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  • Writer's pictureClif Harald

How Competitive is Your Innovation Ecosystem?

For all the talk about innovation these days, it can still be a pretty nebulous concept – particularly when it comes to measuring it. But one metric often seen as a driver of innovation – investment in research & development - got a refresh in a new report by the National Science Foundation (NSF).

The NSF conducts a survey of businesses annually to quantify business spending on R&D. The big takeaway from the latest survey is that most (60%) of the $262 billion of R&D conducted by U.S. businesses occurred in just 10 metropolitan statistical areas. Diving deeper, the survey findings show how MSAs across the U.S. compare in R&D investment and innovation.

It isn’t surprising that Silicon Valley (the San Jose-Sunnyvale-Santa Clara MSA) has by far the highest level of R&D investment by businesses in the nation, accounting for 15% ($67.4 billion) of the U.S. total. More interestingly, the region has a ratio of R&D investment to total GDP of 0.204, almost 10 times that of the R&D/GDP ratio for the U.S overall (0.022).

What may be surprising to some, however, is which other regions are in the top 5, as measured by the ratio of R&D investment to GDP. Second behind Silicon Valley is the Durham-Chapel Hill NC region, home to North Carolina’s Research Triangle. Their ratio of business R&D investment to regional GDP is 0.081.

The Seattle and San Francisco regions rank 3rd and 4th, with R&D/GDP ratios of 0.075 and 0.074, respectively. Rounding out the top 5 regions for business R&D is the Boulder MSA with an R&D to GDP ratio of 0.055, tied with the Boston region. The other regions in the top 10 are Austin, Portland, Raleigh, Madison, and Ann Arbor.

It’s worth noting that innovation in these regions also derives from additional public sector R&D investment. Research universities such as Stanford, the University of North Carolina, and the University of Washington invest billions of dollars annually in R&D. Plus, federally funded laboratories concentrated in regions such as the Research Triangle, and the Boulder and Seattle MSAs conduct billions of dollars in R&D annually.

If you want to know how the innovation ecosystem in your region compares to others, you can access the NSF report here.

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