Massachusetts: Best 'New Economy' state
A study ranking state economies correlates entrepreneurship with adaptability - even during the toughest times.
(CNNMoney.com) -- Massachusetts is the state best positioned for growth when the current economic turmoil recedes, according to the 2008 State New Economy Index released Tuesday.
Washington, Maryland, Delaware, New Jersey, Connecticut, Virginia, California, New York and Colorado rounded out the top ten.
The study, issued by the nonpartisan think tank Information Technology & Innovation Foundation (ITIF),measures how effectively states operate in order to compete nationally and globally. It notes that states should be focused on whether their economies are well positioned for robust growth in the next decade, pointing out that innovation is central to state economic success.
"We had to go back a full year to get data, but I do think these results will, to some extent, be able to predict how each state will do in the current economic turmoil," said Dr. Rob Atkinson, president of the foundation.
"In recessions, there are higher levels of entrepreneurship because people who are laid off will use that opportunity to start a business," he said. "We won't be in this predicament forever. States that foster risk-taking and treat this time as an opportunity will be in a better position when they emerge - they'll be growing, instead of replacing the investments they slashed."
Funded by entrepreneurship boosters the Ewing Marion Kauffman Foundation, ITIF considers 29 factors in determining which states are the most - and least - "New Economy." These indicators included, among other things, start-up activity, education, venture capital investment, IPOs, patents and alternative-energy.
Those data points were then grouped into five meta categories that the ITIF says embodies the New Economy: knowledge jobs, globalization, transformation into a digital economy, technological innovation capacity and economic dynamism.
"The index is a composite of variables," said Atkinson. "But economic dynamism, which measures factors such as the number of fast-growing gazelle companies and value of IPOs, is more important than, say, globalization or a digital economy at influencing the new economy leadership."
Based on past observation, states that foster startups, particularly fast-track tech ventures, are also those that adapt best in economic downturns and emerge from them with higher standards of living, according to the the survey, which was also released in 1999, 2002 and 2007.
Utah, Massachusetts, Colorado, Georgia and New York placed at the top of the ITIF's list in the economic dynamism category, while Alabama, West Virginia, Hawaii, South Carolina and Kentucky ranked lowest.click here.