Beacon Hill Compete 2009 State Final

Beacon Hill Institute Ninth Annual
State
Competitiveness
Report
BHI
Subindexes,Rankin2009
Overall Govt&Fiscal Security InfrStrc Human Tech BizIncub. Openness EnviroPlcy
Policy Resources
Index Rank I R I R I R I R I R I R I R I R
Alabama 3.20 50 5.07 24 3.66 50 4.96 29 4.01 47 4.77 34 4.65 41 4.63 39 4.71 33
Alaska 6.31 7 5.63 3 5.30 17 5.03 25 4.74 33 4.28 42 4.52 45 6.85 1 5.88 7
Arizona 5.12 21 5.49 5 4.73 38 4.96 28 4.90 29 4.86 31 5.34 9 5.09 17 4.42 44
Arkansas 4.23 38 5.13 18 4.91 31 4.94 30 4.27 43 4.03 49 5.24 13 4.34 47 5.41 19
California 4.48 32 4.48 46 4.79 36 4.35 48 4.48 36 5.67 6 5.15 16 5.98 4 4.52 40
Colorado 6.33 6 5.06 26 5.34 13 5.24 10 5.33 18 5.90 4 5.57 6 4.67 37 5.48 16
Connecticut 4.81 26 4.38 48 5.32 15 4.66 41 5.66 8 5.53 9 4.69 35 5.36 11 4.60 38
Delaware 5.16 20 5.11 19 4.28 46 4.92 31 5.10 25 5.04 21 6.81 1 5.38 10 2.84 50
Florida 4.87 25 5.87 1 4.49 42 4.48 47 4.44 39 4.34 39 5.29 11 5.29 14 5.17 22
Georgia 4.69 28 5.29 11 4.57 39 5.09 18 4.11 46 4.66 35 5.71 5 4.82 26 4.57 39
Hawaii 4.72 27 4.44 47 6.14 1 4.81 36 5.36 15 4.37 38 4.32 50 5.01 19 5.43 18
Idaho 6.12 10 4.96 28 5.54 8 5.73 4 4.82 31 5.28 16 5.12 17 4.67 36 5.84 9
Illinois 4.33 36 4.74 36 5.00 24 4.71 39 4.93 28 4.98 26 4.68 36 5.34 12 4.50 42
Indiana 4.26 37 5.47 8 4.89 32 5.10 17 4.76 32 4.55 36 4.61 42 4.91 24 3.68 47
Iowa 6.13 9 5.06 25 5.94 2 5.40 8 5.98 4 4.99 25 4.66 40 4.72 32 5.44 17
Kansas 5.72 14 4.81 32 5.44 11 5.12 15 5.50 11 5.04 22 4.96 24 4.91 23 5.89 6
Kentucky 3.95 43 4.73 39 5.01 23 5.14 14 4.41 40 4.26 44 4.68 37 4.93 22 4.67 35
Louisiana 4.06 41 4.62 41 4.50 41 5.05 21 3.96 49 4.33 40 4.86 28 5.90 5 4.86 30
Maine 5.05 23 4.59 45 5.31 16 4.74 38 5.46 13 4.99 24 5.15 15 4.44 44 5.96 3
Maryland 4.48 31 5.22 15 4.41 45 4.20 49 5.50 12 6.50 2 4.94 25 4.81 27 3.81 46
Massachusetts 7.04 1 4.90 30 5.03 22 4.66 40 6.38 1 7.70 1 5.81 4 5.42 8 4.60 37
Michigan 4.47 33 4.93 29 4.95 27 5.11 16 4.54 34 5.18 19 4.39 49 5.01 20 4.91 27
Minnesota 6.58 4 4.87 31 5.80 3 5.27 9 6.23 2 5.70 5 5.04 19 4.80 29 5.60 13
Mississippi 3.29 49 5.27 13 4.83 34 4.62 45 3.47 50 4.10 48 4.67 39 4.34 46 5.20 20
Missouri 4.44 34 5.50 4 4.51 40 4.82 35 5.01 26 4.92 28 4.71 33 4.39 45 4.98 26
Montana 5.52 17 4.76 35 5.26 18 5.78 1 5.16 23 4.79 32 4.98 22 4.19 50 6.05 1
Nebraska 5.55 16 5.09 21 5.79 4 5.04 23 5.79 7 4.92 29 4.83 30 4.58 41 5.03 24
Nevada 5.35 19 5.71 2 4.83 35 5.71 5 4.14 45 3.86 50 5.32 10 5.27 15 4.71 34
NewHampshire 5.70 15 5.15 17 5.00 25 4.65 43 5.94 6 5.46 11 5.24 12 4.64 38 5.66 12
NewJersey 4.03 42 4.05 50 5.52 9 4.55 46 5.34 17 4.93 27 5.01 21 5.70 7 3.28 49
NewMexicoi 4.14 40 5.10 20 3.90 48 5.04 22 4.47 37 5.46 12 4.75 31 4.55 42 5.18 21
NewYork 4.37 35 4.32 49 5.18 21 3.94 50 5.26 20 5.25 18 4.89 27 5.78 6 5.06 23
NorthCarolina 4.51 30 5.07 23 4.49 43 5.22 11 4.46 38 5.05 20 5.15 14 4.67 35 4.66 36
NorthDakota 6.93 2 5.16 16 5.64 5 5.78 2 5.97 5 5.36 14 5.02 20 4.68 34 6.05 2
Ohio 3.68 47 4.66 40 4.85 33 5.20 13 4.96 27 4.79 33 4.44 47 4.75 31 3.66 48
Oklahoma 3.91 44 4.61 42 4.78 37 5.06 19 4.53 35 4.27 43 4.96 23 4.29 48 5.51 15
Oregon 6.11 11 5.22 14 5.45 10 5.56 6 4.87 30 5.31 15 4.48 46 5.29 13 5.86 8
Pennsylvania 4.18 39 4.77 33 4.98 26 4.80 37 5.36 16 5.28 17 4.70 34 4.59 40 4.10 45
RhodeIsland 4.68 29 4.73 37 5.23 20 4.66 42 5.24 22 5.59 7 4.74 32 4.85 25 4.72 32
SouthCarolina 3.86 45 5.28 12 4.22 47 5.02 26 3.98 48 4.21 46 4.86 29 4.97 21 4.88 29
SouthDakota 5.89 12 5.35 10 4.94 28 5.52 7 5.59 9 4.43 37 5.44 7 4.19 49 5.96 4
Tennessee 3.76 46 5.49 7 3.86 49 5.06 20 4.19 44 4.28 41 4.90 26 4.81 28 4.50 41
Texas 4.95 24 4.99 27 4.93 29 4.64 44 4.27 42 4.88 30 5.07 18 6.17 2 4.90 28
Utah 6.65 3 5.40 9 5.32 14 5.21 12 5.56 10 5.45 13 6.01 2 5.03 18 4.77 31
Vermont 5.48 18 4.60 43 4.44 44 4.90 33 6.18 3 5.99 3 4.68 38 5.13 16 5.89 5
Virginia 5.80 13 5.49 6 4.92 30 5.00 27 5.15 24 5.53 8 5.44 8 4.77 30 5.02 25
Washington 6.15 8 5.08 22 5.56 7 4.84 34 5.25 21 5.50 10 4.41 48 6.16 3 5.77 11
State Index
WestVirginia 3.54 48 4.73 38 5.40 12 4.92 32 4.33 41 4.21 45 4.54 43 4.46 43 4.49 43
Wisconsin 5.07 22 4.76 34 5.60 6 5.03 24 5.26 19 5.01 23 4.52 44 4.71 33 5.52 14
Wyoming 6.37 5 4.60 44 5.24 19 5.75 3 5.44 14 4.19 47 5.95 3 5.41 9 5.79 10
Page 2 / Ninth Annual BHI State Competitiveness Report

From the Executive Director
The Beacon Hill Institute at Suffolk University is pleased to release its Ninth Annual State
BHI
Competitiveness Report. Published since 2001, the report has drawn the growing attention of policymakers,
economists and public officials across the nation seeking to identify strengths and weaknesses in economic
performance among the states.
As the Great Recession comes to a close, stressing the nuances of long-term indicators is still a difficult
task. U.S. unemployment, historically a lagging indicator, is at 10% and remains a serious concern. Firms are
reluctant to hire given the uncertainty all around us. In state capitals across the nation, tax revenues are down
by 11% from last year, constraining budgets and forcing uncomfortable choices. Foreclosures are up 19% since
last October. Moreover, according to one estimate, American homeowners will have lost nearly $500 billion in
home value by the end of 2009. Furthermore, there is a debate as to whether the federal stimulus is working
fast enough, if at all. The impulse, naturally, is to focus on solutions to pull the the nation out of financial trouble
in the short term.
The Institute remains persistent in providing the long view: state competitiveness, the ability of a state
to promote sustainable economic and income growth for its citizens, is a reliable indicator of performance.
There may be little that states can do to address the current global economic insecurity, but competitiveness,
as a measure, has other virtues. For example, it can help states find ways to keep firms within their borders
productive, its standards for education high , and its infrastructure sound.
Massachusetts this year remains atop of the index, North Dakota ranks second and Utah third.
Minnesota, Wyoming, Colorado, Alaska, Washington and Idaho fill out the top ten. Alaska, capitalizing on
increasing oil revenues, was the most improved this year, up 17 places. Hawaii also moved up 18 places, to 27th
place. New Hampshire, a perennial competitor from New England, held third place only two years ago, but
slipped to 17th last year; this year it improved slightly to 15th place, from 17th . (In 2006, it finished third.)
Vermont finished 18th while other New England states finished in the middle of the pack: Maine (23), Rhode
Island (29) and Connecticut (26).
This year we turn again to an examination of the Bay State’s competitors, or “leading technology
states.” Policymakers often view this measure as a leading indicator of economic competitiveness; however,
these high technology states do not always prove to be competitive by the Institute’s measure. Massachusetts
(1), Minnesota (4) and Washington (8) are the only leading technology states to finish in the top ten in the latest
BHI index. Other LTS states - California (32), Connecticut (26), New Jersey (42), New York (35), North Carolina
(27) Pennsylvania (39) and Texas (24) - have relatively unimpressive rankings.
Improving productivity and increasing personal income should be part of any state’s economic development
strategy. And the report continues to show that improvement in these two areas can translate measurably into real
capita income growth.
This year’s edition would be impossible without the talented resources available to the institute from its
successful internship program and its affiliation with a graduate program in economics. IThis year’s report is the
product of months of collaboration (including number-crunching, fact-checking and web programming) by Nicolas
Cachanosky, a PhD candidate in Economics here at Suffolk University, Jacob Magid of Boston University and Michael
Becker of Boston College.
We are fond of saying that our young team is proof positive that human capital is a critical variable for highly-
motivated entities, whether they are states, metropolitan areas, or research organizations, like our own Beacon Hill
Institute at Suffolk University.
Ninth Annual BHI State Competitiveness Report / Page 3

