While North Carolina outpaces the nation in in appropriations for higher education and high-tech business formation, work remains if the state wants to stay ahead, according to the 2017 Tracking Innovation report released today by the North Carolina Board of Science, Technology & Innovation.

North Carolina businesses must intensify their research and development efforts and the state needs to grow the share of community college and university students earning degrees in science and engineering, the report states.

The 2017 report, the sixth in a series first published in 2000, rigorously evaluates the state’s standing against other states in the country on measures of innovation capacity and outlines ways to advance the state’s economy by encouraging and harnessing innovation. North Carolina is one of only a handful of states that monitor innovation assets and trends within its borders.

“North Carolina has been home to many firsts, from the Wright Brothers first flight to the invention of the barcode” said N.C. Commerce Secretary Anthony M. Copeland. “This report offers suggestions for how to develop and encourage the next generation of innovators in our state, the people who will create North Carolina’s next firsts.”

Tracking Innovation: The North Carolina Innovation Index 2017 assesses the state’s performance across 40 measures of innovation-related assets, activities, and trends. The strongest source of innovation remains North Carolina’s universities, according to the report.

The state performs at 151 percent of the national average on the measure of appropriations for higher education expenses as a portion of gross domestic product (GDP), earning a 4th place ranking among the 50 states. High-tech business formation outpaced the national average by 23 percentage points. North Carolina manufacturing output as a function of total GDP ranks 4th in the country, performing at 164 percent of the U.S. average.

The state has one of the fastest growing populations in the nation, but its productive capacity is below average, while its unemployment is higher than average. Its total level of business R&D is below average and “insufficient to fuel and sustain strong economic growth,” the report says.

While technology employment is rising, the report notes that a higher share of business in the state is not technology oriented.

The report identifies areas for improvement, noting the state’s share of engineers as a percentage of all workers ranks 33rd in the U.S. In terms of R&D activities performed by business, the state performed at only 91 percent of the national average for a #21 ranking, although this performance did mark an improvement from the 2015 report.

“North Carolina is known for encouraging innovation, but our well-deserved high-tech reputation sometimes masks the work that remains for us to do,” said Dr. John Hardin, executive director of the North Carolina Office of Science, Technology & Innovation, a unit of N.C. Commerce. “This report offers elected officials, policymakers, economic development professionals, educators and business leaders several tangible suggestions for further developing an innovation-oriented economy in North Carolina.”

The 2017 Tracking Innovation report is the Board’s sixth report since 2000 on innovation in North Carolina.