LOS ANGELES — Which states are in the best position to take advantage of the opportunities for growth in the New Economy?
According to the latest New Economy Index from the Milken Institute, they are Massachusetts, California, Colorado, Connecticut and Maryland.
These are the five top-ranking states on the Institute′s New Economy Index, which ranks each state based upon 12 criteria that Milken Institute research has determined are critical to a region′s future high-tech growth. These include research and development dollars, the percentage of advanced degrees, number of patents issued, venture capital investment, business starts and IPO proceeds. The data is then merged to determine each state′s place on the Index.
Massachusetts and California retained the one and two positions. Colorado, which was fourth in 2000, moved up to number three on the 2001 ranking. New York moved up two spots to number six. Delaware moved up three spots, to number eight.
The most improved states are Texas (from 16th in 2000 to 12th in 2001), Arizona (18th to 13th), Iowa (43rd to 38th) and Louisiana (45th to 39th). States that fell most in the ranking are New Mexico (10th to 21st), Vermont (15th to 23rd) and Maine (35th to 43rd).
Ross DeVol, Director of Regional and Demographic Studies for the Institute and creator of the Index, said the states that rank highest are those that are able to turn their research capabilities into commercial products and help their economies grow.
"Some people have given up on the New Economy because of so many dot.com failures, and the implosion of tech stock valuations," said DeVol. "That′s a big mistake. The Internet and technology will continue to improve productivity, and those regions that can take advantage of high-tech will be rewarded. Our Index shows which states are in the best position to do that."
The Institute′s research shows that technology and knowledge-driven innovation are critical to wealth creation in the New Economy. Countries, states and metropolitan areas that are able to create clusters of high-tech industries will have greater economic growth than other areas. The Index measures the New Economy′s critical attributes, which are based on innovation, knowledge, and the ability to convert ideas into viable products and services, DeVol said.
Massachusetts is number one on the Index because of its vast research capabilities, its highly educated population, and its many venture capital investments. California does well on exports, patents issued, venture capital investment, business starts and IPO proceeds.
Texas and Arizona moved up the list because they have been investing in research and development infrastructure. Both have seen increases in the number of doctoral scientists and engineers. Arizona also went up the ranking because of a jump in the value of IPOs.
New Mexico took the biggest plunge down the list — 11 positions — mainly because it has not been able to translate its vast research capabilities into commercial products, DeVol said.
Meanwhile, those at the bottom of the Index — Arkansas, South Dakota, West Virginia, Mississippi and Wyoming — will have a difficult time competing in the New Economy unless they can turn their performance around in the 12 categories, DeVol added.
| 1. Massachusetts (93.0), [1] | 18. Minnesota (60.5), [20] | 35. Indiana (38.3), [38] |
| 2. California (85.3), [2] | 19. Pennsylvania (60.5), [22] | 36. Montana (35.3), [36] |
| 3. Colorado (83.5), [4] | 20. Georgia (60.2), [19] | 37. Nevada (33.7), [37] |
| 4. Connecticut (82.7), [3] | 21. New Mexico (59.8), [10] | 38. Iowa (32.8), [43] |
| 5. Maryland (78.3), [6] | 22. Michigan (57.2), [23] | 39. Louisiana (32.2), [45] |
| 6. New York (77.0), [8] | 23. Vermont (57.2), [15] | 40. Nebraska (32.2), [41] |
| 7. Washington (75.8), [5] | 24. North Carolina (56.8), [24] | 41. Oklahoma (30.7), [40] |
| 8. Delaware (71.5), [11] | 25. Florida (50.3), [25] | 42. South Carolina (30.5), [39] |
| 9. New Jersey (71.2), [7] | 26. Kansas (48.0), [29] | 43. Maine (30.2), [35] |
| 10. New Hampshire (69.7), [9] | 27. Ohio (47.8), [26] | 44. Kentucky (27.0), [46] |
| 11. Utah (69.2), [12] | 28. Missouri (47.0), [28] | 45. North Dakota (25.8), [42] |
| 12. Texas (65.5), [16] | 29. Idaho (46.8), [27] | 46. Wyoming (24.7), [44] |
| 13. Arizona (62.8), [18] | 30. Hawaii (46.5), [31] | 47. Mississippi (24.2), [47[ |
| 14. Oregon (62.2), [14] | 31. Wisconsin (45.7), [30] | 48. West Virginia (21.7), [49] |
| 15. Virginia (61.7), [13] | 32. Alabama (42.0), [34] | 49. South Dakota (19.3), [48] |
| 16. Rhode Island (61.5), [17] | 33. Tennessee (41.5), [32] | 50. Arkansas (11.5), [50] |
| 17. Illinois (61.3), [21] | 34. Alaska (40.0), [33] |