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Timothy Slaper
Indiana Business Research Center

Jerry Conover
Indiana Business Research Center

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Indiana Business Research Center

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Last modified: Thursday, January 27, 2011

Innovation Index for America's Regions: IU center releases 2011 results

Jan. 27, 2011

BLOOMINGTON, Ind. -- Innovation has become the Holy Grail for improving, or maybe even saving, our economy. Innovation has even become something of a mantra for President Obama. But what is it? How can we measure it?

With the latest update to its unique nationwide Innovation Index for America's Regions, the Indiana Business Research Center (IBRC) at Indiana University's Kelley School of Business answers both questions.

The Innovation Index helps regions determine their capacity for innovation, providing actionable data to guide critical public and private investments and to formulate effective development strategies that foster economic growth.

Among the nation's 3,100 counties, Indiana has two that are in the nation's top bracket: Kosciusko, with its impressive concentration of medical device companies and innovators, and Hamilton, which has one of the highest concentrations in the nation of well-educated professionals. Tippecanoe, Bartholomew and Ripley counties are among the nation's top 10 percent of counties that lead in innovation.

"The Innovation Index helps regions and counties to examine their innovation capacity more closely," said Jerry Conover, director of the IBRC. "For example, is Ripley County capitalizing on the benefits of having a high rate of patents? What's the source of Tippecanoe County's high productivity? There are some obvious possibilities in terms of which companies may be driving such trends, but that's not the point. The point is to attempt to quantify those innovation strengths and capitalize on them regionally."

Only 125 counties in the nation generated Index values over 100. Those counties -- innovation powerhouses that drive the national average -- also account for 20 percent of the nation's population. The better benchmark is the median index value of 76.5. But the Index was not intended to keep score or report regional rankings. Its purpose is to spark conversations among local or regional leaders to identify innovation strengths in order to take advantage of them and to ID innovation weaknesses that can be bolstered.

A fundamental question the IBRC had to answer, before developing the Innovation Index, was "What is innovation?" It is generally defined as a process by which an idea or invention is translated into a good or a service that either lowers cost or adds value. Innovation can be incremental -- think a small change in an existing product like toothpaste in a pump. Or it can be transformational -- think the desk-top computer or iPad.

According to Timothy Slaper, the IBRC's research director and the index creator, metropolitan and rural areas alike now act regionally to compete globally. Individual communities and counties collaborate as regions to gain the size or clout to compete.

"As we learned in our joint research with the Purdue Center for Regional Development, this may mean regions overcoming a history of localized competition and even distrust," Slaper said. "Successful local leaders reach beyond their parochial interests to link assets and competitive advantages throughout their broader region. Indeed, many of today's best economic opportunities emerge only at the scale of the broader region."

In a global economy, trying to compete based on cost alone will have limited success. Rather than emphasizing incentives, subsidies and low-cost, low-skill labor, the new race, according to Slaper, is won by regions with the capacity to innovate and with the brainpower -- education and skills -- needed to create and sustain competitive advantages over the long run.

"Successful regions learn to build on their unique qualities and capacities," he said.

The Innovation Index for America's Regions will provide economic developers, regional planners, government officials and businesses anywhere in the country with the ability to assess a region's competitive advantages and weaknesses. In the process, regions can determine how to adapt to global competitive pressures by exploiting new and emerging industries.

The IBRC provides this and other regional assessment tools as part of a U.S. Economic Development Administration (EDA) funded project for assessing regional competitiveness in America.

The Innovation Index has been newly updated for 2011 and includes four dimensions important to fostering innovation:

  • Human Capital (education, population growth, knowledge-occupations)
  • Economic Dynamics (investment, broadband density, business churn, business size)
  • Productivity and Employment (change in tech jobs, overall job growth, GDP per worker, patents)
  • Economic Well-Being (poverty, unemployment, migration, income, job compensation)

The Index is available online at

About the IBRC:

The IBRC is a nationally recognized research center in the fields of business, economic and demographic research. It serves the state of Indiana in many roles, including that of census liaison and lead in the Information for Indiana initiative. It is a founding member of the Association of University Business and Economic Research and founded the pilot for what became the nationwide State Data Center Program. For more information go to