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

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 the2020 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 Indexfinds:

• 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

*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.