Tech, VC Rule in 15th Annual Report Card of the States

States that support a vibrant technology sector are attentive to the quality of their economic development efforts and continue toattract venture capital will outperform those that do not, according to the 2001 Development Report Card for the States. The 15th annual report, released yesterday by the Corporation for Enterprise Development (CfED), uses 70 measures to provide a state-by-state assessment of economic development policy in three main areas — Performance, Business Vitality and Development Capacity. 



Top performers in this year's report, Colorado, Connecticut, Massachusetts, Washington and Minnesota, all earned straight A's. They were joined by Maryland, New Jersey, Pennsylvania, Utah, and Virginia on an "honor roll" of A’s or B’s. Eleven states received an F in at least one of the three categories. 



Among its key findings, CfED says there is a very strong relationship between states that have a high presence in technology-intensive firms and states with high scores overall. Seven of the 10 honor roll states are among the top 10 states ranked by number of tech companies: Colorado 1st, Washington 2nd, Massachusetts 3rd, Connecticut 7th, New Jersey 8th, Virginia 9th, and Utah 10th. "These findings continue to support the importance of technology as a driver of economic development," CfED said. 



In addition, CfED suggests "states with active venture capital lending also exceed many other measures of economic and social health." All 10 honor roll states rank in the top 20 percent in venture capital investments. Moreover, four of the five straight A states fall in the top five for VC. 



CfED concludes that "while it is important for states to create and retain businesses, it is simply not enough to base economic impact assumptions on raw numbers — number of new enterprises, number of new jobs, number of business closings, etc. The kinds of businesses in a particular state and the way they operate have a large impact on economic performance for the state overall. Businesses that conduct commerce outside of the state, attract investment, seize market opportunities, and generate living wage employment are the most likely to prosper." 



CfED also suggests that "states in which the business sector invests the most in human resources — high wages, salary increases, and health benefits — are among the highest performing. In addition, counterintuitive to most business assumptions, the Report Card shows a relationship between strong economic performance and investment in conservation and environmental resource management." 



The 2001 Development Report Card and state-by-state assessments across 70 indicators are available for download at: http://209.183.252.136/drc2001/