Table of Contents
Alabama .................................................................................................................................................................................. 16
BHI Alaska ................................................................................................................................................................... 17
Arizona ................................................................................................................................................................. 18
Arkansas .............................................................................................................................................................. 19
California ............................................................................................................................................................. 20
Colorado .............................................................................................................................................................. 21
Connecticut .......................................................................................................................................................... 22
Delaware .............................................................................................................................................................. 23
Florida .................................................................................................................................................................. 24
Georgia ................................................................................................................................................................. 25
Hawaii .................................................................................................................................................................. 26
Idaho .................................................................................................................................................................... 27
Illinois .................................................................................................................................................................. 28
Indiana ................................................................................................................................................................. 29
Iowa ...................................................................................................................................................................... 30
Kansas .................................................................................................................................................................. 31
Kentucky ............................................................................................................................................................... 32
Louisiana ............................................................................................................................................................. 33
Maine ................................................................................................................................................................... 34
Maryland ............................................................................................................................................................. 35
Massachusetts ..................................................................................................................................................... 36
Michigan .............................................................................................................................................................. 37
Minnesota ............................................................................................................................................................ 38
Mississippi .......................................................................................................................................................... 39
Missouri ............................................................................................................................................................... 40
Montana ............................................................................................................................................................... 41
Nebraska .............................................................................................................................................................. 42
Nevada ................................................................................................................................................................. 43
New Hampshire .................................................................................................................................................... 44
New Jersey ............................................................................................................................................................ 45
New Mexico .......................................................................................................................................................... 46
New York ............................................................................................................................................................... 47
North Carolina ..................................................................................................................................................... 48
North Dakota ........................................................................................................................................................ 49
Ohio ...................................................................................................................................................................... 50
Oklahoma ............................................................................................................................................................. 51
Oregon .................................................................................................................................................................. 52
Pennsylvania ....................................................................................................................................................... 53
Rhode Island ........................................................................................................................................................ 54
South Carolina ..................................................................................................................................................... 55
South Dakota ........................................................................................................................................................ 56
Tennessee ............................................................................................................................................................. 57
Texas ..................................................................................................................................................................... 58
Utah ...................................................................................................................................................................... 59
Vermont ................................................................................................................................................................ 60
Virginia ................................................................................................................................................................ 61
Washington .......................................................................................................................................................... 62
West Virginia ....................................................................................................................................................... 63
Wisconsin ............................................................................................................................................................ 64
Wyoming .............................................................................................................................................................. 65
Page 4 / BHI State Competitiveness Report 2009

BHI
“A state is competitive if it has
in place the policies and
conditions that ensure and
sustain a high level of per capita
income and continued growth.”
BHI State Competitiveness Report 2009 / Page 5

BHI Table1 About the indexes
StateCompetitivenessRankings
2009 2008 2007 2006 2005 How does one state create more economic
Index Rank Index Rank Index Rank Index Rank Index Rank activity, and hence more income for its
Alabama 3.20 50 3.39 48 3.44 48 3.61 47 4.05 43
citizens, than other states? What special
Alaska 6.31 7 4.82 24 5.77 13 5.75 14 6.00 9
Arizona 5.12 21 5.10 22 5.47 19 5.62 16 5.17 22 characteristics or attributes lead to generating
Arkansas 4.23 38 4.03 43 3.54 46 3.61 46 3.08 48 this higher income? Since 2001, BHI’s State
California 4.48 32 4.70 25 5.10 24 5.26 20 5.02 26
Colorado 6.33 6 6.73 4 6.59 3 6.33 4 6.37 6 Competitiveness Report has identified the
Connecticut 4.81 26 5.16 21 4.93 25 5.01 24 5.21 21 qualities that allow some areas to excel in
Delaware 5.16 20 5.37 19 4.85 27 5.22 21 5.17 23
income generation and the qualities that
Florida 4.87 25 4.58 32 4.63 33 4.89 27 4.79 28
Georgia 4.69 28 4.28 37 4.68 31 4.70 30 4.92 27 inhibit other areas from attaining the same
Hawaii 4.72 27 3.94 45 4.30 40 4.00 42 3.95 45 level of competitiveness. This question
Idaho 6.12 10 6.58 5 6.24 5 6.06 6 5.67 14
Illinois 4.33 36 4.45 33 4.43 36 4.51 33 4.58 35 quickly leads on to others: How are these
Indiana 4.26 37 4.37 36 3.91 44 3.72 45 3.73 46 qualities measured? What standard should
Iowa 6.13 9 5.74 12 5.48 18 5.54 18 5.45 15
Kansas 5.72 14 5.62 18 5.53 17 5.61 17 5.71 13
be used to determine whether a state is
Kentucky 3.95 43 4.21 38 4.31 39 4.14 39 4.42 39 competitive or not? Indeed, why is it even
Louisiana 4.06 41 3.30 49 2.75 50 3.44 48 2.60 50 interesting to measure competitiveness? How
Maine 5.05 23 4.70 26 4.45 35 4.33 36 4.46 38
Maryland 4.48 31 4.66 28 5.12 23 5.13 23 5.95 10 does economic competitiveness differ from
Massachusetts 7.04 1 7.33 1 7.07 2 7.28 1 7.16 1 interstate competition for workers, firms and
Michigan 4.47 33 4.60 30 4.16 41 4.46 34 4.68 30
Minnesota 6.58 4 6.17 7 6.20 6 6.00 9 6.05 7
capital?
Mississippi 3.29 49 3.12 50 2.97 49 3.02 50 2.83 49
Missouri 4.44 34 4.61 29 4.87 26 4.58 31 5.40 17 This State Competitiveness Report uses these
Montana 5.52 17 5.88 10 5.68 15 4.87 28 4.62 33
Nebraska 5.55 16 5.68 14 5.82 11 5.97 11 6.02 8 questions as a starting point. The indexes are
Nevada 5 35 19
5.35 5 64 15
5.64 4 73 28
4.73 4 79 29
4.79 4 62 34
4.62 designed to measure the long-term
NewHampshire 5.70 15 5.63 17 5.88 9 6.60 3 6.67 3
NewJersey 4.03 42 4.15 42 4.07 43 3.94 43 4.54 36
competitiveness of an area, and use a similar
NewMexico 4.14 40 4.39 34 4.72 29 4.22 38 4.00 44 approach to the one taken in BHI’s earlier
Defining State Competitiveness
NewYork 4.37 35 4.38 35 4.37 38 4.44 35 4.27 40

studies of state competitiveness.
NorthCarolina 4.51 30 4.68 27 4.70 30 4.90 26 5.05 25
NorthDakota 6.93 2 6.75 3 6.36 4 6.27 5 6.41 5
Ohio 3.68 47 3.95 44 3.89 45 In this year’s report, Massachusetts remains at
3.91 44 4.07 42
Oklahoma 3.91 44 4.17 40 4.68 32 4.13 40 4.16 41
Oregon 6.11 11 5.97 8 5.74 14 the top, closely followed by North Dakota, and
5.66 15 5.32 19
Pennsylvania 4.18 39 4.18 39 4.47 34 then by Utah, Minnesota, and Wyoming.
4.57 32 4.65 32
RhodeIsland 4.68 29 4.58 31 5.19 21 4.95 25 4.67 31
Colorado, Alaska, Washington, Iowa, and
SouthCarolina 3.86 45 3.93 46 4.07 42 4.28 37 4.77 29
SouthDakota 5.89 12 5.75 11 5.90 8 6.00 8Idaho round out the top ten most competitive
5.71 12
Tennessee 3.76 46 4.16 41 4.41 37 4.01 41 4.48 37
states (See Table 1). Most notably, Alaska
Texas 4.95 24 4.94 23 5.35 20 5.15 22 5.25 20
Utah 6.65 3 6.79 2 7.39 1 7.12 2moved up 18 places to 7th after dropping 11
6.78 2
Vermont 5.48 18 5.69 13 5.78 12 places the year before. The lowest-ranked
5.95 12 5.37 18
Virginia 5.80 13 5.64 16 5.62 16 5.98 10 5.73 11
Washington 6.15 8 6.57 6 5.94 7
states were Mississippi (49) and Alabama (50).
5.87 13 6.45 4
WestVirginia 3.54 48 3.70 47 3.46 47 Louisiana, which had been ranked 49th in 2008,
3.32 49 3.40 47
Wisconsin 5.07 22 5.33 20 5.15 22 5.27 19 5.42 16
jumped to 41st position this year, as it
Wyoming 6.37 5 5.94 9 5.86 10 6.00 7 5.14 24
continues to rebound from the effects of
Hurricane Katrina. On the other hand California, beset by fiscal stresses, dropped seven places to 32nd
position.
What is Competitiveness?
We consider a state to be competitive if it has in place the policies and conditions that ensure and sustain
a high level of per capita income and continued growth. To achieve this, a state should be able both to
Page 6 / BHI State Competitiveness Report 2009

