(FORTUNE Magazine) – 1. RALEIGH/DURHAM The presence of three top universities -- Duke, University of North Carolina, and North Carolina State -- and the 7,000-acre Research Triangle Park has fueled the area's capacity for business innovation. State-sponsored incubators for emerging companies in microelectronics and biotechnology have spurred dozens of startups, and a brainy work force is luring big high-tech employers. The state will be wired for a superfast electronic info highway by next year. Low costs and a laid-back lifestyle are a bonus. Refugees from the North are often charmed by the mild climate (average annual temperature: 59!F.) and easy access to recreation and cultural events. A negative: American Airlines may shut down hub operations, cutting the number of nonstop flights.

2. NEW YORK The nation's largest metro area can boast of a unique, irreplaceable asset: world-class talent in such diverse fields as finance, advertising, publishing, consulting, accounting, fashion, biomedical research, video, and the arts. Whatever a business needs, it can find in the Big Apple. ''The ability to purchase specific, innovative, and customized service -- that's New York,'' says Mitchell L. Moss, director of New York University's Urban Research Center. The area's 100 colleges and universities churn out potential employees, and immigrants provide an entrepreneurial spark, though new arrivals are also a drain on city services. New York's age is showing: Roads, transit, and housing all need repair.

3. BOSTON More than 60 colleges and universities dot the metro area, including Harvard, MIT, Brandeis, Tufts, and Boston University. These institutions enroll 250,000 students, pump $5 billion into the local economy annually, and are a magnet for innovative enterprises of all types. High-tech electronics, once a leading component of the business mix, are now less important than medical research and related manufacturing. More than 150 biotechnology companies have sprung up over the past decade, and the industry is expected to generate 75,000 new jobs annually by the end of the Nineties. Environmental technology firms are also sprouting rapidly. This young industry produces $13 billion of revenues and about 25 new companies each year. On the downside, tax rates and costs in general are among the nation's highest.

4. SEATTLE The University of Washington, based here, is a major recipient of federal research money, and its technology-transfer program has led directly to a score of biotech and engineering spinoffs. Boeing is still a big draw for knowledge workers, though Microsoft commands a growing share of the local spotlight. The software company's home office serves as a sort of high-tech laboratory for operating a business more efficiently; even government agencies thinking about reinventing themselves have stopped by looking for tips. Outdoor enthusiasts find it all here -- sailing, skiing, mountain climbing. Trend surfers can sip espresso and listen to grunge music. Seattle lovers tend to ignore all that rain in the winter.

5. AUSTIN This high-tech boomtown, home to the main campus of the University of Texas and a rapidly growing roster of big corporate players like Dell Computer, IBM, Apple, and Motorola, has the hang-loose feel of an oversize college town. The local music industry has gone bigtime, and the seven nearby lakes and tree- covered hills offer views that seem more like Maine than Texas. Corporate refugees tend to show up for business reasons and linger because of low costs and the mellow lifestyle. Startups, especially in biotech and software, are sprouting all over town. One sticky problem: A new airport, which will replace the current cramped and outdated facility, won't be ready for a couple of years, and only a few nonstop flights connect Austin with the big cities up North.

6. CHICAGO This city's greatest strength is a diversified economy that holds steady across business cycles. Its innovative ferment comes from top universities like Northwestern and the University of Chicago, along with an impressive roster of big high-tech companies -- Motorola, Abbott Laboratories, Ameritech, Amoco, and Baxter International among them. The city's Board of Trade and Mercantile Exchange have captured an increasing share of the nation's investment business with sophisticated options and commodity products. Window of opportunity: Due to overbuilding, downtown office rents have tumbled to $13 a square foot. Says real estate consultant Pamela Rose: ''If you lined up all the empty office space end to end, you could create a foot path from New York to Los Angeles.''

7. HOUSTON % The city is home to more than 260 academic and government research centers. Among the most prominent are NASA's enormous Johnson Space Center, which employs more than 20,000 scientists and researchers; the Houston Advanced Research Center, which links work from 11 universities; and the Texas Medical Center, which has fueled the local biotech industry. Area universities -- particularly Rice, the University of Houston, and Texas A&M -- provide a willing corps of trained high-tech employees. Still a leader in oil and gas, Houston has also become an important engineering and computer- technology center. Houstonians enjoy a full range of big-city cultural amenities, and elegant homes can be had at prices shockingly low by coastal standards. Locals say the heat isn't all that bad in the summer. Don't believe them.

8. SAN JOSE Silicon Valley is still epicenter for information technology. About 1,500 of the nation's 2,500 largest electronics companies are based there, including industry behemoths Apple and Hewlett-Packard. Top-rank universities like Stanford and Berkeley feed hundreds of whiz-kid graduates into the action every year. An array of private think tanks and national labs attract research talent from all over the planet. This is where the money is as well: Drawn by the industries of tomorrow, more than half the venture capital firms in the world have set up shop in the Valley. Residents pay to be near all that juice. Housing costs are high, traffic jams legendary. Downtown San Jose has been rehabilitated -- but Paris this is not.

9. PHILADELPHIA Some 50,000 graduates spill out of over 80 local colleges and universities, providing a yearly feast of new talent for the diverse economy. Helpful outfits like the University City Science Center and the Ben Franklin Partnership have sparked hundreds of high-tech startups. Big pharmaceutical players like SmithKline Beecham, Rohm & Haas, and Rh ne- Poulenc Rorer have long clustered here. Says Rh ne-Poulenc Chief Executive Robert E. Cawthorn: ''What attracts scientists is other scientists. They want to mix with colleagues.'' This town is famous for being dull, especially compared with nearby New York. The tired W.C. Fields jest: ''I was in Philadelphia once -- it was closed.'' But those who enjoy quiet will find costs moderate and the scale human.

10. MINNEAPOLIS Consider the Twin Cities' combination of economic strengths: a highly / educated work force, access to high technology, excellent transportation, available capital. Also based here are 31 FORTUNE 500 companies, including innovation leaders like 3M, Honeywell, and Cray Research. A wealth of advisory groups, many of them emanating from the University of Minnesota, assist small business. Project Innovation helps with technology transfer from federal labs. Project Outreach is an interactive computer network providing technical expertise at more than 350 business sites. Environmentalists abound, and much of the countryside is unspoiled. You'd better like cold if you live here, however, and summer means mosquitoes the size of 727s.

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