2018 U.S. Innovation Scorecard

Innovation starts with a seed of an idea. It takes an entrepreneur with vision and courage to make that seed blossom into a business that enriches our lives or even provides our livelihood.

Overview

Ideas can only take root in welcoming environments. States where leaders recognize the transformative power of innovation, and allow entrepreneurs to test new technologies and new business models, create more robust economic growth, more high-quality jobs, and more livable cities. These states are fostering new technologies like drones and self-driving vehicles, welcoming new business models like ridesharing and short-term rental platforms, and empowering their citizens with the right skills to work in a range of emerging fields.

The annual CTA Innovation Scorecard grades every state on 12 qualitative and quantitative criteria, and ranks them into four tiers: Innovation Champions, Innovation Leaders, Innovation Adopters and Modest Innovators.

2018 Champions

Scheduled events
Arizona
Maryland
Pennsylvania

Arizona
Maryland
Pennsylvania
Colorado
Massachusetts
Utah
Delaware
Michigan
Virginia

2018 Champions

Arizona
Maryland
Pennsylvania
Colorado
Massachusetts
Utah
Delaware
Michigan
Virginia
Kansas
New Hampshire
Washington

Methodology

CTA’s Innovation Scorecard is formulated using 12 complementary factors that, in combination, indicate how strongly a state supports innovation. Some of these factors relate to individuals in a state, while others address corporations doing business or employing people there, and others concern the legislative and regulatory environments. All third-party sources and state policy inputs reflect the newest information available as of December 31, 2017.

Categories

Best & Brightest

Grades in the Best & Brightest category reflect state Right-to-Work (RTW) and LGBTQ non-discrimination laws. The RTW component, using data sourced from MultiState Associates, a state and local government relations firm, is bimodal and assigns an ‘A+’ grade to states that allow workers to decide whether to join and pay dues to an established labor union, and an ‘F’ grade to those states that do allow such union security agreements that require workers to participate in unions. CTA staff assign grades for LGBTQ non-discrimination laws using data from the Movement Advancement Project. The combined normalized scores are assigned letter grades from ‘A+’ to ‘F’.

Fast Internet

The Fast Internet category grades states based on two components: the percentage of households with internet speeds of at least 10 megabits per second (mbps), and the percentage with internet speeds of at least 25 mbps. This category features data from the Federal Communication Commission’s Internet Access Service Report as of December 2016. States in this category are graded on a curve and assigned letter grades from ‘A+’ to ‘F’.

Attracts Investment

The Attracts Investment category is a two-part measure encompassing both the level of venture capital investment in a state and government and corporate R&D. Each component of the state score is normalized to a scale from zero to one. Normalized category scores are then added together such that each score component comprises 50 percent of the Attracts Investment score. Venture capital investment data for this category was provided by the PwC/CB Insights MoneyTree™ Report for the periods Q1 2017 through Q4 2017. R&D investment data for this category was provided by the National Science Foundation’s Business Research and Development and Innovation: 2015 (Table 4). The combined normalized scores are graded on a curve and assigned letter grades from ‘A+’ to ‘F’.

Tech Workforce

The Tech Workforce category measures the per capita number of technology-related jobs in a state. CTA staff select a subset of American Community Survey occupational codes (ACS OCC) that represent technology-related occupations and calculate aggregate employment per state for all of these categories combined. Numerical data for this category is supplied by the U.S. Bureau of Labor Statistics as of May 2016. States in this category are graded on a curve and assigned letter grades from ‘A+’ to ‘F’.

Tax Friendly

The Tax Friendly category uses data from the Tax Foundation’s 2018 State Business Tax Climate Index to reward simple, lean tax structures that offer attractive rates to new businesses, encouraging investment and job creation. A state’s Tax Friendly grade is derived from numerical scoring data including corporate and individual income tax, sales tax, unemployment insurance tax, and property tax rates. States in this category are graded on a curve and assigned letter grades from ‘A+’ to ‘F’.

Grants Advanced Degrees

The Grants Advanced Degrees category measures the percentage of a state’s population age 25 years and older with a graduate or professional degree. Data for this category is provided by the United States Census Bureau’s American Community Survey (2016).

Entrepreneurial Activity

The Entrepreneurial Activity category uses Quarterly Workforce Indicators data provided by the U.S. Census Bureau. Grades in this category reflect a normalized score based on the number of net new jobs per capita created by firms with fewer than 50 employees from the Q2 2011 through Q4 2016. States in this category are graded on a curve and assigned letter grades from ‘A+’ to ‘F’.

Ridesharing

CTA staff assign grades in the Ridesharing category based on state and municipal laws and regulations affecting Ridesharing services. States earned a grade based on whether regulations allow rideshare services to operate unencumbered, place local restrictions on the services, or prohibit them altogether. The normalized scores are assigned letter grades from ‘A+’ to ‘F’.

Short-Term Rentals

CTA staff assign grades in the Short-Term Rentals category based on laws and regulations affecting short-term rental services. States earned a grade based on whether regulations allow short-term rentals to operate unencumbered, place local restrictions on the services, or prohibit them altogether. The normalized scores are assigned letter grades from ‘A+’ to ‘F’

Innovation-Friendly Sustainable Policies

CTA staff assign grades in the Innovation-Friendly Sustainable Policies category on the basis of the unique legislative, regulatory and marketplace realities in each state. For example, an electronics recycling law can inhibit, support, or be neutral with respect to innovation in protecting the environment, depending on the specifics of the law and how it is implemented.

Self-Driving Vehicles

CTA staff assign grades in the Self-Driving Vehicles category on the basis of state laws and regulations that affect consumer use of self-driving vehicles. Not every state has enacted policies relating to SDVs, but states were assigned a grade based on the ease of developing this emerging technology. The combined normalized scores are assigned letter grades from ‘A+’ to ‘F’.

Drones

CTA staff assign grades in the Drones category on the basis of state laws and regulations that affect consumer use of drone technology. Not every state has enacted policies relating to drones, but states were assigned a grade based on the ease of developing and deploying this emerging technology. The combined normalized scores are assigned letter grades from ‘A+’ to ‘F’.

Overall Grade

The overall Innovation Scorecard grade captures a state’s overall support for innovation based on the criteria above. Each criterion receives equal weight in the final scoring formula. Final composite scores are then graded on a curve to determine which of the four tiers a state will be ranked in — Modest Innovator, Innovation Adopter, Innovation Leader or Innovation Champion.

Explore the 2018 Results