The Research Council has posted a report titled “Washington’s Prosperity Depends on Vibrant Tech Sector,” which can be downloaded here. Briefly:

Washington’s vibrant tech cluster has had a strong, positive effect on the state economy. The sector accounts for nearly two-thirds of Washington’s job growth since 1990 and more than half of the growth in employee compensation. Major tax revenues generated by the sector grew 318 percent, to $2.9 billion in 2011.

The tech industry mitigated the effects of the national recession here, showing relatively stable income and employment patterns, even during the sharpest economic downturn in more than half a century.

Other states and regions witness the success of states with strong innovation clusters and strive to replicate it. They offer incentives, make education and infrastructure investments that the sector finds essential, and provide start-up assistance in the form of incubators and accelerators.

While Washington’s cluster may appear secure, policymakers should not be complacent. The state has advanced several key initiatives important to the innovation economy, including tax incentives, STEM investment, and the Washington Opportunity Scholarship. These strategies, however, do not differentiate Washington from other states.

While Washington’s incentive programs are generally consistent with good tax policy, “good tax policy” does not always guide the actions of our competition. States focusing on long-term cluster strategies are often willing to forego tax revenues far in excess of expected short-term returns. And businesses will respond. Location decisions are driven by many factors, but profit-and-loss calculations are always important.

Washington has been fortunate. The state’s tech cluster has generated significant economic growth, created thousands of jobs, cushioned the recession, and spurred investment in critical infrastructure and higher education. The growth here not only has been consistent with good public policy, including tax policy, but it has also provided the intellectual and economic foundation to support an enhanced quality of life.