Mass. shines in tech study, Calif. loses luster

SAN FRANCISCO – Massachusetts remains the “gold standard” for mining economic growth from technology and science while California is losing its luster, according to a study released today. The report by the Milken Institute has ranked Massachusetts as the United States’ top technology incubator all three times that it has been compiled since 2002.

But California slipped from second place for the first time, despite being home to Silicon Valley’s fount of innovation.

Drawing upon a complex index that analyzes a variety of factors, the Milken Institute dropped California to fourth place in its 2008 rankings. The rankings are swayed by a state’s entrepreneurial environment, population of technology-savvy workers and government commitments to education and other programs that plant the seeds for more tech growth.

Maryland moved into the second spot while Colorado held on to third, where it stood the last time the study was done in 2004. Washington, the home state of Microsoft Corp., rounded out the top five.

California’s high-tech stature is diminishing largely because it’s having more trouble educating and retaining future computer engineers and scientists.

The state ranked 13th in the Milken Institute’s “human capital investment” category, which was headed up by Maryland.

“This should be seen as a red flag” for California,” said Ross DeVol, the Milken Institute’s director of regional economics. “It’s not the end of the world, but it’s something that needs to be addressed.”

Some of California’s problems can be traced to an “unintended consequence” from the U.S. government’s response to the September 2001 terrorist attacks, DeVol said.

It’s now more difficult for people outside the United States to attend school in the country – a factor that DeVol said has hurt California more than most states because its publicly subsidized universities tend to attract a disproportionate number of students from outside the U.S.

The Milken Institute, a Santa Monica-based think tank, assembles the index in an attempt to identify states that appear to be in the best position to foster innovation and, theoretically, cash in on the resulting benefits.