In contrast, many of the states that lag behind on the index historically depended on natural resources, on tourism or on mass-production manufacturing and relied on low costs rather than innovation capacity to gain a competitive advantage.
While some variance can be explained by low incomes, many states have drastically outperformed where income measures would predict them to fall. Arizona, Idaho, Utah and Vermont do significantly better on the SNEI than would be expected by solely looking at per-capita incomes. These states have done reasonably well at attracting and/or growing knowledge-based, innovation industries backed by a growing skilled workforce.
Regionally, the "new economy" has taken hold most strongly in the Northeast, the mid-Atlantic, the Mountain West and the Pacific regions. Conversely, many Southern states have not kept pace, in part because for so long the South sought to win through low costs, not high-innovation, and that strategy doesn't work anymore. Many Midwestern states also lag behind due to the challenges they face in developing more dynamic entrepreneurial business cultures that can spawn the next fast-growing companies.
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States that score poorly in the rankings are not lost causes.
If policymakers insist that supporting new economy success factors become a priority, states can gradually improve both their SNEI score and their economic vitality.
Recommended reforms include:
—enhanced financial incentives for innovation, such as research and development tax credits.
—support for higher education, particularly for efforts to transfer technology from universities to local companies.
—education and training programs that are adapted to the needs of high-growth employers.
—improved entrepreneurial support systems.
If all states take these kinds of steps, not only will their own economies do better but so, too, will the overall U.S. economy.
The new economy has transformed how states do business both with each other and the broader global marketplace. Those that succeed will be the ones that can best create innovative and supportive climates that can attract the high-tech industries, entrepreneurs and highly-skilled workers that are the keys to economic health.
—Robert Atkinson, president of the Information Technology and Innovation Foundation