Economic innovation in Michigan was unchanged in the second quarter of 2009, according to UM-Dearborn study
November 30, 2009
DEARBORN / Nov. 30, 2009---After four straight quarters of decline, innovative economic activity in Michigan was unchanged in the second quarter of 2009, according to the “innovation index” compiled by scholars at the University of Michigan-Dearborn College of Business.
The index remained at 80.0 in the second quarter, after dropping from 96 to 80 during the previous four quarters.
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. Three components of the Index rose during the quarter while three declined.
“Looking ahead, preliminary indications are that innovative activity in the third quarter will show a small improvement from the second quarter of 2009,” according to Lee Redding, associate professor of business economics and director of the Innovation Index at the UM-Dearborn College of Business. “Based on partial data, iLabs estimates that the Index will show a modest third quarter recovery to 81.3. A continued improvement in Small Business Administration loans will likely support this increase.”
The number of trademarks applied for in the state rose in the second quarter. “Although still down from year-ago levels, the quarterly improvement added 2.9 points to the Index,” said Redding.
Venture capital activity in the state rebounded somewhat from steep declines during the credit crunch, adding 0.4 points to the Index, according to Redding.
The number of small business loans showed a strong increase in the second quarter. The increase was aided by stimulus plan provisions and was the first quarterly improvement since 2007, adding 2.1 points to the Index.
The number of incorporation filings in the state declined slightly in the second quarter. “The second quarter numbers were also down slightly from year-ago levels, reducing the Index by 0.3 points for the quarter,” Redding said.
The reported number of new jobs created by new companies or companies adding jobs was down sharply from the previous quarter at approximately 165,000 during the first quarter of 2009, which cost the Index 4.8 points.
(Due to data availability, this item enters the index calculation one quarter late.)
Employment of “innovation workers” and the number of loans arranged through the Detroit office of the Small Business Administration experienced a slight drop during the first quarter of 2009, reducing the Index by 0.3 points.
The Innovation Index for the third quarter of 2009, with a preliminary estimate for the fourth quarter, will be released in March.
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.
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