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How does your state stack up in development?

The results of the Sixth Annual Development Report Card for the States were releassed last week at a press conference in Des Moines, Iowa--a state that, according to the report, exemplifies some of the key "cutting edge" strategies driving successful economic development programs today. The report card is produced by the Corporation for Enterprise Development (CFED)

CFED chose to release its report outside of Washington, D.C. for the first time as a reflection on the changing economy. "The state of Iowas has an important story to tell the rest of the country, having rallied from tough times in the 1980s" said Mitchell Horowitz, CFED director of state and local development. "As its report card reflects, Iowa has made a tremendous improvement in business vitality," added Horowitz.

The distinguishing factors for states that are making it despite the recession is an investment in the fundamentals--technology, financial capacity, physical infrastructure, amenities and, especially human resources noted Horowitz.

CFED's Report Card presents critical economic indicators and judgments on the economic health of each of the fifty states. The Report Card draws upon more than 70 economic indicators from a variety of government and private databases Together these indicators offer an aggregate view across three interrelated indexes that define a state's economic health: economic performance, business vitality, and development capacity.

A summary glance at the report card shows five states with the distinction of achieving all As and Bs in the three indexes: Connecticut, Delaware, Maryland, Minnesota and Utah. Two others, New Jersey and Vermont, join them on the honor roll with rankings of all Bs. Those with failing marks of Ds and Fs included Mississippi, Oklahoma, West Virginia, and Louisiana.

What do the Indexes Mean?

Economic Performance: How well is the state's economy performing? The bottom line on how an economy is doing, and an indicator of whether a state offers a good place for businesses to grow, is a state's performance.

Business Vitality: How vital are the businesses in the state? The vitality of any state economy is determined by the vitality of the businesses located there, i.e. how competitive they are, how diversified and how many new ones are being created each year.

Development Capacity: What is the state's capacity for continued growth? The future of both today's and tomorrow's businesses is tied directly to the quality and availability of the "building blocks" of economies--a skilled workforce, technology resources, financial resources, physical infrastructure and amenity resources.

How were the Report Card Grades calculated?

* Raw data was collected for more than 50 measures, gathered into 11 subindexes and three indexes.
 Economic Business Development
 STATE Performance Vitality Capcity
Alabama D C D
Alaska D B C
Arizona C F B
Arkansas F C F
California C A A
Colorado C A A
Connecticut A B B
Delaware A A B
Florida C C D
Georgia C F C
Hawaii A F B
Idaho B A D
Illinois C B B
Indiana B A C
Iowa B A C
Kansas B B C
Kentucky D D D
Louisiana F F F
Maine C B D
Maryland A B A
Massachusetts C D A
Michigan C D C
Minnesota B A A
Mississippi F D F
Missouri C C C
Montana D C D
Nebraska A C C
Nevada A C C
New Hampshire B D C
New Jersey B B B
New Mexico F A D
New York C C A
North Carolina B C C
North Dakota D C F
Ohio C C B
Oklahoma F D D
Oregon A D B
Pennsylvania B C C
Rhode Island B C C
South Carolina C F D
South Dakota D A D
Tennessee D C C
Texas D A B
Utah A B A
Vermont B B B
Virginia C B A
Washington A D A
West Virginia D D F
Wisconsin A C A
Wyoming C D C

* Each state is ranked from 1 to 50 for every measure, with the best state's score a 1 and the worst a 50.

* To create a final index score, state ranks for each relevant subindex are added together, creating an idex score.

* Grades are assigned corresponding to each subindex and index final score and rank. CFED points to six lessons that evolved from the Report Card which are just as relevant to cities and towns as to states:

Lesson One: There is no "national economy."

The country is too big and too diverse to be characterized as a single economic entity. National economic policy must take into account that our economy is a collection of regional economies with lives of their own -- some thriving and others quite weak.

Lesson Two: "Jobs, Jobs, Jobs" are not the answer.

The focus on creation of new jobs did not always included a similar emphasis on the quality of the new jobs. The jobs created didn't pay enought to support a family, offered few benefits and with so little to tie the jobs to the community, were easily moved offshore. Creating jobs isn't the answer to economic ills; creating good jobs that improve people's living standards is the answer--and the whole point of economic development.

Lesson Three: Fundamentals Matter; the stronger a state's development capacity, the better its jobs.

Fundamentals such as human, financial, technology, infrastructure and amenity resources are critical. The stronger they are the greater the economy's capacity to rebound and the higher the quality of the jobs created. It is no coincidence that the states with the best development capacities also have the best jobs.

Lesson 4: New business formation by itself insn't the answer either.

High rates of new business formation can mean a thriving economy -- or a deeply troubled one. Alot of what passes for entrepreneurial energy has more to do with necessity than with growth. It is important that businesses are not only created, but that they are sustained and grow.

Lesson 5: Some of the nation's "hot" economies are at risk.

The real foundation of current economic performance is often not examined when determining "hot" economies. An economy that is based on only one or two industries, such as Washington, is fragile and vulnerable. Those with more diversified are more likely to weather changes without disrupting business and residential life.

Lesson 6: Growth itself can be the engine of growth, but not for long.

Development-driven economines, like undiversified economies, are fragile things. The moment an economy hiccups, they go into a tailspin.

For more information on the development Report Card, you can call CFED at (202) 408-9788.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Mayer, Virginia
Publication:Nation's Cities Weekly
Date:Apr 20, 1992
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