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The Honolulu Advertiser
Updated at 8:54 a.m., Thursday, June 19, 2008

Hawaii jumps up technology list

By MICHAEL LIEDTKE
AP Business Writer

SAN FRANCISCO (AP) — Massachusetts remains the "gold standard" for mining economic growth from technology and science while California is losing its luster, according to a study released Thursday.

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.

North Dakota and Hawaii made the most significant strides since the Milken Institute released its last report. North Dakota moved up from 45th to 31st place while Hawaii catapulted from 39th to 28th place.

The report attributed North Dakota's rapid rise to government programs that have helped keep tech-savvy workers in the state.

Hawaii, meanwhile, appears to be benefiting from an emphasis on "clean" technology aimed at reducing the United States' reliance on fossil fuels. The island also is leveraging its splendor to attract older tech workers looking for a more laid-back lifestyle.

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.

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.

Mississippi ranked last in the rankings for the second consecutive time. West Virginia, Arkansas and Kentucky all remained in the bottom five, just as they were in the last report in 2004.

Ohio also fared badly as the state plummeted from 24th to 36th place. The erosion largely reflected the state's struggles to reduce its reliance on manufacturing, the report said.

Overall, though, more states appear to be doing a better job cultivating technology and science, said Ross DeVol, the Milken Institute's director of regional economics.

"States are starting to recognize they need to change because, as a country, we can no longer compete using the low-cost, low-skill formula of the past," DeVol said.

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," DeVol said. "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.