Report cites gap between innovation, job creation

A gap is emerging in Massachusetts between innovation and job creation, as the state's high-tech workforce continues to shrink despite the growth of a robust technology infrastructure, according to a report being released today by the Massachusetts Technology Collaborative.

Its eighth annual Index of the Massachusetts Innovation Economy says the state's infrastructure of entrepreneurs, research and development labs, inventors, and venture capital firms may be stronger than ever. But the state has lagged in converting innovation into jobs.

One factor may be difficulty in capitalizing on the globalization trend, the report suggests. "Unfortunately," it says, "in today's global economy, innovations are pieces of intellectual property that are traded in an international market much like any other set of goods."

Federally funded research grew to $4.6 billion in 2002, the most recent year for which figures were available, up 10 percent from 1999. Patent awards to Massachusetts inventors, meanwhile, climbed 8.3 percent in 2003, compared to an 1.1 percent increase for the nation as a whole. And the Massachusetts share of venture capital investments reached 14 percent in the first half of this year, one of the highest percentages in the nation, up from 11 percent in 2003.

But the report also documents disturbing trends: Massachusetts has lost more than 94,000 jobs since 2000 in technology sectors such as computer hardware, software, and communications. Fewer than a quarter of state workers are employed in what the collaborative calls the "innovation economy," and the decline of jobs in high-tech sectors contributed to a 3.2 percent drop in median household income in Massachusetts last year.

Governor Mitt Romney called on businesses to take advantage of innovations to create jobs and said state government needs to create a more entrepreneurial climate. "We need to continue to work aggressively to develop new incentives, lower costs, and remove barriers for businesses across all industry sectors," he said.

Christopher R. Anderson, president of the Massachusetts High Technology Council, said higher education must play a more important role in keeping the state competitive. "The state's political, academic, and industry leaders must continue to act collaboratively to develop a technology-based economic plan for Massachusetts that will lead to economic growth," he said.

The index offers some hopeful signs, said Bentley College economics professor Patricia Flynn, who chairs the commission that produced the report. "The heart and soul of the innovation economy in Massachusetts has never been stronger," she said, citing increases in everything from enrollments in public higher education to the state's share of entrepreneurial companies.

Massachusetts colleges and universities remain a talent magnet, the report says, but the state continues to suffer "chronic out-migration."

"While out-migration acts to keep our unemployment rate low," the report says, "it saps our ability to rapidly capitalize on new business development that is generated by our great innovation resources."

Robert Weisman can be reached at weisman@globe.com.