, according to the National Science Foundation (via OREDI).
But California lags in terms of R&D intensity – that is R&D spending divided by economic output. Massachusetts has the highest level of R&D intensity, followed by Michigan, Connecticut, and Washington. California ranks fifth. Think about it: Michigan has a higher level of research and development intensity than California.
Could it be that R&D is a better investment in some places then others? Sure economists note local spillovers to R&D, but its results can also travel pretty widely. Research done in Michigan for example can be commercialized in New York.
Your thoughts?
September 10th, 2008 at 11:34 am
In short, I agree, R&D spending is a better investment in some places than others. I would borrow the concept of CMM’s capability maturity model and apply it here. For example, California has 11 top tier universities (research centers). Texas has only three. Until you improve the lower level processes (i.e. build more research university capacity) then additional R&D funding will be ‘wasted’ or underutilized.
September 10th, 2008 at 11:35 am
I’m not sure about measuring R&D intensity as R&D spending divided by economic output. Seems like this would make big, economically diversified states/cities appear to have less intense R&D. In reality, R&D that takes place in big, diversified places might be more innovative or of higher quality than that which takes place in insulated R&D-exclusive places.
As an alternative, what about measuring R&D intensity as the residual of R&D spending regressed on economic output? That is, the degree to which R&D spending exceeds (or falls short of) what would be expected for a place of a given total economic productivity.
September 12th, 2008 at 5:04 pm
I think Zachary has a point about California’s being too big for a model. It’s got 10% of the country’s population and half of the West Coast’s territory — the equivalent of New Jersey to Georgia. As Richard has said elsewhere, states are poor measuring tools.
What if we looked at the mega-regions where the R&D is clustered and measured their economic output? Echoing Charles, I’d guess that besides Davis, the top tier universities are all within 50+ miles of either San Francisco or LA. This would also be a combined geographic region about the size of Mass.
September 14th, 2008 at 10:54 pm
I looked up US News list of top univerisities, and they list 15 first tier in California (I don’t know if that’s the same list as Charles used, the last few didn’t look like research powerhouses.) And I’d have to expand to 100+ miles to take in UC San Diego, Santa Barbara and Santa Cruz — on the other hand, that also reaches Davis.
Interesting difference, California is many UC schools, most of Mass schools are private. Of course, Silicon Valley is tied to Stanford like Route 128 to MIT, so maybe the spinoffs are private — but that doesn’t fit Austin or Boulder.