attract and incubate new businesses and to
BHI
provide an environment that is conducive to the In thinking about how to create an index of
growth of existing firms. competitiveness, we begin with the simple
economic relation:
Competitiveness may be thought of as a catch-all
term that covers what Michael Porter calls “the Y = f (K,L,technology).
microeconomic foundations of prosperity.” The
states of the United States all face the same This says that output (Y) depends on the
macroeconomic conditions set at the top – amount of capital (K), labor (L) and
national fiscal, monetary and trade policy. Where technology that is harnessed by the
they differ from one another is in their economy. As expected, more inputs lead to
microeconomic policies such as tax and regulatory more output. But what raises input levels?
regimes, their provision and emphasis on And why do some states mix the ingredients
education, and their – sound fiscal policies, educated
attractiveness to business. workforce, openness to trade –
These policies matter. As Porter more successfully than others?
puts it, “wealth is actually
created at the microeconomic To answer these questions we need
level … - in the ability of firms to focus on the quality of the
to create valuable goods and business environment. Using his
services using productive celebrated “diamond,” Porter finds
methods.” 1 it helpful to group the influences
into four components: the quality of
It follows that the outcome of available inputs, the sophistication
competitiveness is greater of local demand, the nature of local
affluence, measured by higher levels of real Gross suppliers and the extent to which they form
StateProduct (GSP) or personal income per capita. clusters, and the rules and institutions that

govern the market.2 These are still very
Quantifying Competitiveness broad categories and so, following the
To be useful as a concept, it is essential to have an Porter-inspired Global Competitiveness
operational measure of competitiveness, a Report, we actually classify our indicators
measure that aggregates the key microeconomic into eight groups. The breakdown is as
variables into a single index. In its influential follows:
annual Global Competitiveness Report, the World
Economic Forum does this for the countries of the Government and fiscal policies. Businesses
world, but there is no equivalent at the level of are more likely to be attracted to areas
the states of the U.S. There are some more with moderate tax rates and clear
specialized rankings of the states, but none meet evidence of financial discipline (as
the criteria for measuring competitiveness as evidenced, for instance, by high state
defined above, or have an equivalent breadth of and municipal bond ratings, and
coverage. We believe the institute’s index meets budgetary balance). This subindex is
the challenge. designed to pick up these effects.

BHI TechnicalNote1:
Security. A state will be more attractive to business if
public officials are trusted, and if crime is low. The CreatingtheIndexes
security subindex addresses these dimensions of
competitiveness, with particular emphasis on the Giventherawdataseriesforeachstate,several
importance of public safety. stepswereneededinordertoconstructthe
competitivenessindex.
Infrastructure. How easy is commuting? Do most
1. First,eachvariablewasnormalizedtogiveita
households have access to high-speed broadband
and telephone service? Is housing affordable? How meanof5,astandarddeviationof1,anda
expensive is energy? These are the elements of rangefrom0(worst)to10(best).
competitiveness that are included in the 2. ThentheeightsubͲindexeswereformedasthe
infrastructure subindex for each state.
simpleaveragesofthenormalizedcomponent
Human resources. A high level of labor force variables.
participation, and skilled labor that is readily 3. Next,thesubͲindexesthemselveswere

available and not too expensive, combined with a normalized,againgivingameanof5and
widespread commitment to education, training and standarddeviationof1toeach.These
health care, make a state attractive for business. arepresentedinsidethefrontandback
These factors are captured in the human resources covers.
subindex. Finally,theoverallindexofstatecompetitivenessis
thesimpleaverageoftheeightsubͲindexes,again
Technology. Since the arrival of the industrial
normalizingitsoithasameanof5andstandard
revolution, the development and application of
deviationof1.Inpracticethecompetitiveness
technology has been central to economic
indicatorindexrangedfromalowof2.57toahigh
development. The technology subindex measures
this by taking into account research funding, the of7.14.
number of patents issued, the proportion of

scientists and engineers in the labor force, and the
importance of high tech companies.
Business Incubation. A good idea is not enough;

businesses also need to be able to mobilize
financing for investment, both internally and from
the financial system. A higher rate of business births
is a particularly clear sign of a competitive
environment, and is an important component of the
business incubation subindex.
Openness. Open economies tend to be more

competitive and hence more productive. The
openness subindex measures how connected the
firms and people in a state are with the rest of the
world. It is based on the level of exports, as well as
Page 8 /BHI State Competitiveness Report 2009

the percent of the population born abroad, a One difficult, and controversial, part is
BHI
key element. choosing a weighting scheme. Our
approach is the simplest and most
Environmental Policy. States that are faced with transparent: within each subindex, each
environmental problems, or that have a variable carries equal weight. Then each
heavy-handed policy of environmental sub-index is given the same weight when
regulation, are likely to be less attractive to constructing the overall index. This has
businesses as well as to their workers and been referred to as a “democratic”
managers; we measure this effect with the weighting structure, and is a reasonable
environmental artifact. If two series
policy were very highly
subindex, correlated, there
which among would be no need to
other things include both of them
reflects the in the index; at first
levels of air sight, one might
pollution and expect some series to
of toxic move together, such
releases. as the level of
Decent air taxation and the
quality is a number of state
measure that employees. In
states are pursuing policies that improve the practice, neither these series, nor the
environment, and attracts workers and others that make up the building blocks of
investors. our index, are closely correlated, suggesting
that they are indeed picking up different

A complete list of the components of the facets of competitiveness.
competitiveness indexes is given in Table A1 at
the end of this section of the report. We have Is the competitiveness index useful?
used the most recent data available. Do the indexes of state competitiveness
explain affluence and growth? If the index
The eight categories are coherent, but there is is properly constructed, then it should help
explain why some areas are affluent and
inevitably some degree of arbitrariness in the
others are not. In our experiment we
way in which individual data series are assigned
estimate an equation with the following
to the subindexes. For instance, the amount of general form:
air travel could be included in the infrastructure
subindex or the measure of openness; and Real Personal Income per capita
electricity prices could be included in the = a + b × Competitiveness Index
infrastructure subindex or the environmental
subindex. In practice, the assignment of a data We use a measure of personal income per
series is much less important than the fact that it capita for 2008, which is the year that
is included at all. corresponds best to the timing of most of
the component series that make up the
A competitiveness index is simply a summary competitiveness index; figures for 2009 are
measure based on a large number of variables.

BHI (with an index of 3.20) could achieve the same
not yet avaiable. Since the cost of living varies
competitiveness as Massachusetts (with an
from state to state we adjust the raw numbers to
index of 7.04), real per capita income in
take account of these differences, using spatial
Alabama would be over $4,500 higher than it
price indexes generated by Aten and D’Souza
currently is, an increase of over 10 percent. A
(2008).3 This gives the following estimated
similar linear regression with an R2 of 0.7 finds
equation:
that if a state rises by ten points in the ranking
(e.g. from 15th to 5th), its real per capita income
Personal income per capita =
is expected to be $750 higher. Competitiveness
35.6 + 1.196 × Competitiveness Index 2009
really does matter.
t=12.6 t=2.2
Putting the competitiveness index to work

This equation has an R2 of .09, and personal
What do we learn from this exercise?
income per capita is measured in thousands of
Naturally it is interesting to look at the raw
dollars per year in 2008. The data points, and the
rankings (Table 1 on page 6), but this may not
line fitted
be the most
through them,
important use of
are shown in
the information.
55
Figure 1.
Real Personal Income per capita, $'000
The detailed
50
data, both in
individual
45
variables and
The coefficient
40
the sub-indexes,
on the Index
allow one to
variable, which
35
identify the
is on a scale of 0
determinants of
30
(not 3 4 5 6 7
Competitiveness Index 2009
competitiveness.
competitive) to
This is of value
10 (very
to policy makers,
competitive) is
who are in a better position to identify what
significant at the 5 percent level and indicates
needs to be done, in order of priority, to
that every additional one point on the
improve the position of their states.
competitiveness index is associated with $1,196
more in real per capita income. Thus if Alabama
The logic behind this is that a higher
competitiveness indicator index is associated
with greater affluence. A reasonable inference
is that if one were to improve
competitiveness, then residents of the state
would be better off. And the greatest upside
potential is for the indicators whose
performance is currently weak. For instance, a
low-crime state may have trouble reducing the
crime rate further, while for a high-crime state,
efforts to reduce crime are likely to be an
efficient way to boost competitiveness.

To illustrate, consider the case of Georgia, which this sound tax policy are important, and our index of
BHI
year jumped from 37th to 28th position, with a competitiveness includes some indicators, such
competitiveness index this year of 4.69 or just as the share of state tax collections in Gross
slightly below the average (5.00) in our ranking. State Product, that measure the weight of
Georgia certainly does some things well, particularly government quite well. However, we believe
in fiscal policy where it ranks 11th , and business that other factors are also important to
incubation, where it ranks fifth. competitiveness, even if they are not easy to
place on a scale of economic freedom or fit into
However, Georgia’s overall the ideals of low tax regimes;
index score is hurt by these include such variables as
several factors, including the time that is required to
most notably its low human travel to work, the availability
resources subindex ranking of venture capital, the number
(46th) and its weak of patents generated, and the
environmental subindex importance to the economy of
ranking (39th). While these high-tech firms. For each state,
are the areas of greatest we set out the main
deficiency for Georgia, they competitive strengths and
also mark the areas with weaknesses to give individuals
the greatest potential. For example, if Georgia could a sense of where their home state has been and
institute measures that would raise its subindexes which direction it could be taking.
for human resources and environment variables to
the national average, it could increase its overall The central goal of this report is to engage
index from 4.69 to 5.24, increasing its overall ranking everyone in thinking about how best to improve
from 28th to 20th. This improvement would be long term economic growth, while expanding

associated with an increase in real personal income and maintaining high levels of personal income.
of almost $660 per person per year, or a total of $6.4 At the state level, even if it is essential to think
billion for the whole state. global, we still have to act local.
What next? (Endnotes)

1 Michael Porter, “The Current Competitiveness Index:
Since 2001, when we began compiling these
Measuring the Microeconomic Foundations of
rankings, we have set out to invite the policymakers, Prosperity,” in World Economic Forum, The Global
citizens and the media to pore over the detailed Competitiveness Report 2000, Oxford University Press,
results contained here. We have also visited state New York, 2000. For more discussion of
houses from Massachusetts to Rhode Island and competitiveness applied to nations see “What is
Competitiveness?” The Competitiveness Institute,
Arizona to Wisconsin and have hosted discussions (September 2007): http://www.competitiveness.org/
with delegations from the Republic of Georgia, article/articleview/774/1/32/ (accessed November 1,
China, and other nations. Legislatures and planning 2008).
2Michael E. Porter, The Competitive Advantage of
agencies have sought ways to improve their ranking.
Nations, Free Press, New York, 1990.
3 Bettina H. Aten and Roger J. D’Souza, “Regional Price
Since then, we’ve received significant press Parities: Comparing Price Level Differences Across
attention and fielded dozens of questions about our Geographic Areas,” Survey of Current Business,
methodology. Some have compared our ranking to November 2008, 64-74.
other studies that stress economic freedom or low
tax criteria. We do agree that economic freedom and

