Massachusetts, California, Utah Lead 50-State Ranking of Economic Fundamentals Key to Success in Innovation-Driven “New Economy”; 2020 Edition of Long-Running Index Shows Several Surprises, Suggests All Would Benefit From Comprehensive Strategies

October 19, 2020

WASHINGTON—There is a persistent divide among U.S. states when it comes to fundamental metrics of success in the technology and innovation-driven “new economy,” according to the 2020 State New Economy Index, released today by the Information Technology and Innovation Foundation (ITIF), the world’s leading think-tank for science and technology policy. 

The new report is the latest edition of a long-running ITIF series that measures the degree to which state economies are knowledge-based, globalized, entrepreneurial, IT-driven, and innovation-based. Massachusetts, California, Utah, Maryland, and Washington rank first through fifth overall. Mississippi ranks last, ahead of Arkansas, Oklahoma, West Virginia, and Wyoming in the bottom five spots.

“State and regional economies may focus on different strengths, but a defining trend of this era is the degree to which all have become more reliant on innovation as new technologies drive productivity and competitiveness,” says ITIF President Robert D. Atkinson, lead author of the report. “To be well positioned to take advantage of technological innovation, and thrive amid the ebbs and flows of the global economy, states need to be firmly grounded in fundamentals such as knowledge-based work, export orientation, and utilization of information technology. The data shows some states are far ahead of others—but all would benefit from implementing comprehensive innovation strategies.” 

ITIF’s State New Economy Index measures 25 economic indicators in five categories to assess states’ capacities to harness innovation: knowledge jobs, globalization, economic dynamism, the digital economy, and innovation capacity. The 2020 Index builds on eight earlier editions, published in 1999, 2002, 2007, 2008, 2010, 2012, 2014, and 2017. Each edition has included refinements in methodology as new data sets have become available. 

The 2020 State of New Economy Index finds:

  • Massachusetts ranks first, as it has consistently in every edition of the index since 1999.
  • Mississippi ranks last, as it has in every edition except the 2007 index when it was 49th.
  • The biggest shifts upward since 2017 came in Utah and Louisiana, both of which rose six positions in the overall ranking—to 3rd and 40th, respectively.
  • The biggest change in the other direction came in Delaware and Wisconsin, which dropped seven spots to 12th and 33rd, respectively. 

Since the first edition of the index in 1999, the data also have revealed broad structural trends in the new economy. For example:

  • The number of IT jobs in the U.S. economy grew by 39 percent between 2006 and 2019, while private-sector employment in general grew just 12 percent.
  • Managerial, professional, and technical jobs grew nearly two times faster than overall private-sector employment between 2009 and 2019.
  • Without the 35 percent growth in services exports from 2011 to 2019 and specifically, strong growth in ICT-enabled services exports, the trade deficit would have increased over that period by 52 percent instead of 12 percent.
  • From 2015 to 2018, average broadband connection speeds across the country have increased by 181 percent.
  • Venture capital investment has nearly returned to its 2000 peak, with investments of $110 billion in 2019.

To succeed in the “new economy,” ITIF concludes states should align their economic development strategies to incentivize having a workforce and jobs based on higher skills; strong global connections; dynamic firms, including strong, high-growth startups, industries, and individuals embracing digital technologies; and strong capabilities in technological innovation. 

Atkinson adds: “States that score well in this report will be best positioned to face the challenges associated with the innovation-driven new economy. Lower-scoring states clearly have significant ground to make up. But while low-scoring states would benefit most from implementing comprehensive innovation strategies, high-scoring states also have room for improvement. At the same time, the federal government should work to establish self-sustaining tech hubs in more parts of the country.” 

Overall Scores

2020 Rank

2020 Score

State

1999 Rank

2002 Rank

2007 Rank

2010 Rank

2012 Rank

2014 Rank

2017 Rank

Change from 2017*

1

90.0

Massachusetts

1

1

1

1

1

1

1

0

2

82.3

California

2

2

5

7

4

3

2

0

3

77.8

Utah

6

16

12

12

8

9

9

+6

4

75.9

Maryland

11

5

3

3

5

5

6

+2

5

75.3

Washington

4

4

4

2

3

4

3

-2

6

75.0

Virginia

12

8

8

8

6

7

4

-2

7

72.9

New York

16

11

10

10

11

12

11

+4

8

72.5

Colorado

3

3

9

9

7

6

7

-1

9

71.5

Connecticut

5

7

6

5

9

8

10

+1

10

69.8

New Jersey

8

6

2

4

10

10

8

-2

11

69.4

Minnesota

14

14

11

13

13

13

12

+1

12

68.5

Delaware

9

9

7

6

2

2

5

-7

13

68.1

Illinois

22

19

16

15

20

16

16

+3

14

68.0

Texas

17

10

14

18

17

20

17

+4

15

67.8

Oregon

15

13

17

14

14

15

13

-2

16

64.5

Georgia

25

18

18

19

18

21

19

+3

17

63.6

Michigan

34

22

19

17

19

18

15

-2

18

63.1

New Hampshire

7

12

13

11

12

11

14

-4

19

62.3

North Carolina

30

24

26

24

25

23

22

+3

20

62.1

Arizona

10

15

22

20

16

17

21

+1

21

61.7

Pennsylvania

24

21

21

22

22

22

23

+2

22

58.9

Florida

20

17

23

21

21

25

24

+2

23

58.5

Rhode Island

29

23

15

16

23

19

20

-3

24

58.1

Vermont

18

26

20

23

15

14

18

-6

25

58.1

Missouri

35

28

35

33

33

33

28

+3

26

57.3

Nevada

21

31

27

30

26

27

31

+5

27

56.1

Ohio

33

27

29

25

32

29

25

-2

28

55.9

Kansas

27

30

34

26

29

31

30

+2

29

55.1

Indiana

37

32

31

35

42

38

34

+5

30

55.1

Tennessee

31

34

36

41

39

40

32

+2

31

54.8

Nebraska

36

36

28

34

35

35

27

-4

32

54.7

Idaho

23

20

24

27

24

24

29

-3

33

53.9

Wisconsin

32

37

30

29

31

30

26

-7

33

53.4

South Carolina

38

35

39

39

40

34

35

+2

35

52.4

Iowa

42

40

38

38

38

37

37

+2

36

50.8

New Mexico

19

25

33

32

30

26

33

-3

37

50.2

Maine

28

29

32

28

27

28

36

-1

38

49.7

North Dakota

45

47

37

36

34

36

38

0

39

49.3

Kentucky

39

42

45

44

45

44

39

0

40

48.1

Louisiana

47

44

44

43

44

46

46

+6

41

48.0

South Dakota

43

46

48

45

43

42

41

0

42

48.0

Alabama

44

45

46

47

46

41

44

+2

43

47.2

Alaska

13

39

25

31

28

32

42

-1

44

45.9

Montana

46

41

42

37

37

39

43

-1

45

45.5

Hawaii

26

38

41

40

36

43

40

-5

46

45.5

Wyoming

41

43

43

46

41

45

47

+1

47

44.7

West Virginia

48

48

50

49

49

49

48

+1

48

44.3

Oklahoma

40

33

40

42

47

48

45

-3

49

40.1

Arkansas

49

49

47

48

48

47

49

0

50

37.5

Mississippi

50

50

49

50

50

50

50

0

*Due to changes in methodology, change ranks cannot be positively attributed to changes in the economic conditions or structure of a state economy.

Read the report.