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Sustaining California's Innovation Economy Through Investment in R&D

This report builds on prior research by documenting more recent trends in private-sector R&D investment and their positive impact on employment and wages across the state. California has historically enjoyed a comparative advantage in innovation-fueled growth relative to other US states, but this advantage is closely tied to the presence of dedicated policies supporting local investment in R&D. Recent changes to those policies could make it more difficult to attract R&D that supports high-tech, high-wage industries and jobs. A reduction in R&D investment could hamper the state’s short-term recovery from the COVID-19 pandemic as well as its long-term growth prospects.