Ranking the “New Economy”

A new report released by the Information Technology & Innovation Foundation (ITIF) and the Kauffman Foundation found that “Unless the United States addresses its fundamental economic competitiveness challenges, it will be difficult for the U.S. economy and, by extension, individual economies to thrive.”  The report, entitled, “The 2010 State Economy Index: Benchmarking Economic Transformation in the States,” ranks all fifty states using twenty-six indicators to asses their economic capacity and to what extent they are “knowledge-based, globalized, entrepreneurial, IT-driven, and innovation-based.”

Success in what the authors deem the “New Economy” stems from individual states’ ability to adapt to new economic cycles and promote innovation.  The report, which ranks the states in categories ranging from workforce education to the level of foreign direct investment, argues that “if the recent economic recession has taught economists anything, it should be that economic growth and stability stem from a mix of highly productive and innovative industries.”

Four of the five states that have most demonstrated these attributes are in the Northeast, with the fifth being from the Pacific Northwest.  Taking the top rank for the fourth time is Massachusetts, which enjoys a strong network of different technology sectors supported by a plethora of top-rated universities.  Washington state, number two in the rankings, benefits from large corporations such as Microsoft and especially Boeing, but also from its strong investment in digital technology.  Coming in at third, Maryland benefits from a large concentration of well-educated workers who are employed in Washington, D.C.  New Jersey and Connecticut, fourth and fifth respectively, rank high due to their educated workforce while benefiting from strong defense and financial industries and high foreign direct investment.

The report points to the need for high levels of innovation, as seen in the top ranking states, in order to jumpstart an economy in which “Highly innovative economies are characterized by a diverse mix of high-paying, capital-intense, and productive industries.”  While the top ranking states enjoy many of the same attributes they are not all in lockstep.  Washington, for example, ranked 43rd in job-churning and 34th in high-wage trade services.

While the report focuses on the domestic ranking of individual states, a prior blog entry examines the role of competitiveness on a world scale.

Posted by: Michael Darden

Sources: The Information Technology & Innovation Foundation, TechFlash

Photo Credit: “Innovation” courtesy of flickr user Thomas Hawk

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