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).

Hawaii inventionINDEX Scores – Last 12 months

The Hawaii inventionINDEX for March 2026 stands at 1.85%, marking a return to the elite A+ rating category. This performance represents a sharp and necessary rebound from the February score of 0.84%, which had temporarily dropped the state into a D+ rating. While the current figure is an exact match for the performance recorded in January 2026, the rapid recovery highlights a resilient, though notably volatile, innovation environment. This bounce-back suggests that the state possesses the underlying infrastructure to trigger significant bursts of creative output, even after periods of measurable stagnation.

Looking across the broader sixty-month historical horizon, the current 1.85% score places Hawaii in a strong competitive position, though it remains below its historical ceiling. Over the last five years, the state has seen dramatic fluctuations, reaching a five-year peak of 3.03% in July 2024 and another high of 2.52% in March 2021. Conversely, the index has also plummeted as low as 0.50%, resulting in a failing grade in June 2024. The current standing illustrates that while Hawaii is presently performing well above its historical average, it continues to cycle through a pattern of high-performance peaks followed by abrupt contractions.

Securing a high grade such as an A+ yields substantial benefits for the state’s economic and intellectual landscape. An elevated index score often serves as a primary indicator for venture capitalists and institutional investors that a region is a fertile ground for high-growth startups and proprietary technology development. When the index remains in this upper tier, it fosters a virtuous cycle of talent attraction and retention, as world-class researchers and engineers are drawn to ecosystems with proven innovative momentum. These periods of high activity also tend to correlate with increased patent commercialization, which diversifies the local economy and reduces reliance on more traditional sectors.

Conversely, the recurring dips into the D and F ranges carry significant negative implications for Hawaii’s long-term growth. Lower scores often reflect a bottleneck in the transition from research to commercial application or a lack of sustained funding for emerging inventors. If these low-rated periods become frequent, they risk creating a brain drain effect, where local talent migrates to more consistent innovation hubs. Furthermore, a low inventionINDEX score can signal a lack of institutional support, potentially discouraging private enterprises from establishing research and development centers within the state, which ultimately hampers the region’s ability to remain competitive on a national stage.

Discussion:

In March, the Hawaii 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 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 Hawaii office provides R&D tax credit consulting and advisory services to Honolulu, East Honolulu, Pearl City, Hilo and Kailua.

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.