The Most (and Least) Innovative States

We found the states that keep innovating and the states that are stagnating.

Hybrid cars. Cancer medications. Smart televisions. Minimalist running shoes.

In a race to create the best, smartest, and most unique products, companies invest billions of dollars into research and development (R&D) each year, and these are just a few of the resulting products—products that many of us use and enjoy every day.

Recent articles from FastCompany and Forbes outline the undeniable fact that innovation is largely influenced by company culture—, but could geographic location also have something to do with it? Is there a reason why certain areas of the nation earn flashy titles like “Silicon Slopes” or “Silicon Valley,” while others seem to trail behind?

To find out, we looked at how much companies in each state spent on research and development (R&D) and then adjusted per 100,000 people to find the most innovative states. Here’s our final report on which states are innovating—and which states are not.

Bullhorn
Research and development definition
The National Science Foundation defines R&D as “planned, creative work aimed at discovering new knowledge or devising new applications of available knowledge.”1 It can include research for the sake of research as well as research and development for commercial purposes.

The top innovation locations

Unsurprisingly, California, with its tech companies and startups galore, tops our list of the most innovative states. More surprising? Just how much California spends: over $1.1 million per 100,000 people, and 31% of the national spend overall.

For context, our next-highest spender is Massachusetts, which spends just $215,600 per 100,000 people. That means California spends five times more per 100,000 people on R&D than any other state.

And while several other states you’d expect appear on our list of big R&D spenders—including tech-heavy states like Washington, home of Microsoft, or Texas, home to Dell—you might be surprised to see that Illinois, Pennsylvania, and North Carolina round out our top 10. Their largest industries are insurance, telecommunications, and chemical manufacturing, respectively.2

Top 10 most innovative states

Rank
State
Amount of R&D per 100,000 people

1

California

$1,175,690

2

Massachusetts

$215,600

3

Washington

$196,730

4

Michigan

$188,470

5

Texas

$173,530

6

New Jersey

$157,150

7

New York

$157,140

8

Illinois

$137,330

9

Pennsylvania

$123,000

10

North Carolina

$100,640

On the other end of the innovation spectrum, Alaska spends just $340 per capita (only 0.0003% of California’s spending), making it the least innovative state.

That might have something to do with its largest industry: oil.3 Several of the other states on our bottom 10 also have some form of fossil fuel extraction as their largest industry. These days, more R&D goes to fossil fuel alternatives than fossil fuels themselves.

Top 10 least innovative states

Rank
State
Amount of R&D per 100,000 people

50

Alaska

$340

49

Montana

$1,400

48

South Dakota

$1,510

47

Hawaii

$1,640

46

Wyoming

$1,720

45

West Virginia

$1,820

44

Mississippi

$2,220

43

Vermont

$2,480

42

North Dakota

$2,540

41

Louisiana

$2,740

But aside from industry, you’ll notice that most of our least innovative states tend to have fewer metro areas than our most innovative states: Alaska, Montana, and South Dakota have well-deserved reputations as rural states, while California, Massachusetts, and Washington have several bustling metropolises each. It seems R&D dollars tend to come from more urban states.

 

A nation of innovation

Our data revealed big innovators ranging from the east coast to the west, and many places in between. But who knows how these rankings will change in the years to come?

most and least innovative states

After all, R&D continually gives us things we once thought were impossible—from smartphones to vaccines to self-driving cars. So who’s to say it couldn’t one day give us a world in which Alaska innovates the most?

Until then, if you’ve got an innovative idea, you know which states to go to.

Did our list of the most innovative states surprise you, or did it confirm what you already knew? Tell us your thoughts in the comments below!

Methodology

Business.org used the National Science Foundation’s data on research and development spending to find out how much each state spends on R&D. We then analyzed those amounts per 100,000 people to create our list of the most and least innovative states.

Location
Why per 100,000?
Without looking it up, can you remember the population of California? How about Vermont? Most of us can’t, which can make per capita numbers feel abstract. We stuck to R&D per 100,000 to keep our data concrete and easily comparable.
Chloe Goodshore
Written by
Chloe Goodshore
Chloe covers business financing and loans for Business.org. She has worked with many small businesses over the past 10 years, from video game stores to law firms. Those years watching frustrated business owners try to sift through their many options gave her a passion for breaking down complex business topics. She wants to help business owners spend less time agonizing over their businesses so they can spend more time running them.
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