The State New Economy Index, which was most recently released in 2007 by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF), provides a state-by-state analysis of how state economies are transforming from an over aged industrial economic model based on "smokestack chasing" in which economic development success is measured by the number of big company relocations rather than in the creation and retention of high value-added, high-wage jobs.

The 2007 Index, expanding on two earlier reports issued in 1999 and 2002, uses 26 indicators from a variety of sources to rank each state on the extent to which their economies are structured, adapting and operate to effectively compete regionally as well as globally. It examines the degree to which state economies are knowledge-based, globalized, entrepreneurial, information technology-driven and innovation-based.

According to the Index, states at the top of the ranking tend to have a high concentration of managers, professionals and college-educated residents working in "knowledge jobs." Their companies tend to be more geared toward global markets, both in terms of export orientation and the amount of foreign direct investments.

Conversely, states ranking at the bottom of the Index tend to depend on natural resources or on mass production manufacturing and rely on low costs rather than innovative capacity to gain advantage.

The study can help guide entrepreneurs by providing additonal parameters data for seeking the right place to run a business based on how states are functioning in a changing economy.

With the economic indicators as a reference, the Index also outlines an eight-point public policy framework of "best practices" that state officials can use as a guide to transform their economies and ensure raising standards of living for their residents.

The 2008 index is due out later this year.

State New Economy Index 2007

Source: EMKaufmanFoundation