Council on Competitiveness Executive Vice President and Chief Operating Officer Chad Evans presented a snapshot of the key pillars supporting New Mexico’s innovation-based competitiveness.
Launched in 2024, these conversations are meant to uncover the emerging best practices and policies driving innovation forward in regions across the country.
The core of all the Competitiveness Conversations is place-making innovation. Place-making innovation focuses on building and expanding regional innovation ecosystems in areas all around the country via the intentional, strategic creation of an investment, research, and policy ecosystem that makes a place come to life with a vigorous, vibrant, and innovation-driven economy. The focus of the series is on strengthening regional ecosystems to enhance economic resilience, foster inclusive growth, and elevate the United States’ position in the global innovation landscape. For any innovation ecosystem to succeed, a supportive environment is needed across several dimensions.
New Mexico is home to a robust innovation ecosystem with distinctive strengths. In recent years, the state has experienced major economic growth, and our U.S. DOE national laboratory and university partners have driven a continued standard of excellence and impact in the R&D ecosystem. However, the region must overcome workforce and infrastructure challenges to truly capitalize on its innovative momentum.
New Mexico experienced a significant increase in its rate of economic growth in the past five years, shrugging off several years of middling growth to come in line with the national rate. One major driver of this growth was the oil and gas industry. As the second-largest oil-producing state, New Mexico’s economy and state revenues have been fueled by oil and gas over the last five years; in 2023, as much as 35 percent of the State’s revenue came from oil and gas earnings. The mining, quarrying, and oil and gas extraction industries led New Mexico in economic output and made up almost half of the industrial contribution to GDP growth in 2023.
New Mexico has one of the strongest research and development spending environments in the nation, performing almost $11 billion in R&D each year. The state’s R&D ecosystem is largely driven by FFRDCs, including Sandia and Los Alamos. In fact, New Mexico accounts for almost 30 percent of all FFRDC funding in the nation, ranks 3rd in federal R&D funding, and ranks 2nd in R&D intensity.
Sandia and Los Alamos both contribute significantly to the state’s economy. In 2024, Sandia employed almost 17,000 people and achieved $5.2 billion in economic impact, while Los Alamos employed over 16,000 people and executed a budget of $5.24 billion.
New Mexico’s strong scientific foundation allows for significant growth opportunities in industries of the future. Research partnerships and large-scale investments are helping to set New Mexico apart in the space, AI, and advanced manufacturing sectors, securing its position as a national leader in innovation and security.
Spaceport America’s one-of-a-kind commercial space launch facility provides a unique advantage for New Mexico to lead in commercial space activities and is already home to tenants such as Virgin Galactic. New Mexico can boast being the third state, after Florida and California, to send humans to space.
Meanwhile, the world-leading facilities and researchers at Los Alamos and Sandia are placing the labs at the forefront of AI technology. Los Alamos partnered with NVIDIA and HP to build a cutting-edge supercomputer capable of handling intense computational needs, applying these capabilities to unlock new discoveries in national security and basic research contexts. And just last month, hundreds of scientists from the two labs met to discover new ways to apply frontier AI models to pressing national security challenges.
New Mexico’s laboratories are also leading the nation’s advanced manufacturing sector forward. Research partnerships at the labs, from the Center for Integrated Nanotechnologies to the Microelectronic Science Research Center, are performing critical research necessary to refine advanced manufacturing techniques and create more capable, more efficient technologies from semiconductors to medical devices.
Sandia is a partner in the Microelectronics Energy Efficiency Research Center for Advanced Technologies, or MEERCAT, which seeks to adapt conventional silicon-based semiconductor manufacturing techniques for novel materials, speeding the widespread deployment of more energy-efficient semiconductors capable of blunting the voracious power demands of computing technologies like AI.
