What the Innovation Index Research Shows
Interpreting the Innovation Index (also known as the portfolio index) can get complex given its broad, multi-metric nature with both innovation inputs and outputs. In order to identify those specific factors with the greatest influence on economic growth, while controlling for some non-innovation factors, the research team statistically analyzed the innovation input data. Interpreting the results is simpler than the portfolio approach because there is only one output measure―economic growth (i.e., GDP-per-worker growth).
In updated research using a descriptive cross-sectional regression model, the research team found that the following indicators have a positive and significant relationship to increases in GDP per worker:
- Change in high-tech employment share
- Average small establishments per 10,000 workers
- Percent of population, ages 25-64, with some college or an associate’s degree
- Population growth rate for ages 25-44
In addition, change in broadband density also proves to be significant when the model focuses on a smaller time span (2002-2007).
An “empirical index” based on statistical analysis would include only these factors that positively influence growth. That said, additional analysis currently underway will point to which factors may be more important given a region or county’s characteristics. For example, there may be a rural/urban divide in terms of which factors have more influence on growth. In addition to spatial characteristics, population density or resource endowments may also affect growth. As longer time series become available, longitudinal analysis will also help to establish which factors tend to drive economic growth at a regional level.