Benchmarking Economic Transformation in USA
Massachusetts, New Jersey, Maryland, Washington and California top the list of states that are leading an economic transformation in adapting to an increasingly global-, knowledge- and innovation-based New Economy, according to “The 2007 State New Economy Index”, released by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF).
The Index uses 26 indicators from a variety of sources to rank each state on the extent to which their economies are structured and operate to effectively compete regionally as well as globally. It examines the degree to which state economies are knowledge-based, globalized, entrepreneurial, information technology-driven and innovation-based.
The most important driver of the new economy, according to the Index, is the information technology revolution that is transforming virtually all industries and driving increased productivity. Various industrial sectors such as health care, education, transportation, government, real estate and others are at the early stages of digital transformation, and as they transform, productivity promises to continue to grow.
According to the Index, states at the top of the ranking tend to have a high concentration of managers, professionals and college-educated residents working in “knowledge jobs.” Their companies tend to be more geared toward global markets, both in terms of export orientation and the amount of foreign direct investments.
All the states at the top of the ranking also show above-average levels of entrepreneurship, even those that are not growing rapidly in employment. Most are at the forefront of the information technology and Internet revolutions, with a large share of their institutions and residents embracing the digital economy. Most have a solid infrastructure that fosters and supports technological innovation and many have high levels of domestic and foreign immigration of highly mobile, highly skilled knowledge workers seeking good employment opportunities coupled with a good quality of life.
With the economic indicators as a reference, the Index also outlines a public policy framework of “best practices” that state officials can use as a guide to transform their economies and ensure raising standards of living for their residents:
- Align Incentives Behind Innovation Economy Fundamentals
- Co-invest in an Infrastructure for Innovation
- Co-invest in the Skills of the Workforce
- Cultivate Entrepreneurship
- Support Industry Clusters
- Reduce Business Costs without Reducing the Standard of Living
- Help Boost Productivity
- Reorganize Economic Development Efforts
- Enlist Federal Help