The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Arkansas inventionINDEX Scores – Last 12 months

The Arkansas inventionINDEX score for March 2026 reached 1.15%, yielding a B- rating. This performance represents a notable recovery from the immediate previous month of February, which saw a dip to 0.99% and a C- rating. When viewed through the lens of the first quarter of 2026, the index appears to have returned to the baseline established in January. This current score is consistent with the trends observed in late 2025, where the index largely hovered between 1.08% and 1.19%. These figures suggest that while the state is not currently experiencing a rapid surge in innovation, it is maintaining a steady level of resilience and recovering quickly from short-term volatility.

Looking across the broader sixty-month historical horizon, the current 1.15% score reflects a middle-tier performance for the state. Arkansas achieved its most significant momentum in late 2023, specifically in October, when the index climbed to a historical peak of 1.94% with an A+ rating. In contrast, the five-year floor occurred in October 2022, when the index dropped to 0.76%. Comparing the present data to these historical extremes, it is evident that the state has successfully moved away from the deep underperformance of 2022 but has yet to recapture the high-octane innovative output recorded three years ago. The index currently mirrors the stable levels maintained throughout much of 2021 and 2024.

Achieving higher grades, such as the A and A+ ratings seen in the past, yields substantial socioeconomic advantages for the region. An elevated index score typically correlates with a surge in patent registrations, more robust venture capital interest, and a thriving ecosystem for technology startups. When the state pushes into the higher percentiles, it signals to external investors and industrial partners that the local infrastructure for research and development is both efficient and productive. This fosters a virtuous cycle where high innovation ratings attract top-tier talent, which in turn drives further intellectual property creation and strengthens the overall regional economy.

Conversely, lower scores and grades carry concerning implications for long-term regional competitiveness. A lower inventionINDEX rating often suggests a bottleneck in the commercialization of new ideas or a lack of institutional support for emerging innovators. If the score remains consistently in the C or D range, it can lead to a brain drain effect where skilled professionals migrate to more dynamic markets with better support systems. Furthermore, a lower rating can dampen the state’s competitive edge on a national stage, making it more difficult to secure the federal grants or private funding essential for large-scale technological advancement. Maintaining the current B- rating is a positive step toward stability, but avoiding a slide back into the lower tiers remains critical for sustained progress.

Discussion:

In March, the Arkansas inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Arkansas office provides R&D tax credit consulting and advisory services to Little Rock, Fort Smith, Fayetteville, Springdale, Jonesboro, North Little Rock, Conway, Rogers, Pine Bluf and Bentonville.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.