Study Ranks States by Adaptation to “New Economy”

A new study indicates varying degrees of adaptation by states to an innovation-based, global economy.  Funded by the Kauffman Foundation and authored by the Information Technology and Innovation Foundation (ITIF), the 2010 State New Economy Index recognizes Massachusetts as the state leading the U.S. in adopting a more technologically dynamic, knowledge-driven economic structure, while the Plains States and southern states tend to be slower to follow suit.  

What follows has been excerpted from the original announcement by the Kauffman Foundation:

“In this century, the global economy has shifted,” said Robert Litan, vice president of Research & Policy at the Kauffman Foundation. “A mix of highly productive and innovative New Economy firms is necessary for an economy to prosper. The United States is lagging, and that lack of innovation-based vitality has contributed to our continuing recession. States need to concentrate on achieving New Economy success factors and providing the entrepreneurial resources and access that are critical to boosting competitiveness within the global marketplace.”

The State New Economy Index uses 26 indicators to assess states’ fundamental capacity to successfully navigate the shoals of economic change. It measures the extent to which state economies are knowledge-based, globalized, entrepreneurial, IT-driven and innovation-based – in other words, to what degree state economies’ structures and operations match the ideal structure of the New Economy. The 2010 Index builds on four earlier Indexes, published in 1999, 2002, 2007 and 2008.

“In today’s highly competitive environment, states must work together and with the federal government to overhaul their economic development policies,” said Dr. Robert D. Atkinson, president of the Information Technology and Innovation Foundation and co-author of the Index. “Too often, states still view their economic competitors as next door, rather than halfway around the world. If, instead, they used incentives to expand broadband, support entrepreneurial assistance programs, or invest in research and technology transfer, they – and the nation as a whole – would be far more globally competitive.”

The report recommends that, to pursue this new approach to economic development, states should 1) establish policies that reduce within-state zero-sum competition; 2) implement state policies to spur “win-win” economic results; and 3) pursue new state-federal innovation-based economic development partnerships.

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