Economic innovation in Michigan increases in the third quarter of 2009, according to UM-Dearborn study

March 8, 2010

DEARBORN / March 8, 2010---Some signs of job creation were enough to boost innovative economic activity in Michigan during the third quarter of 2009, according to the “innovation index” compiled by scholars at the University of Michigan-Dearborn College of Business.

After a drop to 80 from 96 in the first quarter of 2008, the index showed a third quarter improvement, jumping to 86.9 from 80 during the previous quarter.  

“The 6.9 increase for the quarter is the largest since the index was created in 2006,” according to Lee Redding, associate professor of business economics and director of the Innovation Index at the UM-Dearborn College of Business. “The index is still down significantly from its year-earlier level of 93.3.”

The quarterly index, a project of UM-Dearborn’s Center for Innovation Research, or iLabs, provides a summary measure of economic innovation activity in the state of Michigan. The index tracks economic innovation in Michigan based on calculations of employment of “innovation workers,” trends in venture capital, trademark applications, incorporation activity, small business loans and gross job creation. Four components of the index rose during the quarter while two declined.

“Looking ahead, it appears that the next report is unlikely to show that these improvements continued into the fourth quarter,” Redding said.  “A decline in trademark applications appears likely to lead a fourth-quarter decline in the index.”

The number of trademarks applied for in the state increased very slightly in the third quarter.  “Although slightly ahead of year-ago numbers, the quarterly improvement added 0.3 points to the Index,” Redding said.

Venture capital activity in the state continued a modest rebound from steep declines during the credit crunch, adding 0.5 points to the index, according to Redding.

The number of small business loans showed a continued increase in the third quarter.  The increase was aided by stimulus plan provisions, adding 1.9 points to the index.

The reported number of new jobs created by new companies or companies adding jobs rebounded to approximately 208,000 during the second quarter of 2009, reversing the sharp first quarter decline and adding 5.6 points to the index. (Due to data availability, this item enters the index calculation one quarter late.)

The number of incorporation filings in the state declined somewhat in the third quarter.  “The third quarter numbers were up slightly from year-ago levels, but reduced the index by 0.9 points for the quarter,” Redding said.

Employment of “innovation workers” showed a continued drop in the fraction of Michigan workers employed in science and engineering, reducing the index by 0.6 points.
The Innovation Index for the fourth quarter of 2009, with a preliminary estimate for the first quarter of 2010, will be released in June.

Redding collaborates on the project with economist Anne-Louise Statt.


About University of Michigan-Dearborn
The University of Michigan-Dearborn is celebrating its 50th anniversary throughout the 2009/2010 academic year. Founded in 1959 with a gift of just over 200 acres of land and $6.5 million from the Ford Motor Company, UM-Dearborn has been distinguished by its commitment to providing excellent educational opportunities responsive to the needs of southeastern Michigan. The university has 8,700 students pursuing undergraduate, master’s, doctoral and professional degrees in the liberal arts and sciences, engineering, business, education, and public administration. With a faculty devoted to teaching, and students committed to achievement, UM-Dearborn has been shaped by its history of interaction with business, government and industry in southeastern Michigan, and is committed to responding to the needs of the region in the future.


Ken Kettenbeil
Director of Communications
PHONE: 313-593-5518

Jennifer Thelen
Public Relations Representative
PHONE: 313-593-5644

The Office of University Relations
Room 1040, Administration Building
University of Michigan-Dearborn