TableA1
BHI ComponentsofSubͲindexesforStates
SubͲindex CompetitivenessIndicatorsIndex(“objective”)
Government& Stateandlocaltaxespercapita/incomepercapita(Ͳ)
FiscalPolicy Workers’compensationpremiumrates(Ͳ)
Bondrating(compositeofS&P’sandMoody’s,scale1Ͳ25)(+)
Budgetsurplusas%ofGrossStateProduct(+)
Averagebenefitperfirstpaymentforunemployed(Ͳ)
FullͲtimeͲequivalentstateandlocalgovernmentemployeesper100residents
(Ͳ)
Security Crimeindexper100,000inhabitants(Ͳ)
%Changeincrimeindex,2005Ͳ2006(Ͳ)
Murdersindexper100,000inhabitants(Ͳ)
TheBGAIntegrityIndex(+)
Infrastructure Telephonepenetration(combinedFed/state/localtaxesas%ofprice)(+)
HighͲspeedlinesper1000(+)
Airpassengerspercapita(+)
Traveltimetowork(Ͳ)
ElectricitypricespermillionBTU(Ͳ)
Medianmonthlyhousingcosts(Ͳ)
HumanResources %ofpopulationwithouthealthinsurance(Ͳ)
%ofpopulationaged25andoverthatgraduatedfromhighschool(+)
Unemploymentrate,notseasonallyadjusted(Ͳ)
%ofstudentsenrolledindegreeͲgrantinginstitutionsper1000(+)
%ofadultsinthelaborforce(+)
Infantmortalityrateindeathsper1,000livebirths(Ͳ)
NonͲfederalphysiciansper100,000inhabitants(+)
%ofstudentsatoraboveproficientinmathematics,Grade4publicschools
(+)
Technology AcademicR&Dper$1,000GSP(+)
NIHsupporttoinstitutionsinthestate,percapita(+)
Patentsper100,000inhabitants(+)
Scienceandengineeringgraduatestudentsper100,000inhabitants(+)
Scienceandengineeringdegreesawardedper100,000inhabitants(+)
Scientistsandengineersas%oflaborforce(+)
EmploymentinhighͲtechindustryasa%oftotalemployment(+)
Business Depositsincommercialbanksandsavingsinstitutions,percapita(+)
Incubation Venturecapitalavailablepercapita(+)
Employerfirmbirthsper100,000inhabitants(+)
IPO (A weighted measure of the value and number of initial public Stock
offeringsofcompaniesasashareofGrossStateProduct)(+)
%oflaborforcethatisrepresentedbyunions(Ͳ)
Minimumwage(Ͳ)
Openness Exportspercapita,$(+)
State Index
Incomingforeigndirectinvestmentpercapita,$(+)
%ofpopulationbornabroad(+)
Environmental Toxicreleaseinventory,pounds/1000sq.miles(Ͳ)
Policy Carbonemissionper1000sqmiles(Ͳ)
Airquality(%goodaveragedays)(+)


BHI
“The states of the United States all face
the same macroeconomic conditions set at
the top – national fiscal, monetary and
trade policy. Where they differ from one
another is in their microeconomic policies
such as tax and regulatory regimes, their
provision and emphasis on education, and
their attractiveness to business. These
policies matter.”
State Index

BHI
Each state’s overall rank

How to Read Indicator Index Pages is based on its total
index from 1 (highest) to
50 (lowest)
The index value ranks from 0
to 10, with a mean of 5 and a
In this column you will standard deviation of 1. Each
find variables where the state’s index is ordered to In this column you
state is competitive. create the overall rank among will find variables
the 50 states. where the state is
Index Overall Rank not competitive
STATE NAME 6.10 5
COMPETITIVE ADVANTAGES COMPETITIVE DISADVANTAGES
Inde Ran Inde Ran

Subindex/Variable Subindex/Variable
x k x k
Government and fiscal policy Government and fiscal policy
subindex 4.97 24 subindex 4.97 24
Budget deficit, % of GSP 5.10 11 Bond rating: composite 3.13 49
Security subindex 5.65 11 Security subindex 5.65 11

The BGA Integrity Index 5.69 15
Variables are the

Infrastructure subindex 3.63 47 Infrastructure subindex elements
3.63 that47 make up
A subindex combines
High-speed lines per 1000 6.99 1 Electricity prices per million BTU each3.49
subindex.
47
one or more variables Median Monthly Housing Costs Variables
3.35 that
47 rank
that explain certain Travel time to work between
3.06 1 and
49 20 are
How to read the index pages
social orHuman
economic
resources subindex 6.68 1 Human resources subindex considered
6.68 1
characteristics. For advantages to a state,
example, the institutions while variables that
and security subindex is rank between 30 and
composed Technology
of othersubindex 8.45 1 Technology subindex 50 are
8.45considered
1
Academic R&D per $1,000 GSP
variables such as crime, 7.71 2 disadvantages.
Patents, per 100,000 inhabitants 6.41 3
percentage change in
crime, and murders
committed in the state.
Business incubation subindex 7.65 1 Business incubation subindex 7.65 1
Bank deposits per capita 5.38 5 Minimum wage 3.42 43
Venture capital per capita 10.00 1
Openness subindex 6.29 7 Openness subindex 6.29 7
Exports per capita, dollars 5.95 7
% of population born abroad 5.98 9
Environmental policy subindex 3.92 43 Environmental policy subindex 3.92 43

Carbon emission per 1000 sq 2.80 48
miles

BHI
2009 State Index

ALABAMA Index Overall Rank
BHI 3.20 50
Subindex/Variable Index Rank Subindex/Variable Index Rank

Government and fiscal policy subindex 5.07 24 Government and fiscal policy subindex 5.07 24
State and local taxes per capita /income per capita 5.65 11 Workers’ compensation premium rates 4.05 42
Average benefit per first payment for unemployed 6.78 2 Budget deficit, % of GSP 4.61 45
Full-time-equivalent state and local government employees 4.67 38

per 100 residents

Crime index, per 100,000 inhabitants 3.73 45
Crime index change 2006-2007, % 4.22 42
Murder index, per 100,000 inhabitants 3.70 46
Infrastructure subindex 4.96 29 Infrastructure subindex 4.96 29
Telephone penetration (combined Fed/state/local taxes 5.55 16 High-speed lines per 1000 3.96 43
as % of price)
Median monthly housing costs 5.86 9 Air passengers per capita 4.24 45
Human resources subindex 4.01 47 Human resources subindex 4.01 47

% of population aged 25 and over that graduated from high 3.68 45
school
Unemployment rate, not seasonally adjusted 4.21 38
% of adults who are in the labor force 3.66 46
Infant mortality rate, deaths per 1000 live births 3.51 46
Rate of nonfederal physicians per 100,000 inhabitants 4.23 40
% of students at or above proficient in mathematics, grade 3.08 48

4 - public schools
Technology subindex 4.77 34 Technology subindex 4.77 34

Academic R&D per $1,000 GSP 5.01 18 Patents, per 100,000 inhabitants 4.06 44

Minimum wage 4.96 8 Bank deposits per capita 4.63 34
Employer firm births per 100,000 inhabitants 3.90 44

Incoming foreign direct investment per capita, dollars 4.91 13 % of population born abroad 4.09 43

Toxic release inventory, pounds per 1000 sq. miles 4.67 39
Air Quality Index 4.36 37
State Index

ALASKA Index Overall Rank
6.31 7
BHI

Budget deficit, % of GSP 10.00 1 Full-time-equivalent state and local government employees 2.29 49
per 100 residents
Average benefit per first payment for unemployed 6.54 3

Crime index change 2006-2007, % 6.84 2 The BGA Integrity Index 4.27 40

as % of price)
Air passengers per capita 7.29 3 Electricity prices per million BTU 3.44 45
Travel time to work 6.48 5 Median monthly housing costs 3.99 42

% of population aged 25 and over that graduated from 6.41 2 % of population without health insurance 3.60 46
high school
Unemployment rate, not seasonally adjusted 5.54 14 % of population enrolled in degree-granting institutions 3.63 49


NIH support to institutions per capita 4.22 45
Patents per 100
Patents, 100,000
000 inhabitants 3 88
3.88 50
Science & Engineering grad. students 100,000 4.40 34
inhabitants
S&E degrees awarded per 100,000 inhabitants 3.40 49
Scientists and engineers as % of labor force 4.58 32

Bank deposits per capita 5.10 8 Venture capital per capita 4.40 50
Employer firm births per 100,000 inhabitants 5.30 17 IPO, % of GSP 4.43 38
Minimum wage 4.96 8 % of labor force that is represented by unions 2.92 48

Incoming foreign direct investment per capita, dollars 10.00 1

Carbon emission per 1000 sq miles 5.94 1
State Index

BHI ARIZONA Index Overall Rank
5.12 21

State and local taxes per capita /income per capita 5.74 10 Bond rating: composite 4.20 37
Workers’ compensation premium rates 6.11 7 Budget deficit, % of GSP 4.13 49

Full-time-equivalent state and local government 6.28 3

employees per 100 residents

Crime index change 2006-2007, % 5.32 16 Crime index, per 100,000 inhabitants 3.48 47
The BGA Integrity Index 5.84 11 Murder index, per 100,000 inhabitants 4.26 37

Air passengers per capita 5.54 8 Travel time to work 4.59 32
Median monthly housing costs 4.47 36

% of population enrolled in degree-granting institutions 8.80 1 % of population without health insurance 3.92 43

school

4 - public schools

Patents, per 100,000 inhabitants 5.14 17 Academic R&D per $1,000 GSP 4.62 33
Scientists and engineers as % of labor force 5 24
5.24 17 NIH support to institutions per capita 4 35
4.35 40
Employment in high-tech industry as % of total 5.32 16 Science & Engineering grad. students 100,000 4.37 36
employment inhabitants

IPO, % of GSP 6.01 7 Bank deposits per capita 4.45 49
% of labor force that is represented by unions 5.54 20
Minimum wage 6.59 4

