Md. ranks near top for `new economy'

February 28, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN REPORTER

Maryland is one of the best-positioned states for today's fast-changing and high-tech economy, according to a report released yesterday by two pro-innovation nonprofit groups.

The state ranked third behind Massachusetts and New Jersey - beating out the tech states of Washington and California, which rounded out the top five. Maryland's large share of professional and technical jobs, fast-growing firms and scientists and engineers helped propel it near the top of the list.

The study, released by the Information Technology and Innovation Foundation and the Ewing Marion Kauffman Foundation, looks at 26 indicators to judge how prepared states are for what it calls the "new economy" - in which knowledge and entrepreneurship are key, and the competition for business is global.

Regions that rely primarily on luring big companies with promises of low costs and government incentives should beware, the groups warn.

"The new economy is most fully developed, if you will, on the East Coast from, say, Virginia up to New Hampshire and on the West Coast," said Robert D. Atkinson, president of the Information Technology and Innovation Foundation and the report's primary author.

"Places that have lagged behind are places that historically have not invested in education and infrastructure and skills," Atkinson said.

States that did well on his "new economy index" haven't necessarily added jobs at a frenetic pace, but the jobs they're getting are higher paying.

The last new economy index report, released in 2002, ranked Maryland fifth. In 1999, the state was 11th. The studies aren't fully comparable because the newest one uses more indicators, but Atkinson - a Maryland resident - said the state has clearly benefited from post-9/11 spending on homeland security and biosciences.

Proximity to the nation's capital has long been critical to Maryland's economic good fortunes, though economists warn that this federal reliance could prove uncomfortable if the government slows spending to deal with deficits.

The state has federal research labs, research-heavy Army installations, a plethora of high-tech government contractors and universities that win big federal grants. The Johns Hopkins University in Baltimore consistently tops all other academic institutions in federally funded research and development - nearly $1.3 billion in the 2005 fiscal year.

Richard P. Clinch, director of economic research with the University of Baltimore's Jacob France Institute, questions whether Maryland is really a better new-economy state than California, as the study suggests. But he says there's no doubt that it's one of the best.

"We have money, ideas and talent, which are the key building blocks of the new economy," Clinch said.

Maryland scored particularly well on work force measures. It ranked first in the country for its comparatively high share of scientists and engineers - about 1 percent of the total work force, more than twice the national average. It was topped only by Massachusetts for its percentage of jobs classified as managerial, professional or technical. And it ranked third for the high share of workers with college educations.

Still, it could use more, local observers say. "It seems like everyone is in growth mode," said Steve Kozak, executive director of the Greater Baltimore Technology Council, whose members say recruitment is their main challenge.

The state also ranked well on a measure of fast-growing firms. Consider, for example, the young Round2 Communications, an Internet marketing company in Canton: It grew from four to 40 employees in three years - half of them in the company's technology division.

"We live in a period of innovation," said Matt Goddard, a principal with the company, which works with a lot of technology and biotech firms. "We cannot underestimate ... how entrepreneurial our state needs to be so we can continue to have our leadership position in technology."

Sensics Inc., a startup in one of Baltimore's business incubators, was spun off from technology developed at Hopkins. Chief Executive Officer Yuval Boger said the company can stay local because Maryland is a good location for its niche. It makes "immersive" virtual reality headgear - something that, beyond the obvious gaming potential, has training applications for government and defense, Boger said.

"We've found there are a lot of excellent contractors in the area that can help us develop and manufacture this stuff, and many of the customers are in this region as well," he said.

An active local venture capital community and more than 10 years of "aggressive" initiatives by state government to support startup companies is paying off now, said Frank A. Adams, managing general partner with Grotech Capital Group, a venture capital firm in Timonium.

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