By Chris Caraveo
The future is now.
With the U.S. projected to spend $581 billion on research and development in 2019 and New York City recently no longer under consideration for Amazon’s second headquarters, personal-finance website WalletHub released its report on 2019’s Most & Least Innovative States.
Arizona misses out on the Top 10, coming in at No. 16.
However, it fared well in metrics including net migration, accelerated startups, entrepreneurial activity and industry cluster strength.
Leading the nation is Massachusetts, Washington state, Washington D.C., Maryland, and Colorado. Arizona’s neighbor, California, is No. 6.
In order to give credit to the states that have contributed the most to America’s innovative success, WalletHub compared the 50 states and the District of Columbia in Human Capital and Innovation Environment, combining 24 key metrics.
The share of STEM professionals held the highest weight in the report. In fact, the metrics in the Human Capital side have heavier weights than in Innovation Environment. Partly because it has fewer metrics, but also for another critical reason.
“Clearly, there is no innovation without human capital,” WalletHub Analyst Jill Gonzalez told the Daily News-Sun. “This is why there is indeed a need for states to provide the necessary environment through education, so as to increase the potential for innovation and technology advancement.”
However, while Arizona is tenth in the Innovation Environment side, it is 21st in Human Capital. Of the six metrics under Human Capital, Arizona has a 6.7 percent share of STEM professionals, putting it at No. 15. That metric has the heaviest weight among the six, keeping Arizona somewhat relevant nationwide in producing and maintaining talent.
Ms. Gonzalez said considering youth education in the report speaks to a state’s future potential in innovation and technology.
“Arizona ranked poorly in terms of eighth grade math and science performance, AP exam participation and scientific knowledge output,” Ms. Gonzalez stated. “This speaks to an apparent lack of interest in science.
“The state could invest more in education and special programs to draw children to math and science matters, which would eventually improve its overall human capital availability for STEM jobs.”
WalletHub asked multiple college professors how state policymakers can encourage and facilitate innovation.
Barry Goldman, associate professor at the University of Arizona, said policymakers too often have a short-term perspective to supporting policies that will help their own re-election.
“To encourage them to implement innovative policies, proponents need to consciously put themselves in the policymakers perspective,” Mr. Goldman stated. “Too often, proponents assume they have ‘The Truth,’ and people who oppose the position are just ‘wrong.’ Better to listen to the policymakers and patiently address their concerns.”
However, he also said policymakers would do well in providing some sort of subsidy for people who lose their jobs or are displaced by innovation, such as when they are in retraining programs.
Jason Stephens, associate professor and Columbia College Chicago, said policymakers should incorporate entrepreneurship and intrapreneurship concepts and skills into school curriculums.
In addition, he said tax policies should incentivize entrepreneurial activity.
In Arizona, Attorney General Mark Brnovich and his office paved the way for start ups to experiment with financial technology. The FinTech Sandbox was implemented in 2018, which eased regulatory burdens for entrepreneurs.
“As a state, we also want to attract more venture capitalists to help grow our economy,” AG spokeswoman Katie Conner told the Daily News-Sun in 2018.
When Arizona’s sandbox became the first in the U.S., around 75 percent of all venture capital investment in the U.S. had been going to California, New York, and Massachusetts.
Now, Arizona officials are hopeful the state will receive a greater share of that market.
“This type of investment grows our economy organically by creating high-quality jobs and infrastructure,” Ms. Conner stated.
“Technology is the future; Arizona has embraced this reality and is rapidly becoming a hub for innovation.”
Sandra Watson, president and CEO of the Arizona Commerce Authority, has touted the state for establishing a position as a global front-runner in emerging technologies, to include autonomous vehicles, 5G, and the sharing economy, as well as recognition as a model for regulatory reform.
D.C. has the highest share of STEM professionals, 9.8 percent, three times higher than in Mississippi, the lowest at 3.3 percent.
D.C. also has the highest share of technology companies, 8.4 percent, 3.2 times higher than in South Dakota, the lowest at 2.6 percent.
New Mexico has the highest research and development intensity, 6.52 percent, 16.3 times higher than in Nevada, the lowest at 0.4 percent.
Florida has the highest share of public high-school students taking Advanced Placement (AP) exams, 51.91 percent, 3.9 times higher than in North Dakota, the lowest at 13.22 percent.
Visit www.wallethub.com/edu/most-innovative-states/31890/ for the full report.