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).

Virginia inventionINDEX Scores – Last 12 months

The Virginia inventionINDEX for February 2026 holds steady at 1.74 percent with an A plus rating, mirroring the performance observed in the previous month. This consistency suggests a period of stabilization following the more volatile fluctuations seen in late 2025, such as the peak of 2.08 percent in December. When looking at the broader sixty-month trajectory, the current score remains comfortably within the upper tier of the index’s historical range. The index has demonstrated remarkable resilience, maintaining an A plus rating for the vast majority of the past three years.

Assessing the historical context reveals that the current 1.74 percent is significantly higher than the five-year low of 1.29 percent recorded in December 2021. However, it sits below the periodic peaks that occasionally pushed the score above the 2.00 percent threshold, most notably the 2.18 percent reached in October 2023. This historical comparison illustrates a mature innovation ecosystem that has successfully moved past the lower B and A minus ratings seen in 2021 and 2022. The transition from those earlier, more modest scores to the sustained A plus performance of the mid-2020s reflects a strengthened foundation for inventive activity across the state.

A high grade on the inventionINDEX provides substantial benefits to the regional economy and its various stakeholders. When the rating reaches the A plus level, it serves as a powerful signal to investors and entrepreneurs that the environment is conducive to research, development, and the commercialization of new ideas. Such a high score often correlates with increased patent filings, a robust pipeline of startup activity, and a greater capacity to attract venture capital. Furthermore, a top-tier rating helps in retaining local talent and drawing in skilled professionals from other regions, creating a virtuous cycle of growth and technological advancement.

Conversely, a decline in the inventionINDEX score or rating carries several negative implications for the long-term economic health of the area. A lower score typically indicates a slowdown in the pace of innovation, which can lead to a loss of competitive advantage against other high-tech hubs. If the score were to drop back toward the levels seen in late 2021, it might suggest a lack of sufficient support for emerging industries or a decrease in institutional research funding. Such a trend often results in a talent drain, as the most creative and ambitious individuals may seek opportunities in regions with higher index scores, ultimately leading to diminished economic vitality and slower job creation.

Discussion:

In February, the Virginia inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is similar to the prior 12 months, which experienced an upward 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 Virginia office provides R&D tax credit consulting and advisory services to Virginia Beach, Norfolk, Chesapeake, Richmond, Newport News, Alexandria, Hampton, Roanoke, Portsmouth, and Suffolk.

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.