Maine Innovation Index 2002
Measuring Maine's Performance in the New Economy

Summary

The Maine Science and Technology Foundation (MSTF) is pleased to present The Maine Innovation Index 2002, a statewide report on Maine's performance in the new economy.

The Maine legislature first asked MSTF to publish an index of science and technology measures five years ago. Entitled 1998 Maine Science & Technology Report Card, it was one of the first efforts by any state to document trends in science and technology indicators.

The Maine Innovation Index 2002 updates and expands the original report card. It offers 71 primary and secondary indicators that measure aspects of Maine's innovation economy. By tracking this data over time, the Index presents a historical view of Maine's evolving capacity to compete in the new economy.

The elements of a vibrant innovation economy are identified in this report.

An innovation-driven economy begins with a highly educated, scientifically and technologically savvy workforce. It requires a well-equipped research infrastructure with scientists capable of performing nationally competitive research. It must encourage entrepreneurial risk-taking, and it depends on early stage financing, an advanced telecommunications network and the development of robust technology clusters.

Key Findings

In the past several years the state of Maine has put in place a portfolio of programs comparable to those in other innovation-oriented states. These programs have begun to strengthen Maine's capacity for technology-driven economic growth. While the state's progress in many areas has been matched or exceeded by other states, Maine nonetheless has come a long way

The Innovation Index measures a broad range of indicators required for successful innovation-driven economic growth. Of the 30 major indicators tracked in the report, 13 showed improvement in the past five years, while five showed no change and three decreased. For nine indicators, five-year data is not yet available.

I. R&D Funding

• Maine's total R&D spending continues to expand, but falls well below the national average.
• Federal funding for R&D in Maine has increased as a proportion of gross state product (GSP) since 1995. The state still lags behind the national average, but has made significant progress in closing the gap.
• The mix of R&D funding differs in Maine from the U.S. as a whole. Industry accounts for a smaller share in Maine, while Maine's not-for-profit research laboratories account for a much larger-than-average share of total R&D funding.
• State R&D funding achieved a historic high in 2001 of $41 million.
• R&D spending by Maine universities and colleges represents increased to 0.13 percent of the GSP in 1999, but still totaled less than half the national average.

II. Education

• The proportion of Maine adults 25 years and older with a four-year college degree rose from 18.8 percent in 1990 to 22.8 percent in 2000, an increase of 21 percent. This increase was not enough to prevent Maine from falling further behind the national average.
• Maine continues to outperform the nation in its high school graduation rate. In 2000, 84.8 percent of Maine adults over age 25 had completed high school, compared to 81.6 percent nationally.
• Maine's colleges and universities are producing science and engineering graduates at a higher rate than the U.S. As a whole.
• While there is room for improvement, Maine students perform well in both math and science compared to the rest of the nation.
• Gender disparities continue to exist, both in Maine and nationally, with male high school students testing higher than females in mathematics and science.

III. Connectivity

• Business use of the Internet has dramatically increased. A 2001 survey of Maine businesses found that 86 percent reported using the Internet. Approximately 43 percent used broadband services, while 57 percent were connected via a dial-up phone line.
• The number of Internet-connected computers in Maine has grown more than 20-fold since 1994, but on a per capita basis the national average remains nearly 40 percent higher than Maine's.
• Household access to the Internet in Maine is nearly identical to the national average. In 2000, 43 percent of Maine households had an Internet connection, compared to 42 percent nationally.
• Computer ownership in Maine is slightly higher than the national average of 51 percent, with 55 percent of Maine households reporting access to a home computer.
• Maine students have greater classroom access to the Internet. There were 6.2 students per Internet-connected classroom computer in Maine in 2000, compared to 7.9 percent nationally. Both the Maine and national figures represent more than a 40 percent improvement over the previous year.

IV. Innovation

• In 2000 the number of federal SBIR/STTR awards dropped from a seven-year high in 1999, but remained higher than the levels achieved in 1996-1998.
• In 1999 Maine received its first two Small Business Technology Transfer (STTR) awards.
• Maine's funding level from the SBIR/STRR programs remains well below the national average. According to an October 2001 U.S. Commerce Department report, Maine ranked 24th in the nation in SBIR funding and 32nd in the nation in STTR funding.
• Venture capital investments in Maine totaled $110 million in 2000, an increase of 479 percent from 1999.
• Maine's share of venture capital remains well below the national average.
• The number of patents issued to Maine residents is only one-third the national average.
• Maine's technology-intensive companies have a larger share of sales from new products than other Maine firms.
• Maine continues to score poorly on a national ranking of states' innovation assets, receiving an "F" in both 2000 and 2001.

V. Employment

• Employment in Maine's technology-intensive industries grew 5.1 percent from 1998 to 1999.
• The average wage per worker in Maine's technology-intensive industries in 1999 was $40,500, or $14,000 higher than the average nontechnology Maine wage.
• Wage growth in Maine's technology-intensive industries increased 2.37 percent from 1998 to 1999, a slower rate than high-tech wages nationally. It was also a slower that the growth rate in Maine's non-technology-intensive industries, where the average wage increased 3.95 percent.
• Finding and recruiting skilled workers remains a challenge for Maine employers. A 2001 survey of technology-intensive companies found that 66 percent reported difficulty hiring skilled employees in the past 12 months, the same percentage that reported difficulty in 2000.
• Maine has experienced an increase in doctoral scientists and engineers in the workforce, but still lags behind the national average.

MSTF would like to thank all those who contributed their ideas and expertise to this edition of the Innovation Index. With each publication the report continues to improve. We believe its refinement provides a better understanding of the state's high-tech economy and offers insights into what is needed to support Maine's sustained economic growth.