% of population born abroad 5.99 9 Incoming foreign direct investment per capita, dollars 4.62 45

Carbon emission per 1000 sq miles 5.69 14 Air Quality Index 2.09 50
State Index

ARKANSAS Index Overall Rank
4.23 38
BHI

Workers’ compensation premium rates 6.21 5 State and local taxes per capita /income per capita 4.43 36
Budget deficit, % of GSP 5.16 6


Travel time to work 5.65 11 Telephone penetration (combined Fed/state/local taxes as 4.82 31
% of price)
Electricity prices per million BTU 5.60 17 High-speed lines per 1000 3.32 47

Unemployment rate, not seasonally adjusted 5.45 16 % of population without health insurance 4.08 41
school
% of population enrolled in degree-granting institutions 4.39 34


4 - public schools

Academic R&D per $1,000 GSP 4.30 41
Patents per 100
Patents, 100,000
3.94 47
inhabitants
Employment in high-tech industry as % of total employment 4.06 41

Employer firm births per 100,000 inhabitants 5.42 15 Bank deposits per capita 4.60 39
% of labor force that is represented by unions 5.98 10 Venture capital per capita 4.40 49
Minimum wage 6.59 4 IPO, % of GSP 4.43 38

State Index

CALIFORNIA Index Overall Rank
4.48 32
BHI COMPETITIVE ADVANTAGES COMPETITIVE DISADVANTAGES

Full-time-equivalent state and local government 5.83 9 State and local taxes per capita /income per capita 3.99 45
Workers’ compensation premium rates 4.35 37
Bond rating: composite 2.83 49

The BGA Integrity Index 5.51 19 Crime index change 2006-2007, % 4.12 45

High-speed lines per 1000 5.95 8 Telephone penetration (combined Fed/state/local taxes as 4.13 41
% of price)
Electricity prices per million BTU 4.07 40

Infant mortality rate, deaths per 1000 live births 6.22 5 % of population aged 25 and over that graduated from high 3.20 48
school
Rate of nonfederal physicians per 100,000 inhabitants 5.10 19 Unemployment rate, not seasonally adjusted 3.57 47

4 - public schools

NIH support to institutions per capita 5.46 10 S&E degrees awarded per 100,000 inhabitants 4.65 31
Science & Engineering gradgrad. students 100
100,000
000 5 22
5.22 20
inhabitants
Employment in high-tech industry as % of total 6.37 6
employment

Bank deposits per capita 4.79 18 % of labor force that is represented by unions 3.83 45
Venture capital per capita 8.90 2 Minimum wage 3.74 44
IPO, % of GSP 5.00 15

% of population born abroad 8.06 1 Incoming foreign direct investment per capita, dollars 4.73 33

Toxic release inventory, pounds per 1000 sq. miles 5.70 12 Air Quality Index 2.68 49
State Index

Colorado
COLORADO Index Overall Rank

6.33 6
BHI

State and local taxes per capita /income per capita 5.30 17 Average benefit per first payment for unemployed 3.91 44



% of price)
Electricity prices per million BTU 5.59 18 Median monthly housing costs 4.58 34

high school

% of students at or above proficient in mathematics, 5.71 9
grade 4 - public schools

i h bit t
inhabitants
employment

Venture capital per capita 6.29 3 Bank deposits per capita 4.61 36
Employer firm births per 100,000 inhabitants 6.95 2 Minimum wage 4.91 39
IPO, % of GSP 5.02 14

Incoming foreign direct investment per capita, dollars 4.87 18 Exports per capita, dollars 3.84 46


State Index

CONNECTICUT Index Overall Rank
BHI 4.81 26

State and local taxes per capita /income per capita 3.46 48

Crime index, per 100,000 inhabitants 5.92 10 Crime index change 2006-2007, % 4.13 44

Telephone penetration (combined Fed/state/local taxes 5.71 12 Air passengers per capita 4.36 40
as % of price)
High-speed lines per 1000 6.72 2 Travel time to work 4.56 34

% of population without health insurance 6.18 4 % of population enrolled in degree-granting institutions 4.19 40
% of population aged 25 and over that graduated from 5.56 19

high school


100,000
000 6 66
6.66 4
inhabitants

Bank deposits per capita 4.90 16 Employer firm births per 100,000 inhabitants 4.31 38
IPO, % of GSP 6.14 5 % of labor force that is represented by unions 4.20 39
Minimum wage 3.74 44


State Index

Delaware
DELAWARE Index Overall Rank

5.16 20
BHI

Bond rating: composite 6.48 1 Workers’ compensation premium rates 3.95 43
Average benefit per first payment for unemployed 5.68 14 Full-time-equivalent state and local government 4.83 35


as % of price)

% of population without health insurance 5.87 9 Infant mortality rate, deaths per 1000 live births 3.46 47
% of adults who are in the labor force 6.56 5 % of students at or above proficient in mathematics, grade 4.58 36
4 - public schools

Science & Engineering grad. students 100,000 5.48 12 NIH support to institutions per capita 4.53 34
inhabitants
S&E degrees awarded per 100100,000
5.16 18
employment

Bank deposits per capita 10.00 1
IPO, % of GSP 10.00 1
Minimum wage 4.96 8


Air Quality Index 4.11 41 State Index

Florida
FLORIDA Index Overall Rank

BHI 4.87 25




The BGA Integrity Index 5.74 16 Crime index, per 100,000 inhabitants 3.37 48

Air passengers per capita 5.66 6 Telephone penetration (combined Fed/state/local taxes as 3.17 48
% of price)
Travel time to work 4.33 40

Rate of nonfederal physicians per 100,000 inhabitants 5.14 18 % of population without health insurance 3.43 47

school


NIH support to institutions per capita 4 26
4.26 42
inhabitants

Employer firm births per 100,000 inhabitants 6.93 3 Venture capital per capita 4.55 34
Minimum wage 4.96 8

% of population born abroad 6.69 5 Exports per capita, dollars 4.61 31

Air Quality Index 6.11 8 Toxic release inventory, pounds per 1000 sq. miles 4.76 37
State Index

GEORGIA Index Overall Rank
4.69 28
BHI

Bond rating: composite 6.48 1 State and local taxes per capita /income per capita 4.51 35



% of population without health insurance 3.90 44
school


4 - public schools
Scientists and engineers as % of labor force 5.13 20 Science & Engineering grad. students 100,000 4.22 41
inhabitants
Employment in high-tech industry as % of total 5 13
5.13 19 S&E degrees awarded per 100100,000
4.18 41
employment

Minimum wage 8.38 1


State Index

HAWAII Index Overall Rank
BHI 4.72 27



Telephone penetration (combined Fed/state/local taxes 5.47 17 Travel time to work 4.27 42
as % of price)
High-speed lines per 1000 5.88 11 Electricity prices per million BTU 2.01 50
Air passengers per capita 9.32 1 Median monthly housing costs 1.93 50

% of population aged 25 and over that graduated from 6.04 8 % of adults who are in the labor force 4.74 31
high school
Unemployment rate, not seasonally adjusted 5.67 12 % of students at or above proficient in mathematics, grade 4.71 33
4 - public schools

inhabitants
S&E degrees awarded per 100100,000
3.77 47

Minimum wage 4.96 8 Employer firm births per 100,000 inhabitants 4.49 31
IPO, % of GSP 4.48 36


Toxic release inventory, pounds per 1000 sq. miles 5.64 17 Carbon emission per 1000 sq miles 4.82 35

State Index

Idaho
IDAHO Index Overall Rank

6.12 10
BHI
Average benefit per first payment for unemployed 5.37 18 Budget deficit, % of GSP 4.75 36

Crime index, per 100,000 inhabitants 6.42 4 The BGA Integrity Index 3.53 44

as % of price)

Infant mortality rate, deaths per 1000 live births 5.57 16 % of population without health insurance 4.13 37

Scientists and engineers as % of labor force 5.68 12 NIH support to institutions per capita 4.03 50
Employment
p y in high-tech
g industryy as % of total 6.18 9 Science & Engineering
g g grad.
g students 100,000
, inhabitants 4.31 39
employment

Minimum wage 4.96 8


State Index

Illinois
ILLINOIS Index Overall Rank

BHI 4.33 36

Full-time-equivalent state and local government 5.87 8 Bond rating: composite 4.20 37


% of price)

% of population enrolled in degree-granting institutions 5.41 14 Unemployment rate, not seasonally adjusted 4.26 36
Rate of nonfederal physicians per 100,000 inhabitants 5.31 16 Infant mortality rate, deaths per 1000 live births 4.55 34

NIH support to institutions per capita 4.92 20 Academic R&D per $1,000 GSP 4.54 36
Patents,, per
p 100,000
inhabitants

IPO, % of GSP 6.04 6 % of labor force that is represented by unions 4.18 42


State Index

Indiana
INDIANA Index Overall Rank

4.26 37
BHI



% of students at or above proficient in mathematics, 5.33 19 Unemployment rate, not seasonally adjusted 4.30 35

S&E degrees awarded per 100,000 inhabitants 5.16 17 Academic R&D per $1,000 GSP 4.64 31
p y
Employment g
in high-tech industryy as % of total employment
p y 3.97 45

Minimum wage 4.96 8 Bank deposits per capita 4.53 46

Exports per capita, dollars 5.30 18 % of population born abroad 4.29 34


IOWA Index Overall Rank
6.13 9

Workers’ compensation premium rates 5.79 11 Full-time-equivalent state and local government employees 4.29 41
per 100 residents


as % of price)
Travel time to work 6.45 6 Air passengers per capita 4.21 46

% of population without health insurance 6.15 5 Rate of nonfederal physicians per 100,000 inhabitants 4.36 36

high school


Academic R&D per $1,000 GSP 5.28 15 Scientists and engineers as % of labor force 4.29 35
NIH support to institutions per capita 5.11 15 Employment in high-tech industry as % of total employment 4.22 35

inhabitants

Minimum wage 4.96 8 Venture capital per capita 4.55 32
IPO, % of GSP 4.50 33

Exports per capita, dollars 5.24 20 Incoming foreign direct investment per capita, dollars 4.67 39


State Index

KANSAS Index Overall Rank
5.72 14
BHI
Bond rating: composite 5.57 12 Average benefit per first payment for unemployed 4.11 41
per 100 residents