As we see across New Mexico’s many industries of the future, partnerships are critical to driving innovation. New Mexico is leveraging its scientific and technological expertise, academic excellence, and industry know-how to push New Mexico’s economy forward, in fields from quantum to AI. For example, the New Mexico AI Consortium brings together Sandia National Laboratories, Los Alamos National Laboratory, University of New Mexico, New Mexico State, New Mexico Tech, and Central New Mexico Community College to create a thriving AI workforce, enhance AI competitiveness, and diversify the state’s economy. Knowledge and technology sharing between consortium partners is driving innovation in research, algorithms, and technology applications of AI.
New Mexico’s institutions are also partnering across state lines. Both laboratories, as well as the University of New Mexico, New Mexico State, Central New Mexico Community College, and New Mexico’s Economic Development Department are members of the Elevate Quantum EDA Tech Hub, which is uniting New Mexico, Colorado, and Wyoming into a single quantum computing innovation ecosystem.
The state’s innovators are also reaching out to form strong one-on-one partnerships beyond New Mexico. Los Alamos is partnering with Arizona State University to expand its manufacturing capabilities and build up its talent pipeline, while Sandia is bringing in talent from schools like Purdue University through its University Partnerships Network, engaging both students and faculty to build relationships with cutting-edge institutions nationwide.
Capitalizing on keystone investments across the region requires building and maintaining a sufficiently large and skilled workforce. But New Mexico faces significant issues in its workforce, with one of the lowest rankings in both personal incomes and labor force participation rate. Amongst tribal populations in New Mexico, labor force participation is 10 points lower than the already-lagging state rate. To build a more sustainable innovation ecosystem, New Mexico must find a way to engage more workers and provide a high number of better-paying jobs.
Many partners across New Mexico are already working to tackle these issues. For example, Quantinuum is planning to build a new quantum research and development center in New Mexico to train quantum workers. Meanwhile, Los Alamos is partnering with 11 institutions across New Mexico to kick off its Plutonium Workforce Development Initiative, and Sandia has rolled out a Critical Skills Recruiting Program that hires entry-level candidates. At the same time, New Mexico’s universities — and, critically, its community colleges — are rolling out quantum training programs ready to provide for a quantum workforce that will soon need talent at all skill levels to thrive.
New Mexico is a highly digitally divided state, ranking 48th in internet connectivity. 73 percent of the counties in the state, most commonly rural or tribal communities, face large gaps in access to technology and internet. Digital infrastructure investments are needed to help New Mexico expand access to innovation and power the technology of the future. Some investments are already underway, such as a partnership between the state and BorderPlex Digital to construct a Digital Infrastructure Campus in Santa Teresa. However, more investment will be necessary to leverage all of the people and communities that can drive New Mexico’s innovation ecosystem forward.
Just as critical as ensuring the flow of data throughout the state is ensuring the flow of water. New Mexico is projected to have 25 percent less available water to use in 50 years. This is not just a problem for the state’s residents and agricultural industry; as AI data centers grow more energy-hungry, so too are they growing thirstier, requiring more and more water to operate. That is why the State’s 50-year water action plan focused on both conserving existing supplies and tapping new water sources, as well as the New Mexico Water Resources Institute involving New Mexico State University, the University of New Mexico, New Mexico Tech, New Mexico Highlands University, Eastern New Mexico University and Western New Mexico University, are both critical components of ensuring the security of the state’s future water access.
So too is the state preparing for its energy future. New Mexico is a net exporter of electricity, thanks in large part to its abundant carbon-based energy resources, especially natural gas. It is also rapidly expanding its renewable energy portfolio; in 2023, 43% of the state’s generated electricity came from renewable sources, with renewables making up all new planned electricity production facilities in 2024 and 2025. This combines to make New Mexico’s electricity the seventh cheapest in the nation. However, aging infrastructure, especially in rural areas, has led to reliability concerns. That led the state to, less than a month ago, pass a new law supporting utilities’ ability to plan for the future and update their systems with new technology, ensuring the state’s energy abundance can continue to be leveraged for the good of its citizens and economy.
The state is home to a unique blend of cutting-edge industries, recognized as a national leader in secure innovation across aerospace, advanced manufacturing, and AI. Our goal with this Conversation is to uncover the policies and strategies that have enabled the region’s growth and success and share these ideas throughout the country.
