The index is produced by the staff of the Milken Institute Center for Regional Economics (CRE). The full list of authors is available here.
CRE promotes prosperity and sustainable growth by supporting improvements in regional competitiveness. Because the link between innovation and economic growth is a vital component of competitive advantage, the index focuses on the pathways from new ideas to their commercialization. It does so by assessing states' knowledge economies, key science and technology inputs, and the level of output in high-tech industries.
No. The index is not sponsored by any external organization or third party.
The index is a composite of five sub-indexes. States are ranked on each sub-index according to data on a set of indicators, and the rankings on each sub-index are averaged to produce the overall index ranking. A detailed explanation of the methodology is available here.
The index uses publicly available data from sources such as the National Science Foundation, Bureau of Labor Statistics, and National Center for Education Statistics, as well as several private-sector databases. The full list of indicators is available here.
The index serves as a benchmark of states' science and technology capabilities as well as the broader policy and business ecosystem that contributes to job creation and wage increases benefiting residents of that state.
By dividing the rankings into five tiers, states have a benchmark for comparing themselves with other states that have similar characteristics. States are placed into a specific tier based on whether they fall above or below scores representing 20 percent, 40 percent, 60 percent, or 80 percent of the gap between the top and bottom scores.
A change in rank indicates a state is performing better or worse relative to the other 49 states. A state's performance may hold steady but rise or fall in the rankings because of changes in other states. The index presents a snapshot of how state-level science and technology economies compare to one another at a specific time, rather than a long-term study of how individual states are changing over time. And because the index scores are based on rankings, differences in state scores reflect broad differences among states, rather than capabilities or performance in a very specific area. A change in rank indicates a state is performing better or worse relative to the other 49 states, so its performance may hold steady but rise or fall in the rankings because of changes in other states. Moreover, the index uses more than 100 indicators, and many values are calculated using three-year averages. This limits the impact that shifts in any one year can have on the rankings."
Moreover, the index uses more than 100 indicators. Many of these values are calculated using three-year averages, so as to limit the impact that specific changes can have on the rankings. (For example, this tends to occur more frequently when measuring venture capital investment.)
STSI tends to be relatively static from one year to the next because developing a knowledge-based economy takes time and requires investment in people, institutions, infrastructure, and firms. States that rank highly on the index usually do so consistently because of long-term investments in research, education, or support for business formation. Similarly, disinvestment is unlikely to lead to significant short-term changes in a state's ranking.
Nonetheless, there were several states that moved up or down five spots or more in the overall rankings, and numerous states whose rankings on individual sub-indexes changed significantly from the previous edition of the index. Overall index rankings from previous years are available here.
An additional policy brief covering specific policy and business recommendations to support knowledge-based economic development will be released in January 2021. The following are previous CRE reports that have evaluated specific regional knowledge economies and provided recommendations for their development: