WASHINGTON (June 11, 2014) - The New Economy, marked by globalization, technological innovation and entrepreneurial development, has replaced the capital-intensive, traditional manufacturing environment that dominated state economies in the second half of the 20th century. As such, old methods of measuring economic success need to be replaced with new metrics that can better analyze how states are adjusting to and thriving in the New Economy.
The 2014 State New Economy Index measures how states and regions are performing in this environment, while offering policy reforms which can spur innovation-based economic growth. The index, produced by the Information Technology and Innovation Foundation (ITIF), ranks states on a series of measures that analyze the economic environment for success in the 21st century.
The Index uses 25 indicators in five categories to assess states' fundamental capacity to transform their economies and incubate innovation. The categories are: knowledge jobs, globalization, economic dynamism, the digital economy and innovation capacity. The 2014 index builds on six earlier indices, published in 1999, 2002, 2007, 2008, 2010 and 2012.
The top five states in this year's index are Massachusetts, Delaware, California, Washington and Maryland. The lowest scoring states in the ranking are Mississippi, West Virginia, Oklahoma, Arkansas and Louisiana.
"States have traditionally sought to spur economic development by keeping costs low and providing incentive packages to individual firms to lure them to their borders," says Rob Atkinson, President of ITIF and co-author of the Index. "However, in the global, innovation-based economy, states would be better off keeping quality high and working to support in-state entrepreneurship and existing firm expansion."
To succeed in the New Economy, policymakers should work to put in place the best environment for attracting and retaining high-skilled knowledge workers, helping firms access technology from universities and national laboratories, investing in high-quality education systems and infrastructure, supporting a dynamic start-up ecosystem, and ensuring that the tax code supports innovative activities like R&D.
"Through The State New Economy Index we seek to highlight the states that have made the most progress in embracing the New Economy, as well as the policies that can be used to accomplish this goal," adds Atkinson. "We hope this will serve as a roadmap states and the nation as a whole can use to support innovation-based growth."
View the report.
The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.