In a report sponsored by the Ewing Marion Kauffman Foundation, ITIF employs 26 indicators to assess the extent to which the 50 state economies are structured according to the tenets of the New Economy. The changing economic landscape requires state economies to be innovative, globally-linked, entrepreneurial and dynamic, with an educated workforce and all sectors embracing the use of information technology. The report, which updates and expands on the 2002 State New Economy Index, ranks the states accordingly. The five states ranking the highest in 2007 are, in order of rank, Massachusetts, New Jersey, Maryland, Washington, and California. With these measures as a frame of reference, the report then outlines the next generation of innovative state-level public policies needed to meet the challenges of the New Economy and boost incomes of all Americans.