% of price)

% of population aged 25 and over that graduated from 5.82 16 Rate of nonfederal physicians per 100,000 inhabitants 4.65 31
high school


Science & Engineering grad. students 100,000 5.90 7 Academic R&D per $1,000 GSP 4.64 32
inhabitants
S&E degrees awarded per 100,000 inhabitants 5.07 20 NIH support to institutions per capita 4.53 33
5.31 16
employment

IPO, % of GSP 4.92 17
Minimum wage 4.96 8



State Index

KENTUCKY Index Overall Rank
BHI 3.95 43

per 100 residents


% of price)
Travel time to work 5.28 17 High-speed lines per 1000 3.70 45

school

4 - public schools

inhabitants

% of labor force that is represented by unions 5.58 19 Bank deposits per capita 4.57 42


State Index

LOUISIANA Index Overall Rank
4.06 41
BHI

Budget deficit, % of GSP 5.15 9 Bond rating: composite 1.91 50

Average benefit per first payment for unemployed 6.51 4 Full-time-equivalent state and local government employees 4.05 42
per 100 residents


as % of price)
Electricity prices per million BTU 5.65 16 Air passengers per capita 4.51 33

school

4 - public schools

Patents per 100
Patents, 100,000
4.05 46

IPO, % of GSP 4.48 35


Air Quality Index 5.49 17 Toxic release inventory, pounds per 1000 sq. miles 4.39 43
State Index

Maine
MAINE Index Overall Rank

BHI 5.05 23

Average benefit per first payment for unemployed 5.43 17 State and local taxes per capita /income per capita 4.43 36


Murder index, per 100,000 inhabitants 5.94 9 The BGA Integrity Index 4.71 33

Telephone penetration (combined Fed/state/local 5.58 13 High-speed lines per 1000 3.95 44
taxes as % of price)
Air passengers per capita 4.41 38


high school


inhabitants
ab ta ts
employment

IPO, % of GSP 5.65 8
Minimum wage 4.96 8



State Index

MARYLAND Index Overall Rank
4.48 31
BHI

Bond rating: composite 6.48 1 Budget deficit, % of GSP 4.70 39

The BGA Integrity Index 5.87 9 Crime index, per 100,000 inhabitants 4.20 37

% of price)



Science & Engineering
g g grad.
g students 100,000
, 6.13 6
inhabitants
employment

IPO, % of GSP 4.99 16
Minimum wage 4.96 8


State Index

MASSACHUSETTS Index Overall Rank
BHI 7.04 1

Workers’ compensation premium rates 6.58 3 Average benefit per first payment for unemployed 2.83 49


as % of price)

% of population without health insurance 7.31 1 Unemployment rate, not seasonally adjusted 4.94 31
high school



Patents per 100
Patents, 100,000
6.72 5
inhabitants
employment
Venture capital per capita 9.74 1 % of labor force that is represented by unions 4.29 37
IPO, % of GSP 7.77 2 Minimum wage 3.74 44


State Index

MICHIGAN Index Overall Rank
4.47 33
BHI

Workers’ compensation premium rates 5.30 20 Bond rating: composite 3.74 46
Full-time-equivalent state and local government 6.03 6 Budget deficit, % of GSP 4.70 39

as % of price)

% of population enrolled in degree-granting institutions 5.26 19 % of adults who are in the labor force 3.88 43
Rate of nonfederal physicians per 100,000 inhabitants 5.48 11 Infant mortality rate, deaths per 1000 live births 4.19 41

4 - public schools

Patents per 100
Patents, 100,000
5.52 13
employment



State Index

MINNESOTA Index Overall Rank
BHI 6.58 4



high school


inhabitants
employment

Venture capital per capita 5.49 6 Employer firm births per 100,000 inhabitants 4.23 40
Minimum wage 6.75 3 % of labor force that is represented by unions 4.27 38



State Index

MISSISSIPPI Index Overall Rank
3.29 49
BHI

State and local taxes per capita /income per capita 5.39 15 Budget deficit, % of GSP 4.73 37
Bond rating: composite 5.57 12 Full-time-equivalent state and local government employees 3.97 45
per 100 residents

Crime index change 2006-2007, % 6.15 7 Murder index, per 100,000 inhabitants 3.49 48

Median monthly housing costs 5.82 12 High-speed lines per 1000 2.52 50

school


4 - public schools
Academic R&D per $1,000 GSP 5.36 10 NIH support to institutions per capita 4.09 48
Patents per 100
Patents, 100,000
3.92 49
inhabitants

IPO, % of GSP 4.43 38

Carbon emission per 1000 sq miles 5.53 20 State Index

MISSOURI Index Overall Rank
BHI 4.44 34




% of price)

% of adults who are in the labor force 5.07 20 Infant mortality rate, deaths per 1000 live births 4.48 35

NIH support to institutions per capita 5.38 12 Employment in high-tech industry as % of total employment 4.63 31

inhabitants

IPO, % of GSP 4.73 20 Venture capital per capita 4.57 31


State Index

MONTANA Index Overall Rank
5.52 17
BHI

Average benefit per first payment for unemployed 5.90 10 Bond rating: composite 4.20 37


Telephone penetration (combined Fed/state/local taxes 5.94 6
as % of price)
High-speed lines per 1000 5.81 12

high school
Unemployment rate, not seasonally adjusted 6.14 6 % of population enrolled in degree-granting institutions 4.03 44
% of adults who are in the labor force 5.24 18 Rate of nonfederal physicians per 100,000 inhabitants 4.55 32


S&E degrees awarded per 100
100,000
6.02 9 Scientists and engineers as % of labor force 4 01
4.01 43




State Index

Nebraska
NEBRASKA Index Overall Rank

BHI 5.55 16

Bond rating: composite 5.57 12 Full-time-equivalent state and local government 3.78 47


% of price)

high school


inhabitants




State Index

Nevada
NEVADA Index Overall Rank

5.35 19
BHI



Telephone penetration (combined Fed/state/local taxes 7.00 2 Electricity prices per million BTU 5.04 35
as % of price)
High-speed lines per 1000 5.65 14 Median monthly housing costs 3.62 46

Infant mortality rate, deaths per 1000 live births 5.76 12 % of population without health insurance 3.32 48
school

4 - public schools

4.05 49
inhabitants

Employer firm births per 100,000 inhabitants 5.93 10 % of labor force that is represented by unions 4.06 43
IPO, % of GSP 4.90 18
Minimum wage 6.10 6


Carbon emission per 1000 sq miles 5.85 5 Toxic release inventory, pounds per 1000 sq. miles 4.79 34
State Index

NEW HAMPSHIRE Index Overall Rank
5.70 15





as % of price)


high school


Academic R&D per $1,000 GSP 5.67 6 Science & Engineering grad. students 100,000 inhabitants 4.31 40

P t t per 100,000
Patents, 100 000 inhabitants
i h bit t 5 72
5.72 10
employment

Venture capital per capita 6.00 5 IPO, % of GSP 4.43 38
Minimum wage 4.96 8



State Index

New Jersey
NEW JERSEY Index Overall Rank

4.03 42
BHI
per 100 residents



% of adults who are in the labor force 5.38 17 Unemployment rate, not seasonally adjusted 4.64 34
Infant mortality rate, deaths per 1000 live births 6.06 9 % of population enrolled in degree-granting institutions 3.72 48


Employment
p y in high-tech
g industryy as % of total 5.82 10 S&E degrees
g awarded perp 100,000
employment

Minimum wage 4.96 8


State Index

NEW MEXICO Index Overall Rank
4.14 40

State and local taxes per capita /income per capita 5.65 11 Full-time-equivalent state and local government 3.91 46

% of price)

% of population enrolled in degree-granting institutions 5.45 13 % of population aged 25 and over that graduated from high 3.82 42
school
Infant mortality rate, deaths per 1000 live births 5.56 17 % of adults who are in the labor force 4.09 42
4 - public schools

Science & Engineering grad. students 100,000 5.52 11 S&E degrees awarded per 100,000 inhabitants 4.39 38
inhabitants
6.46 5
employment

IPO, % of GSP 4.43 38



State Index

NEW YORK Index Overall Rank
4.37 35
BHI
Budget deficit, % of GSP 5.04 20 State and local taxes per capita /income per capita 2.94 49
per 100 residents


% of price)

% of population without health insurance 5.52 18 % of population aged 25 and over that graduated from high 4.30 34
school
Infant mortality rate, deaths per 1000 live births 5.64 15 % of adults who are in the labor force 4.50 33

g g grad.
g students 100,000
, 6.22 5
inhabitants

Minimum wage 4.96 8


State Index

NORTH CAROLINA Index Overall Rank
4.51 30

per 100 residents



% of students at or above proficient in mathematics, 5.46 16 % of population without health insurance 4.57 33
school

Academic R&D per $1,000 GSP 5.43 9 S&E degrees awarded per 100,000 inhabitants 4.65 32

IPO, % of GSP 4.78 19
Minimum wage 4.96 8


State Index

NORTH DAKOTA Index Overall Rank
6.93 2
BHI

Workers’ compensation premium rates 7.10 1 Full-time-equivalent state and local government employees 3.99 44
per 100 residents


% of price)

high school


Academic R&D per $1,000 GSP 5.98 4 NIH support to institutions per capita 4.37 39
Science & Engineering grad. students 100,000 6.93 3 Patents, per 100,000 inhabitants 4.25 39
inhabitants
S&E degrees awarded per 100,000 inhabitants 6.73 4 Employment in high-tech industry as % of total employment 4.59 32

Minimum wage 4.96 8



State Index

Ohio
OHIO Index Overall Rank

BHI 3.68 47



as % of price)

Rate of nonfederal physicians per 100,000 inhabitants 5.41 14 % of population enrolled in degree-granting institutions 4.53 31
% of students at or above proficient in mathematics, 5.71 9 Infant mortality rate, deaths per 1000 live births 4.34 37

Patents, per 100,000 inhabitants 5.09 19 S&E degrees awarded per 100,000 inhabitants 4.54 35
Science & Engineering grad. students 100,000 5.29 19 Scientists and engineers as % of labor force 4.41 34
inhabitants
p y
Employment g
in high-tech industryy as % of total employment
p y 4.30 34



