RALEIGH – North Carolina ranks 20th among all U.S. states in a new rankings report, increasing its ranking by one spot from the most recent study.

The 2021 Tracking Innovation report is the eighth such benchmarking report in a series first published in 2000.  It was released this week by the North Carolina Board of Science, Technology & Innovation.

But the state could do better. According to the North Carolina Department of Commerce, “the state still needs to encourage more private-sector research and development activities.”

North Carolina Secretary of Commerce Machelle Baker Sanders said in a statement that the report confirms that the state is a “magnet for innovative companies and talent,” but also added that further investment will be needed to drive more innovation and lead to enhanced standard of living for residents across the state.

Earlier this year, WalletHub ranked North Carolina 19th for innovation.

NC is the 19th most innovative state, according to WalletHub analysis

Where NC ranks high, low

The report covers 39 key areas tied to innovation.  Of those, North Carolina ranks highest, or 5th overall, for academic science and engineering research and development per $1,000 of state gross domestic product, but 48th in elementary and secondary public school current expenditures as a percentage of state gross domestic product.

But North Carolina also ranks 5th for the appropriation of state funds for higher education as a percentage of state gross domestic product, the report found.

Other areas where North Carolina ranks highly include its population growth between 2000 and 2020, the average number of university startups formed per every $1 million of academic S&E R&D expenditures, and manufacturing gross domestic product as a percentage of state gross domestic product.

And other areas where North Carolina scored low marks compared to other states includes in per capita income, median household income, and the percentage of state citizens who live below the poverty line.

“An economy’s average annual wage reflects and provides insight into its mix of jobs,” the report reads.  “Low average annual wages typically indicate that an economy has a high percentage of low-wage jobs that may be in low-technology and labor-intensive economic sectors. High average annual wages typically indicate that a state’s industry mix provides a larger share of middle- and high-wage jobs and generates relatively high standards of living.”

The report notes that investments that support boosting the state’s innovation-based economy “can lead to higher average annual wages, ultimately leading to greater economic well-being and quality of life.”

But North Carolina’s average annual wage ranked “considerably below the U.S. average and the average wages of all comparison states,” the report found.

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Crucial for North Carolina

The findings “paint a picture of North Carolina that is both rich with opportunities but also facing challenges,” the executive summary reads.

Highlighted as priorities for the state:

  • Increasing the volume and intensity of research and development
  • Enhanced leveraging of asset base for commercialization
  • Boosting entrepreneurship
  • Grow total number of credentialed STEM students
  • Reinforce and enhance investments in North Carolina’s infrastructure, educational institutions, and communities

“We are pleased with the improvement North Carolina has made that is reflected in the report; this is real, meaningful and significant progress. But we also recognize we can and must do better to bring the full potential of the innovation economy to North Carolina and its citizens,” said Michael Cunningham, chair of the North Carolina Board of Science, Technology & Innovation, in a statement.  “It’s clear a thriving innovation ecosystem will help produce even more high-paying jobs in North Carolina.”

Other strengths of the state:

  • Since 2000, the percentage of science, engineering and technology (SET) business establishments increased by 70 percent in North Carolina.  That’s more than twice the rate across the entire United States.
  • According to a statement from Commerce, total employment in those establishments has grown by almost five times the national average, currently ranking the state 10th nationally.