SOUTH DAKOTA INVENTIONINDEX | MAY 2025
May 2025: 1.09% (A+ grade)
South Dakota inventionINDEX May 2025: 1.09% (A+ grade)
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).
The South Dakota inventionINDEX Score for May 2025 stands at 1.09%, marking a modest yet meaningful increase from the 1.00% recorded in April 2025. This uptick suggests a positive shift in local innovation activity and potentially reflects a greater volume of patent filings, research outputs, or innovation-related investments across the state. In the context of the past 12 months, this score is notably higher than the average monthly value, which has hovered around 1.04%. South Dakota’s consistent performance, coupled with this recent rise, indicates a resilient innovation ecosystem that may be responding well to targeted policy incentives or private sector growth.
Compared to the more volatile months earlier in the 12-month period—such as September 2024, which peaked at 1.14%, and February 2025, which dipped to 0.98%—the current score falls within the healthier range. A score above 1.00% typically suggests a favorable environment for new ideas and technological development. If this upward trend continues, it could attract external investment and increase confidence among entrepreneurs and academic institutions. In particular, industries reliant on R&D may interpret this performance as a sign of fertile ground for innovation-led expansion.
Higher inventionINDEX Scores often translate into tangible regional advantages. A strong score may enhance South Dakota’s reputation nationally, leading to greater funding opportunities, stronger university-industry partnerships, and increased talent retention. Additionally, it implies a greater capacity for economic diversification, as emerging technologies and new intellectual property contribute to sectoral growth. For policymakers, a rising index can validate current innovation policies and justify future resource allocation toward research infrastructure and STEM education.
Conversely, had the score declined, it could have pointed to stagnation in innovation pipelines or challenges such as reduced research funding, lower patent activity, or workforce limitations. Sustained lower scores often correlate with decreased competitive advantage, particularly as other states improve their innovation metrics. If not addressed promptly, this could result in diminished interest from investors, slower economic development, and weakened academic and entrepreneurial ecosystems. Fortunately, May’s improved index offers a counter-narrative to such risks, reinforcing South Dakota’s current standing as an innovation-positive state.
Discussion:
In May, the South Dakota inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is in contrast 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 South Dakota office provides R&D tax credit consulting and advisory services to Sioux Falls, Rapid City, Aberdeen, Brookings, and Watertown.
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.
