DEARBORN — The innovation sector of Michigan’s economy continues to improve from recession levels, according to an index developed by iLabs, the University of Michigan-Dearborn’s Center for Innovation Research.
The index, which measures economic innovation based on a number of factors, rose from 90.8 in the second quarter of 2011 to 92.8 in the third quarter, according to a report released Feb. 27. This level is well above the low 80s recorded during the recession in 2009 and also above the previous year’s level of 85.3. Even so, the index remains lower than its initial level of 100 in 2007, when the iLabs began the index.
The iLabs Innovation Index is based on six different factors that Dr. Lee Redding, project director of the index, claims are good indicators of the health of Michigan’s innovation economy: gross job creation, venture capital funding, trademark applications, percentage of innovation workers, incorporactions and LLC filings, and U.S. Small Business Administration loans. Over the third quarter of 2011, all indicators were positive except incorporations and SBA loans, both of which fell slightly. Five of the six indicators were above levels from the previous year.
When asked how the iLabs study differs from similar studies, Redding pointed out the speed with which the index is produced.
“There are studies that use all sorts of data, (but) the catch is they’re available two to three years later,” said Redding. By contrast, the iLabs index is only about five months out. Redding explained: “Our index is meant to be more up-to-date.”
One factor that speeds the release of the iLabs index is the use of data on trademark applications instead of patent applications. Redding said that trademark data is more readily available for any given year and is also reported much more quickly. Additionally, patent numbers can be affected by re-filings and disputes, issues that don’t affect trademark applications as much.
Additionally, the Innovation Index also doesn’t just look at gross job creation in the state, but also looks at the percentage of workers who are “innovation workers,” workers employed in either scientific or engineering fields. These figures are calculated by iLabs based off Bureau of Labor Statistics data.
“It’s encouraging to see that innovative activity,” said Redding about the index’s increase. “This is a measure of how we’re helping out the overall economy.”
The February report suggested that the index might weaken slightly for the fourth quarter of 2011 due to a slowdown in trademark applications after a long period of increasing activity.
The next iLabs Innovation Index report will be released in late May and will detail fourth quarter activity from 2011 and will also provide a preliminary outlook for 2012.