NJBIA Releases Indicators of Innovation Report
Indicators of Innovation, a report issued today by the New Jersey Business & Industry Association, shows New Jersey at a challenging crossroads in its efforts to reclaim itself as the “Innovation State.”
The study uses data to analyze 12 indicators of innovation under three major categories imperative for creating a successful innovation ecosystem – capital, talent and business. Compared with six other regional states, however, New Jersey is struggling to compete, the report finds.
While Gov. Phil Murphy has put forth an Economic Development Strategic Plan reliant on boosting the innovation economy in New Jersey, the report messages that growing an innovation ecosystem in the Garden State will continue to be challenging under current conditions.
“New Jersey’s path to regaining its stature as the Innovation State cannot be forged without fixing what is structurally broken to address affordability in our great state,” said NJBIA President and CEO Michele Siekerka.
“As Governor Murphy noted when he delivered his laudable plan, New Jersey has great advantages with its proximity between New York City and Philadelphia and its highly educated workforce. Our study finds New Jersey also fares well in the rate of entrepreneurs in the region. But overall, our tax structure, business climate and lack of affordability all strike hard at our competitiveness. To improve these indicators and advance the innovation economy in the right direction, we need to fix what is structurally broken in New Jersey.”
Among the findings in the Indicators of Innovation report, authored by NJBIA Policy Analyst Nicole Sandelier:
- New Jersey’s venture capital investment in 2017 was $781 million, compared to the $8.97 billion received by Massachusetts and $12.27 billion received by New York.
- New Jersey increased its venture capital investment at a lower rate than all seven states in the region between 2004 and 2017.
- New Jersey companies received less than $52 million in award obligation for federal R&D funding efforts in 2017, compared to nearly $271 million awarded to Massachusetts. The state also received less award funding than Maryland ($124 million), New York ($114 million) and Pennsylvania ($98 million).
- In 2018, New Jersey received $157 million in National Science Foundation College/University funding – significantly less than regional competitors New York ($466 million), Massachusetts ($415 million) and Pennsylvania ($253 million).
- New Jersey is home to three “Top 100” colleges/universities ranked in 2018 by U.S. News & World Report, compared to 10 each in Massachusetts and New York; and six in Pennsylvania.
- New Jersey lost a net total of more than 28,000 first-time college students in the fall of 2016, the largest loss in the nation. By regional comparison, Pennsylvania had a net gain of nearly 17,000 students that year.
- In 2017, New Jersey was fifth out of seven states with 15.6 percent of its population possessing a graduate or professional degree. In comparison, Massachusetts’ graduate and professional degree holders represented 19.5 percent of its population.
- New Jersey does fare well in the Rate of Entrepreneurs regionally, with 340 adults starting a business for every 100,000 people in the state in 2017. That’s second in the region behind New York, which totaled 360 business starters per 100,000 adults.
- New Jersey’s startup density was 76.1 per 1,000 employer firms in 2017, good for third in the region behind New York (83.3 per 1,000 firms) and Delaware (77 per 1,000 firms).
- In 2017, New Jersey ranked fourth in the region with more than 8,600 patents issued. Massachusetts (more than 15,000 patents issued) and New York (nearly 14,700 patents issued) held a decided advantage.
- From 2015 to 2016, New Jersey experienced a 0.44 percent increase in total businesses – which is sixth in the region. Delaware enjoyed a 2.03 percent increase in total businesses during that span.
- New Jersey finished last out of seven regional states in NJBIA’s 2018 Regional Business Climate analysis, which scores metrics such as each state’s minimum wage, top income tax rate, top corporate tax rate, sales tax rate, property tax paid percentage and unemployment tax rate.
Each indicator was scored from 1 (least competitive in the region) to 7 (most competitive), with a potential high score of 84. New Jersey ranked fifth out of the seven states with a cumulative innovation score of 41.
New York ranked first in the region with a score of 71, followed by Massachusetts (63), Pennsylvania (49), Maryland (46), New Jersey (41), Delaware (34) and Connecticut (33).
In addition to the 12 indicators analyzed in the report, NJBIA also observes additional factors in a New Jersey-Massachusetts comparison that can help jumpstart and sustain an innovation ecosystem.
Further, using a case study detailing how Audible Inc.’s role as a committed partner in the revitalization of Newark can fuel “community visioning” and the leveraging of community assets, the report notes best practices for business engagement. These lessons were demonstrated in the April, 2018 NJBIA event “A Tale of Tech Cities – Innovation & Urban Revitalization,” which was conducted in partnership with Audible.
“With this ‘state of the case,’ we can now clearly understand where to focus our energy to move the innovation needle. While there is a lot of work ahead of us, the task is not insurmountable if the action plan encompasses a coordinated response from academia, business and government, as well as a willingness by state leaders to make difficult short-term budget decisions,” Siekerka said.
“It’s not enough to create new jobs in the innovation sector. We must ensure a pipeline of talent to fill new jobs and an environment to encourage innovative entrepreneurship. This requires a business climate that is more competitive for startups and large corporations. This can be done through tax and regulatory reform, as well as a state budget that is no longer constrained by staggering pension and healthcare costs, but rather with the flexibility to make investments in higher education and infrastructure that are so crucial to a thriving innovation economy.”
For more information, go to njbia.org/indicators.