The name “new economy” was coined during the late 1990s to illustrate the rise of technology tools like the internet and how they were influencing the world economy at that time.
Innovation continues to determine the state of economies everywhere as cities, regions and nations try to keep up with production and compete in an increasingly changing global economy.
The Information Technology and Innovation Foundation (ITIF) recently ranked U.S. states according to their ability to align themselves with the structure of this new economy.
The report, titled “The 2017 State New Economy Index,” aims to expand the spotlight from popular spots like Silicon Valley and Boston to other areas of the U.S. that also contribute to the country’s modernization. The foundation used 25 indicators for each state falling under five themes: the state’s number of knowledge jobs (those that require an associate’s degree or higher); globalization; a state’s nurturing of new, innovative companies; the number of digital transactions; and each state’s innovation capacity.
10. Connecticut
This state can attribute some of its innovation success to its location—it’s right next to New York City. ITIF reported that corporate headquarters, high-tech jobs and financial services dominate the state. Many of those jobs were relocated from the state’s world-famous neighbor. With that said, Connecticut does exceedingly well in the employment of highly educated professionals and the retention of skilled workers.
However, it ranks in the bottom five states when it comes to the number of start-ups and the number of business failures that occurred over the two years included in the study.
9. Utah
Utah, representing one of two Mountain states on the list, ranks in ninth place because of the volume of high-tech manufacturers that reside in Salt Lake City and Provo. It also has a higher rate of business “churn”—the rate of start-up and business failures as a percentage of existing businesses—above the U.S. average.
On top of that, ITIF says that Utah fared significantly better in per capita income.
8. New Jersey
Moving two spots up from 2014’s ranking is the Garden State. ITIF said New Jersey’s “strong pharmaceutical industry, coupled with high-tech [clusters] around Princeton, an advanced services sector in Northern New Jersey” and direct foreign business interests have helped to improve its score.
7. Colorado
This state has the third-most highly educated workforce in the country, according to ITIF. Colorado made the top five for patents per 1,000 people of workforce age, signaling its popularity with scientists, engineers and students with entrepreneurial interests. These features are why ITIF named Colorado a high-tech state.
6. Maryland
Part of Maryland is considered the suburbs of Washington, D.C., which accounts for the significant population of persons holding knowledge jobs with the federal government or federal contractors.
5. Delaware
Although the Corporate Capital slipped three spots from 2014, it maintained its place as a top contributor to the new economy. Delaware got its nickname “The Corporate Capital” from its business-friendly laws appealing to domestic and foreign establishments. ITIF noted the state is one of the most globalized in the U.S.
4. Virginia
Virginia rose three spots. Its fast-growing companies, its proximity to Washington, D.C., and its concentration of research and development firms appealed to highly skilled workers, and that improved the state’s ranking.
3. Washington
Seattle’s retail innovation from companies such as Amazon and Starbucks is not the major factor putting it on this list. Washington’s strong software and aviation exports moved it up a spot from 2014. That’s not surprising, since the state has a large number of aircraft manufacturers. ITIF also reported that Washington state has developing entrepreneurship, and the use of digital tech occurs in all sectors.
2. California
Even though California’s per capita income has suffered since the recession, the Golden State’s tech industry keeps shining. Silicon Valley and a mass of high-tech companies in Southern California make the state competitive in attracting out-of-state talent. It has moved from third to second place on ITIF’s list.
1. Massachusetts
The Bay State came in at No. 1 again. ITIF has ranked Massachusetts as first in seven previous editions of the State New Economy Index.
There are a couple of reasons behind Massachusetts’s win. It has Ivy League schools, and world-class university-backed software, hardware and biotech firms exist throughout the state. Other large industries in Massachusetts—such as health care, financial services and higher education—have also attracted and retained skilled workers.
“Massachusetts continues to be the state whose economic structure best matches the realities of the new economy,” said ITIF.
To see the full report, click here.
