Joint Publication “The Transatlantic Subnational Innovation Competitiveness Index”

Publication
I-Com, IW, ITIF

This report builds on its predecessor, the North American Subnational Innovation Competitiveness Index (NASICI), using 13 commonly available indicators to compare the innovative capacity and global competitiveness of the states and provinces of Canada, Germany, Italy, and the United States.

The report’s goal is to provide policymakers with a comparative and evaluative tool to better understand where their states rank among peers in terms of innovation capacity as well as how they can improve.1 As in the predecessor of this report, Massachusetts ranks first among the 96 states evaluated, thanks to its world-leading network of universities, highly educated population, and concentration of biotechnology and other advanced-industry firms. Although Massachusetts holds the top spot and California comes in second, Germany generally outperforms the United States. The overall score of the median German state across all indicators is 45.3, while that of the median U.S. state is 33.9. Germany claims the second-best-performing state in Baden-Württemberg, home to companies such as Mercedes-Benz and SAP, as well as 4 others in the top 10. Though Canada’s best-performing province (Ontario) scores higher than Italy’s (Emilia-Romagna), and Canada’s worst-performing province (Saskatchewan) scores better than Italy’s (Calabria), the median Italian state actually outperforms the median Canadian province. Canada’s particular weaknesses lie in measures of R&D activity, carbon efficiency of production, business creation, and high-tech exports relative to GDP.

One persistent trend is the disparity in performance among regions in Canada, Germany, Italy, and, to a lesser extent, the United States. Germany’s best performers on almost all indicators can be found in the south and west of the country (with Berlin as a common exception), while this is true as well for Italy’s northern regions. Innovative activity in Canada is concentrated in British Columbia, Ontario, and Quebec (as is Canada’s population and economic activity in general). The United States’ best performers tend to be found along the east and west coasts, though for many indicators, states in the middle of the country score very well (e.g., New Mexico scores highly in R&D intensity and personnel and Nevada in business creation).

The report contends that Germany should sustain its leadership by increasing investment in its education system and supporting businesses in adopting digital technologies and increasing R&D expenditures. Canada should incentivize greater R&D investment, attract technology-intensive FDI, boost productivity, and invest in science, technology, engineering, and mathematics (STEM) education to support employment in advanced-technology industries. Italy should work to expand access to higher education and attract more VC and FDI. The United States should increase its R&D tax credit, bolster science and R&D funding, and reconsider immigration policies in high-demand professions to help accelerate technology innovation and adoption by firms in all states.

After a brief introduction, the report proceeds by delving into overall findings before turning to an analysis of how states in the four countries perform in each of the 13 indicators across the three high-level categories of knowledge economy, globalization, and innovation capacity. It concludes by offering policy recommendations in light of the specific findings for each country.

The report has been presented by the authors, on Monday 14 November, during the policy discussion held at the European Parliament entitled “Regional competitiveness and technological innovation: comparing North America and the EU and learning from best practices”.

  1. Luke Dascoli and Stephen Ezell, “North American Subnational Innovation Competitiveness Index” (ITIF, June 2022), https://itif.org/publications/2022/06/21/north-american-subnational-innovation-competitiveness-index/.

Attached the full publication and its press release.