NGA Releases Guides to Spur State Economic Growth

While taxes and regulations comprise the basic framework for state competitiveness, ample opportunity exists for other strategic interventions that can create a vibrant, entrepreneurial state economy, according to a pair of reports released this week by the National Governors Association (NGA). The first report examines six factors that drive state competitiveness and the kinds of policies states use to encourage economic growth. A second report lays out 12 recommendations for state leaders, with examples from successful initiatives around the country. The reports are the product of NGA's year-long initiative to shed light on the key elements that drive economic growth and to share best practices for state leaders involved in economic development.

The first report, Growing State Economies: A Policy Framework, attempts to distill the essential forces that shape a state's business environment. Taxes and regulations are the most basic of these forces, since they play a large role in attracting startup, small and large businesses to the state, according to NGA. Because every state has its own unique mix of taxes and regulations, these factors help to determine the initial business environment and serve as the framework for economic development initiatives. Not all states have aggressive programs to support entrepreneurs and clusters, but all states have taxes.

Within the framework of taxes and regulations, states may pursue initiatives aimed at boosting the competitiveness of the business community. The report provides six issues and activities that can be refined to improve business conditions and to set the stage for job creation. These include: entrepreneurship, education and skills, innovation and technology, private capital, global markets and linkages, and industry clusters. States must make a frank assessment of their capabilities in each of these areas, and pursue strategies that will remedy their weaknesses and build on their strengths. State economic plans should incorporate all six of these factors.

A companion report, Growing State Economies: Twelve Actions, provides key action items for state leaders and policymakers that can be used to craft economic strategies. NGA's set of recommendations advocates targeted assistance for startups and high-growth companies, together with efforts to cultivate industry clusters built on relationships between businesses, universities and sources of capital.

The recommendations are grouped into four categories: strategic and foundational measures that create a favorable business environment, efforts that target startup companies to help them survive and grow, efforts that help high-growth companies realize their potential and changes that can help a state develop a strong ecosystem for sustainable business growth. Though the recommendations themselves are quite general, each of them is accompanied by several examples of states that have implemented successful strategies. These examples offer concrete best practices that may be useful for leaders and policymakers seeking to address their state's current economic challenges. Recommendations include:

• Create a competitive tax and regulatory environment;
• Put entrepreneurial activity at the top of the state's economic agenda;
• Distinguish among different kinds of entrepreneurs and businesses;
• Cast a wide net to find entrepreneurs;
• Teach entrepreneurship skills and attitudes at all education levels;
• Build a startup environment and culture;
• Find the potential high-growth companies and help them grow;
• Get your entrepreneurs to give back;
• Help companies open doors to new customers;
• Reward strong ties among universities, companies and entrepreneurs;
• Encourage entrepreneurs and companies to build innovation clusters; and,
• Build ecosystems, not programs.

Access both reports at: http://www.subnet.nga.org/ci/1112/default.htm.