State Index

OKLAHOMA Index Overall Rank
3.91 44
BHI




school

4 - public schools

100,000
000 4 38
4.38 35
inhabitants
employment
Minimum wage 5.04 7



State Index

OREGON Index Overall Rank
6.11 11



Telephone penetration (combined Fed/state/local taxes 7.10 1
as % of price)

high school
Infant mortality rate, deaths per 1000 live births 5.89 11 Unemployment rate, not seasonally adjusted 3.74 45
Rate of nonfederal physicians per 100,000 inhabitants 5.34 15 % of population enrolled in degree-granting institutions 4.43 33

4 - public schools

NIH support to institutions per capita 5.20 13 Science & Engineering grad. students 100,000 4.31 38
inhabitants
5.78 10
employment




State Index

PENNSYLVANIA Index Overall Rank
4.18 39
BHI

Full-time-equivalent state and local government 6.34 2 State and local taxes per capita /income per capita 4.25 39


% of price)



g g ggrad. students 100,000
, 5.30 18
inhabitants

Minimum wage 4.96 8


State Index

RHODE ISLAND Index Overall Rank
4.68 29

Full-time-equivalent state and local government 6.06 5 Bond rating: composite 4.20 37


% of price)
Air passengers per capita 4.99 17 Electricity prices per million BTU 3.66 43
Travel time to work 5.13 20 Median monthly housing costs 4.57 35

% of population without health insurance 5.83 10 % of population aged 25 and over that graduated from high 4.18 37
school


100,000
000 5 30
5.30 16
inhabitants

Bank deposits per capita 4.94 13 IPO, % of GSP 4.43 38
Employer firm births per 100,000 inhabitants 5.35 16 Minimum wage 4.72 41



State Index

SOUTH CAROLINA Index Overall Rank
3.86 45
BHI

Bond rating: composite 6.02 8 Full-time-equivalent state and local government employees 4.87 31
per 100 residents


Median monthly housing costs 5.60 19 High-speed lines per 1000 4.71 32

school


4 - public schools
inhabitants

IPO, % of GSP 4.45 37


State Index

SOUTH DAKOTA Index Overall Rank
BHI 5.89 12

State and local taxes per capita /income per capita 6.26 6 Full-time-equivalent state and local government employees 4.85 33
per 100 residents


% of price)


high school


S&E degrees awarded per 100,000 inhabitants 6.37 6 Academic R&D per $1,000 GSP 4.20 44
inhabitants

Minimum wage 4.96 8


State Index

TENNESSEE Index Overall Rank
3.76 46
BHI





Median monthly housing costs 5.69 15 Telephone penetration (combined Fed/state/local taxes as 4.44 38
% of price)

school

4 - public schools

Patents per 100
Patents, 100,000
4.33 35
inhabitants



State Index

TEXAS Index Overall Rank
4.95 24




% of price)

school


Scientists and engineers as % of labor force 5.48 15 Academic R&D per $1,000 GSP 4.52 37
Employment in high-tech industry as % of total 5.49 15 S&E degrees awarded per 100,000 inhabitants 4.19 40
employment

Venture capital per capita 5.00 15 Employer firm births per 100,000 inhabitants 4.33 36
IPO, % of GSP 5.20 13
Minimum wage 4.96 8


State Index

UTAH Index Overall Rank
6.65 3
BHI



% of price)

high school
Unemployment rate, not seasonally adjusted 6.14 6 Rate of nonfederal physicians per 100,000 inhabitants 4.10 44


inhabitants
employment

Minimum wage 4.96 8

Carbon emission per 1000 sq miles 5.71 13 Toxic release inventory, pounds per 1000 sq. miles 4.80 33
State Index

Vermont
VERMONT Index Overall Rank

BHI 5.48 18

per 100 residents


as % of price)
Travel time to work 5.48 14 Electricity prices per million BTU 4.13 39

high school


Academic R&D per $1,000 GSP 5.35 11 Science & Engineering grad. students 100,000 4.07 45
inhabitants
5.80 7
employment




State Index

VIRGINIA Index Overall Rank
5.80 13
BHI



as % of price)
High-speed lines per 1000 5.44 16 Median monthly housing costs 4.07 40



Science & Engineering grad. students 100,000 5.42 13 Academic R&D per $1,000 GSP 4.30 40
inhabitants
Employment
p y in high-tech
g industryy as % of total 7.43 1 Patents,, per
p 100,000
employment

IPO, % of GSP 5.20 12
Minimum wage 4.96 8

State Index

WASHINGTON Index Overall Rank
6.15 8



% of price)
Electricity prices per million BTU 5.88 7 Median monthly housing costs 4.43 37

% of population aged 25 and over that graduated from 5.85 13 % of population enrolled in degree-granting institutions 4.44 32
high school


Patents, per 100,000 inhabitants 6.91 3 Science & Engineering grad. students 100,000 4.09 44
inhabitants
Scientists and engineers as % of labor force 6.23 8 S&E degrees awarded per 100,000 inhabitants 4.40 37
employment

IPO, % of GSP 4.48 34



State Index

WEST VIRGINIA Index Overall Rank
3.54 48
BHI

State and local taxes per capita /income per capita 5.04 20 Bond rating: composite 3.74 46




as % of price)
Median monthly housing costs 6.46 1 Travel time to work 4.47 37


school
4 - public schools

4.16 47
inhabitants

IPO, % of GSP 4.43 38


State Index

Wisconsin
WISCONSIN Index Overall Rank

BHI 5.07 22

Average benefit per first payment for unemployed 5.21 20 Bond rating: composite 3.74 46

as % of price)


high school

Academic R&D per $1,000 GSP 5.30 13 Scientists and engineers as % of labor force 4.48 33
5.10 16 Employment in high-tech industry as % of total 4 30
4.30 33
employment

IPO, % of GSP 4.53 31


State Index

WYOMING Index Overall Rank
6.37 5
BHI

Workers’ compensation premium rates 5.45 15 Full-time-equivalent state and local government 1.01 50


High-speed lines per 1000 6.34 4 Air passengers per capita 4.42 36

% of population aged 25 and over that graduated from 6.44 1 Rate of nonfederal physicians per 100,000 inhabitants 4.03 46
high school

S&E degrees awarded per 100 100,000
4.58 34
employment

Employer firm births per 100,000 inhabitants 8.02 1 Venture capital per capita 4.43 44
% of labor force that is represented by unions 5.70 17 IPO, % of GSP 4.43 38
Minimum wage 8.38 1




About the Authors
BHI Jonathan Haughton is Senior Economist at the Beacon Hill Institute and Assistant Professor of Economics
at Suffolk University. He holds a doctorate in economics from Harvard University and has published
widely in refereed journals on economic development and taxation.
Frank Conte is Director of Communications and Information Systems at the Beacon Hill Institute. He
holds a master’s degree in public policy from the McCormack Graduate School of Policy Studies at the
University of Massachusetts-Boston. He is responsible for all aspects of the institue’s media outreach
including its web presence. He serves as manager for the annual competitiveness project.
Nicholas Cachonasky is a PhD Student in Economics at Suffolk University. He holds a Master in Economics
and Political Science from Escuela Superior de Economia y Administracion de Empresas (ESEADE), Buenos
Aires, Argentina. He compiled, updated and analyzed most of the data for this year’s edition.
Michael Becker is an Economics student at Boston College, Class of 2012. As an intern, he assisted in the
compilation and presentation of this year’s report.
Acknowledgements
BHI would like to gratefully acknowledge the assistance of staff Paul Bachman, Alfonso Penalver-Sanchez
and Michael Head as well as Ashley Mowatt of the Economics Department. The authors would also like to
thank Suffolk University students, James Nolet, Eliabeth Lipka and Sofia Pinheiro. Summer interns Jacob
Magid, Dorothy Heirsteiner, Alexander Weckenmann and Andrew Dabrowski assisted in data collection
efforts and programming.
About The Beacon Hill Institute at Suffolk University

The Beacon Hill Institute (BHI) is an independent, nonpartisan economic research organization located in
the Department of Economics at Suffolk University in Boston, Massachusetts. Articles and references to
BHI’s work have appeared in leading publications, including the Boston Globe, New York Times, Wall Street
Journal, Los Angeles Times Magazine, The New York Sun, U.S. News & World Report and scholarly
publications such as State Tax Notes and the National Bureau of Economic Research’s Working Papers
Series.
For the last seven years, BHI has been a leader in the development of econometric models for the
analysis of state tax policy changes, interstate economic competitiveness and community economic
impact studies. In addition, BHI has applied its customized economic models to public construction
projects, public school performance and alternative energy. The Institute has also produced state
revenue forecasts, using its own models, and presented them to the Massachusetts Joint Legislative
Committee for Ways and Means for the last four fiscal years.
State Index
The Suffolk University Economics Department features 13 full-time faculty members and offers degrees
at the undergraduate and graduate levels including a PhD program. Departmental research strengths
include international trade, economic development, national and international taxation policy,
globalization, and industrial organization.

