New data tell familiar story about weakness of region’s ‘new economy’
A report released in late 2010 shows that the Midwest continues to struggle when it comes to promoting the "new economy."
A November 2010 report measuring the strength of the “new economy” in all 50 states shows that the Midwest continues to lag behind other regions of the country on measures tied to technology- and innovation-led growth.
The “2010 State New Economy Index” uses 26 indicators to evaluate states. These indicators are divided into five categories that reflect key characteristics of the “new economy” (see table). Only Minnesota cracks the top 10 in any of the five categories, ranking sixth in “knowledge jobs.” This category includes indicators such as the number of information technology professionals outside of the IT industry; the educational attainment of the entire workforce; employment in high-value-added manufacturing sectors; and jobs held by managers, professionals and technicians.
With few exceptions, the region’s states ranked particularly low on two new-economy measures: globalization and economic dynamism. The former includes indicators that measure the export orientation of the manufacturing and service industry, as well as foreign direct investment. A state’s “economic dynamism” is assessed based on “job churning” (new business startups and existing business failures); the number of top-500 firms listed by Deloitte and by Inc. magazine; the number of individual inventor patents issued; the number and value of initial public stock offerings by in-state companies; and the number of entrepreneurs starting businesses.
One piece of good news for the region is that Midwestern states have gained ground relative to other states since the 2007 index was released. Along with its national rankings, the report — produced by the Information Technology and Innovation Foundation and the Ewing Marion Kauffman Foundation — includes several policy ideas for states. They include:
- adopt policies that reduce within-state and interstate competition for business attraction;
- focus on “win-win” innovation policies that improve education and workforce development; encourage entrepreneurism; and support research and development, technology transfer and commercialization, and manufacturing modernization; and
- pursue new innovation-based economic development partnerships with the federal government.