Nevada trails nation in tech

California, Maryland and Massachusetts rate as superstars of the high-tech world, the whiz kids who sit in the front row and solve all the complex math problems.

And then there's Nevada, the underachieving slacker who hangs out in the back of the classroom and never hands in his homework.

So say results of the Milken Institute's 2008 State Technology and Science Index. Nevada slipped deeper into the index's bottom 10, falling from No. 43 in 2004 to No. 45 today. The Silver State fared worst in human capital, placing last in the nation. It also ranked No. 48 in technology and science work force. In technology concentration, at least, Nevada broke into the top half, coming in at No. 23.

David LeGrand, a local attorney with the law firm Fennemore Craig and cofounder of investment nonprofit Vegas Valley Angels, said the study showed the state's strengths and weaknesses alike.

The education system "clearly remains under stress," LeGrand said, thanks in part to brisk population growth that outpaces resources. But Nevada's high concentration of fiber-optic infrastructure gives the state an edge in technology concentration.

"What we need to take away from this study is what we can do to improve," LeGrand said. "Clearly, we need to spend attention and money on our educational infrastructure in order to advance."

Kevin Klowden, managing economist at the Milken Institute, said Nevada's dismal showing surprised him. The Silver State ranks as an entrepreneurial hotbed, perennially placing near the top of the California institute's list of cities with the best job growth, and it draws substantial numbers of new businesses. Plus, Nevada abuts high-tech giant California, so venture capital and startup activity in the Golden State should spill over here, Klowden said.

But it hasn't, for a variety of reasons.

Businesses prefer to cluster near similar enterprises, and Nevada lacks a concentrated high-tech sector, Klowden said. Also, the state's emphasis on selling transplants on lower taxes brings in diverse companies, but high-tech entrepreneurs care more about locating near deep pools of educated workers. And if Nevada's missing one attribute, it's a big concentration of tech workers: The state ranked No. 50 in the number of new science and engineering degrees per 1,000 workers and No. 45 for the portion of residents with advanced degrees. It's 49th in its share of database network administrators, 48th in electrical engineers and 47th in computer systems analysts.

What's more, Nevada's neighbors rank well in science and technology, so the Silver State competes with regions that long ago mastered high-tech development. California ranked No. 4 in the Milken study, while Colorado ranked No. 3 and Utah No. 8. Even New Mexico and Arizona, at Nos. 16 and 17, trounced Nevada in tech-sector strength and development.

A state can elevate its rank quickly, though.

North Dakota jumped 14 spots in four years, going from No. 45 to No. 31, while Hawaii improved from No. 39 to No. 28.

Both states launched targeted efforts in one or two index categories. North Dakota emphasized human capital, giving cash to students entering science and engineering programs at state colleges and paying new graduates in tech-related fields to stay in-state. North Dakota also established a network for businesses seeking skilled tech workers, and instituted incentives for companies hiring locally.

Pushing science and engineering degrees and retaining graduates "is a very strong and fast way" to rise in the index, Klowden said.

"It's tough, given the economic climate, but one of the secrets is making sure to vote state funds to science and engineering," he said. "Try to recruit more professors and encourage people to get degrees."

The Aloha State promoted clean energy and life sciences, creating a research and development fund to help small businesses focused on biofuels and energy efficiency. The financing venture paid big dividends in startups of tech-centered smaller operations.

Nevada already boasts strengths it could expand on, Klowden noted. It ranked No. 11 in venture capital directed toward clean technologies such as green energy and recycling, and it came in at No. 8 for research and development into environmental sciences. It also rated highly in "dynamism" measures, which gauge how easy it is to open a business in a state.

"Just building on local strengths and opportunities is a big deal," Klowden said. "Nevada might want to push water-efficiency technologies and other clean and environmental technologies, especially considering its solar and wind advantages."

Nevada officials should advance the state's tech sector for several reasons, Klowden said.

High-tech businesses sit at the cutting edge of industry, which translates into future growth. Tech jobs also pay well, and because high-tech businesses care most about talent pools, they're less likely to decamp a state when a competing market offers economic incentives, Klowden said.

Plus, dropoffs in tourism and construction, Nevada's two biggest private-sector employers, point to the importance of diversifying the economy.

"Real estate and tourism are both fickle," Klowden said. "Being dependent on a couple of industries leaves a state vulnerable."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.