BHI
Subindexes,Rankin2009
Govt&Fiscal Human
Overall Security InfrStrc Tech BizIncub. Openness EnviroPlcy
Policy Resources
Index Rank I R I R I R I R I R I R I R I R
Massachusetts 7.04 1 4.90 30 5.03 22 4.66 40 6.38 1 7.70 1 5.81 4 5.42 8 4.60 37
NorthDakota 6.93 2 5.16 16 5.64 5 5.78 2 5.97 5 5.36 14 5.02 20 4.68 34 6.05 2
Utah 6.65 3 5.40 9 5.32 14 5.21 12 5.56 10 5.45 13 6.01 2 5.03 18 4.77 31
Minnesota 6.58 4 4.87 31 5.80 3 5.27 9 6.23 2 5.70 5 5.04 19 4.80 29 5.60 13
Wyoming 6.37 5 4.60 44 5.24 19 5.75 3 5.44 14 4.19 47 5.95 3 5.41 9 5.79 10
Colorado 6.33 6 5.06 26 5.34 13 5.24 10 5.33 18 5.90 4 5.57 6 4.67 37 5.48 16
Alaska 6.31 7 5.63 3 5.30 17 5.03 25 4.74 33 4.28 42 4.52 45 6.85 1 5.88 7
Washington 6.15 8 5.08 22 5.56 7 4.84 34 5.25 21 5.50 10 4.41 48 6.16 3 5.77 11
Iowa 6.13 9 5.06 25 5.94 2 5.40 8 5.98 4 4.99 25 4.66 40 4.72 32 5.44 17
Idaho 6.12 10 4.96 28 5.54 8 5.73 4 4.82 31 5.28 16 5.12 17 4.67 36 5.84 9
Oregon 6.11 11 5.22 14 5.45 10 5.56 6 4.87 30 5.31 15 4.48 46 5.29 13 5.86 8
SouthDakota 5.89 12 5.35 10 4.94 28 5.52 7 5.59 9 4.43 37 5.44 7 4.19 49 5.96 4
Virginia 5.80 13 5.49 6 4.92 30 5.00 27 5.15 24 5.53 8 5.44 8 4.77 30 5.02 25
Kansas 5.72 14 4.81 32 5.44 11 5.12 15 5.50 11 5.04 22 4.96 24 4.91 23 5.89 6
NewHampshire 5.70 15 5.15 17 5.00 25 4.65 43 5.94 6 5.46 11 5.24 12 4.64 38 5.66 12
Nebraska 5.55 16 5.09 21 5.79 4 5.04 23 5.79 7 4.92 29 4.83 30 4.58 41 5.03 24
Montana 5.52 17 4.76 35 5.26 18 5.78 1 5.16 23 4.79 32 4.98 22 4.19 50 6.05 1
Vermont 5.48 18 4.60 43 4.44 44 4.90 33 6.18 3 5.99 3 4.68 38 5.13 16 5.89 5
Nevada 5.35 19 5.71 2 4.83 35 5.71 5 4.14 45 3.86 50 5.32 10 5.27 15 4.71 34
Delaware 5.16 20 5.11 19 4.28 46 4.92 31 5.10 25 5.04 21 6.81 1 5.38 10 2.84 50
Arizona 5.12 21 5.49 5 4.73 38 4.96 28 4.90 29 4.86 31 5.34 9 5.09 17 4.42 44
Wisconsin 5.07 22 4.76 34 5.60 6 5.03 24 5.26 19 5.01 23 4.52 44 4.71 33 5.52 14
Maine 5.05 23 4.59 45 5.31 16 4.74 38 5.46 13 4.99 24 5.15 15 4.44 44 5.96 3
Texas 4.95 24 4.99 27 4.93 29 4.64 44 4.27 42 4.88 30 5.07 18 6.17 2 4.90 28
Florida 4.87 25 5.87 1 4.49 42 4.48 47 4.44 39 4.34 39 5.29 11 5.29 14 5.17 22
Connecticut 4.81 26 4.38 48 5.32 15 4.66 41 5.66 8 5.53 9 4.69 35 5.36 11 4.60 38
Hawaii 4.72 27 4.44 47 6.14 1 4.81 36 5.36 15 4.37 38 4.32 50 5.01 19 5.43 18
Georgia 4.69 28 5.29 11 4.57 39 5.09 18 4.11 46 4.66 35 5.71 5 4.82 26 4.57 39
RhodeIsland 4.68 29 4.73 37 5.23 20 4.66 42 5.24 22 5.59 7 4.74 32 4.85 25 4.72 32
NorthCarolina 4.51 30 5.07 23 4.49 43 5.22 11 4.46 38 5.05 20 5.15 14 4.67 35 4.66 36
Maryland
y 4.48 31 5.22 15 4.41 45 4.20 49 5.50 12 6.50 2 4.94 25 4.81 27 3.81 46
California 4.48 32 4.48 46 4.79 36 4.35 48 4.48 36 5.67 6 5.15 16 5.98 4 4.52 40
Michigan 4.47 33 4.93 29 4.95 27 5.11 16 4.54 34 5.18 19 4.39 49 5.01 20 4.91 27
Missouri 4.44 34 5.50 4 4.51 40 4.82 35 5.01 26 4.92 28 4.71 33 4.39 45 4.98 26
NewYork 4.37 35 4.32 49 5.18 21 3.94 50 5.26 20 5.25 18 4.89 27 5.78 6 5.06 23
Illinois 4.33 36 4.74 36 5.00 24 4.71 39 4.93 28 4.98 26 4.68 36 5.34 12 4.50 42
Indiana 4.26 37 5.47 8 4.89 32 5.10 17 4.76 32 4.55 36 4.61 42 4.91 24 3.68 47
Arkansas 4.23 38 5.13 18 4.91 31 4.94 30 4.27 43 4.03 49 5.24 13 4.34 47 5.41 19
Pennsylvania 4.18 39 4.77 33 4.98 26 4.80 37 5.36 16 5.28 17 4.70 34 4.59 40 4.10 45
State Rankings 2008

NewMexico 4.14 40 5.10 20 3.90 48 5.04 22 4.47 37 5.46 12 4.75 31 4.55 42 5.18 21
Louisiana 4.06 41 4.62 41 4.50 41 5.05 21 3.96 49 4.33 40 4.86 28 5.90 5 4.86 30
NewJersey 4.03 42 4.05 50 5.52 9 4.55 46 5.34 17 4.93 27 5.01 21 5.70 7 3.28 49
Listing by Rank
Kentucky 3.95 43 4.73 39 5.01 23 5.14 14 4.41 40 4.26 44 4.68 37 4.93 22 4.67 35
Oklahoma 3.91 44 4.61 42 4.78 37 5.06 19 4.53 35 4.27 43 4.96 23 4.29 48 5.51 15
SouthCarolina 3.86 45 5.28 12 4.22 47 5.02 26 3.98 48 4.21 46 4.86 29 4.97 21 4.88 29
Tennessee 3.76 46 5.49 7 3.86 49 5.06 20 4.19 44 4.28 41 4.90 26 4.81 28 4.50 41
Ohio 3.68 47 4.66 40 4.85 33 5.20 13 4.96 27 4.79 33 4.44 47 4.75 31 3.66 48
WestVirginia 3.54 48 4.73 38 5.40 12 4.92 32 4.33 41 4.21 45 4.54 43 4.46 43 4.49 43
Mississippi 3.29 49 5.27 13 4.83 34 4.62 45 3.47 50 4.10 48 4.67 39 4.34 46 5.20 20
Alabama 3.20 50 5.07 24 3.66 50 4.96 29 4.01 47 4.77 34 4.65 41 4.63 39 4.71 33

The Beacon Hill Institute for Public Policy Research
Suffolk University
8 Ashburton Place
Boston, MA 02108
Phone: 617-573-8750 Fax: 617-720-4272
bhi@beaconhill.org
http://www.beaconhill.org

Beacon Hill Compete 2009 State Final

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Beacon Hill Institute Ninth Annual

Page 2 / Ninth Annual BHI State Competitiveness Report

Ninth Annual BHI State Competitiveness Report / Page 3

Page 4 / BHI State Competitiveness Report 2009

BHI State Competitiveness Report 2009 / Page 5

NewYork 4.37 35 4.38 35 4.37 38 4.44 35 4.27 40

Page 6 / BHI State Competitiveness Report 2009

Defining State Competitiveness

Ninth Annual BHI State Competitiveness Report / Page 7

Human resources. A high level of labor force variables.

participation, and skilled labor that is readily 3. Next,thesubͲindexesthemselveswere

this by taking into account research funding, the of7.14.

number of patents issued, the proportion of

Business Incubation. A good idea is not enough;

Openness. Open economies tend to be more

Page 8 /BHI State Competitiveness Report 2009

Defining State Competitiveness

BHI State Competitiveness Report 2009 / Page 9

Putting the competitiveness index to work

Page 10 /BHI State Competitiveness Report 2009

Defining State Competitiveness

What next? (Endnotes)

Ninth Annual BHI State Competitiveness Report / Page 11

Page 12 / Ninth Annual BHI State Competitiveness Report

Ninth Annual BHI State Competitiveness Report / Page 13

Each state’s overall rank

STATE NAME 6.10 5

COMPETITIVE ADVANTAGES COMPETITIVE DISADVANTAGES

Inde Ran Inde Ran

Security subindex 5.65 11 Security subindex 5.65 11

Variables are the

Environmental policy subindex 3.92 43 Environmental policy subindex 3.92 43

Page 14 /BHI State Competitiveness Report 2009

BHI State Competitiveness Report 2009 / Page 15

Subindex/Variable Index Rank Subindex/Variable Index Rank

Full-time-equivalent state and local government employees 4.67 38

Security subindex 3.66 50 Security subindex 3.66 50

Human resources subindex 4.01 47 Human resources subindex 4.01 47

% of students at or above proficient in mathematics, grade 3.08 48

Technology subindex 4.77 34 Technology subindex 4.77 34

Business incubation subindex 4.65 41 Business incubation subindex 4.65 41

Openness subindex 4.63 39 Openness subindex 4.63 39

Environmental policy subindex 4.71 33 Environmental policy subindex 4.71 33

Page 16 / Ninth Annual BHI State Competitiveness Report

Subindex/Variable Index Rank Subindex/Variable Index Rank

Security subindex 5.30 17 Security subindex 5.30 17

Infrastructure subindex 5.03 25 Infrastructure subindex 5.03 25

Human resources subindex 4.74 33 Human resources subindex 4.74 33

% of adults who are in the labor force 4.35 37

Technology subindex 4.28 42 Technology subindex 4.28 42

Business incubation subindex 4.52 45 Business incubation subindex 4.52 45

Openness subindex 6.85 1 Openness subindex 6.85 1

Environmental policy subindex 5.88 7 Environmental policy subindex 5.88 7

Ninth Annual BHI State Competitiveness Report / Page 17

Subindex/Variable Index Rank Subindex/Variable Index Rank

Workers’ compensation premium rates 6.11 7 Budget deficit, % of GSP 4.13 49

Full-time-equivalent state and local government 6.28 3

Security subindex 4.73 38 Security subindex 4.73 38

Infrastructure subindex 4.96 28 Infrastructure subindex 4.96 28

Human resources subindex 4.90 29 Human resources subindex 4.90 29

% of population aged 25 and over that graduated from high 4.21 36

% of students at or above proficient in mathematics, grade 3.58 44

Technology subindex 4.86 31 Technology subindex 4.86 31

Business incubation subindex 5.34 9 Business incubation subindex 5.34 9