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California slips in Milken technology index

June 20, 2008|From the Associated Press

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 Thursday.

The report by the Milken Institute has ranked Massachusetts as the United States' top technology incubator all three times it has been compiled since 2002.

But California slipped from second place for the first time to fourth, despite being home to Silicon Valley's fount of innovation. The rankings are based on factors such as 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 conducted 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 led 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 from 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 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.

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