Science and Innovation

California is globally recognized as the world’s leading center for technology, innovation, and entrepreneurial opportunity. While most concentrated in the San Francisco and Silicon Valley Bay Area, technology assets are spread throughout the state. The economic strength that flows from this unique capacity has produced high-value jobs and world-leading companies and puts California at the leading edge of current and emerging technologies that will transform the world’s economy in coming decades. The income that this activity generates is also a critical source of revenue for the state through personal income taxes (PIT) due to the substantial workforce dedicated to advancing technology in California. In the state’s 2019-2020 fiscal year, PIT accounted for 66.19 percent of California’s General Fund revenues, much of which are driven by taxation on technology initial public offerings (IPOs) and stock gains.

This report examines the scientific roots of the Bay Area's innovation system and the contribution of public investment to the research on which much of the region's technological success has been built. It provides data and analysis on how the ecosystem has evolved, discusses the roles of industry, federal, and state funding, and examines how research generated with public support has broad impacts on the economy.

Preserving the strength of the regional economy—which derives much of its vitality from its diverse set of industry sectors and robust innovation ecosystem—requires land use policies that allow the conflict-free coexistence of industrial activities with other uses in populated areas. Such policies also help to ensure the availability of sufficient industrial lands to sustainably accommodate industrial businesses in both their current and future configurations.

This report examines a broad range of initiatives at the University of California’s ten campuses—plus UC Hastings Law School, Lawrence Berkeley National Laboratory and Lawrence Livermore National Laboratory—that are designed to support entrepreneurial development and startup formation, and through them stimulate economic activity in surrounding regions and communities.

Technology is revolutionizing manufacturing processes through innovations in 3D printing, robotics and big data (the Internet of Things) – often based on innovations that come from California. A range of factors, including rising labor costs in China, are leading some manufacturers to bring production home. California is in a good position to capture much of this growth, but needs policies that support and incentivize investment.