IN A MODERN economy, innovation is the key to economic growth, and Massachusetts has enjoyed a great run for more than 50 years. While more than half of US economic growth since World War II has come from technological and related innovation, in Massachusetts that share has been even larger. Over the last 20 years our state has built a dynamic information technology sector and, more recently, a world-famous biotechnology sector. We have a mix of innovation advantages that leave other states and regions envious: great science talent, strong research universities and institutions, experienced entrepreneurs, robust venture capital, and dynamic companies that understand the need to innovate.
Nonetheless, some longer-term trends are worrying, and that is what this political moment is about. How does Massachusetts, through its elected leaders, protect and promote its innovation franchise?
Like the rest of the nation, Massachusetts depends on the federal government to support the research in basic science that has fueled the growth of IT and biotech. Yet federal support for the physical sciences has been stagnant for more than a decade, and support for the life sciences has leveled out.
We also face problems specific to the Commonwealth. Employment has been sluggish at best in some sectors we have relied on: software and communications, computer hardware, financial services, healthcare technology, and manufacturing. And although the states corporate R&D investment rate is twice as high as in 1994, it is growing at only a small fraction of its pace in the 1990s. The number of fast growth companies in Massachusetts is steady but not increasing, and we have lost some major corporate headquarters. Meanwhile, Massachusetts venture capitalists appear, like their counterparts nationwide, to be investing more cautiously, focusing on later stages of development rather than breakthrough opportunities. Biotech and healthcare remain strong. But will we lead the development of the next big sectors?
Of critical importance to the regional economy is the fact that we now compete not just with other states but with the world. Countries like India and China understand the power of the economic innovation model that the United States pioneered and are moving to replicate it. We long thought that the service sector, which accounts for 85 percent of the US economy, was immune to global competition, but the IT revolution has taught us differently. It is now clear that competition will intensify in all sectors.
Massachusetts needs to think anew about its economic future. We need to do a better job of bringing innovations to market, to position ourselves to lead in new sectors, to ensure that more of the follow-on jobs that flow from innovation stay here, and to educate a workforce that can compete for those jobs.
Most of all, we need open dialogue between the public sector, the private sector, the academy, and labor to develop effective strategies to strengthen our existing economic sectors and nurture new ones. Our next governors leadership in these efforts will be central to our success.
Susan Hockfield is president of the Massachusetts Institute of Technology.