For Immediate Release:
Wednesday, December 19, 2001
10:00 a.m.

Contact: Frank Conte
Director, Communications & IS
617-573-8750

BHI releases State Competitiveness Report 2001: Massachusetts ranks No. 2 despite weak fiscal policy

Why is California better off than New York? Why is Massachusetts better off than almost every other state? Why do some states fail to improve the lives of their citizens? A new study from the Beacon Hill Institute at Suffolk University in Boston suggests that the answer may be found by looking at the “competitiveness” of states.

Defining “competitiveness” as the ability to ensure and sustain a high level of per capita income and its continued growth, BHI authors Jonathan Haughton and Vadym Slobodyanyuk combined more than three dozen variables into nine subindexes, each of which (e.g., “government and fiscal policy,” “infrastructure”) represents an element of competitiveness. The authors then combined the nine subindexes into an “overall index” and ranked the states according to their overall competitiveness. The final product is an extensive and accessible work entitled, State Competitiveness Report 2001, a study that goes beyond conventional standards to examine all aspects of a state's economy.

Among the study's key findings are:

• Competitiveness matters, explaining more than 25% of the variation in living standards, from one state to another.

• For overall competitiveness, Delaware ranks 1st, and Mississippi ranks 50th.

• Some states have a high ranking for overall competitiveness, despite adverse government policies. For overall competitiveness, Massachusetts ranks 1st for the human resources, technology and finance subindexes. On the other hand, Massachusetts ranks 47th for government and fiscal policy and 41st for environmental policy.

• Cold weather is no obstacle to competitiveness. Four of the top ten states are in New England. The Sunbelt states mainly fall in the bottom half of the overall rankings.

• Technology is important, but not, in and of itself, determinative. Some states (Maryland, Rhode Island, New York) that rank high for technology nevertheless have a relatively low overall ranking.

• Every state has room for improvement. Massachusetts needs to reduce government spending. New York needs to bring down housing costs. California needs to increase its fraction of the population with health insurance and bring down electricity prices.

• Some states need to work harder at publicizing their competitiveness. Others have to work harder to measure up to their reputations. A separate opinion survey shows that businessmen and others overrate the competitiveness of Virginia, North Carolina and Texas and underrate the competitiveness of Connecticut, Vermont and Massachusetts.

Commenting on the study, co-author Jonathan Haughton observed that “the new BHI ranking provides important information for any state seeking to improve its competitiveness.” Said Haughton: “If a state wants to be more competitive, it should look at the details of our study and find out where it ranks high and where it ranks low. States that take our findings to heart will find themselves better positioned to attract business investment and workers, to improve their productivity, and in general to make their residents more prosperous.”

The following table presents detailed results, by state, for overall competitiveness and for each of the subindexes.

BHI State Competitiveness Rankings:
Overall Rankings and Subindex Rankings, State

    
 
   
 
Overall index and rank in 2001

Subindexes, rank in 2001
  Overall Index Overall Rank Gov. & fiscal policy Security &

Legal Institutions

 Infrastructure Human resources Technology Finance Openness Domestic competition Environmental policy
Alabama 3.82 45 17 43 42 47 38 35 30 41 13
Alaska 5.20 22 1 34 1 46 48 50 1 13 50
Arizona 4.17 41 27 44 25 30 30 48 17 30 40
Arkansas 3.42 47 19 29 49 45 50 30 46 45 20
California 5.83 10 28 14 33 21 8 5 9 10 38
Colorado 6.41 6 21 18 3 9 5 10 37 4 15
Connecticut 6.18 8 41 8 20 7 2 3 18 21 42
Delaware 7.22 1 5 19 11 28 4 2 6 11 30
Florida 4.45 36 26 40 34 29 42 27 32 14 33
Georgia 4.52 35 4 46 44 40 37 28 23 18 26
Hawaii 3.94 43 45 26 8 23 43 41 39 38 47
Idaho 5.73 12 35 1 16 38 23 47 33 3 3
Illinois 4.30 39 40 35 47 27 21 6 14 44 34
Indiana 4.82 27 18 25 30 33 32 34 12 40 11
Iowa 5.43 16 23 5 9 8 26 22 36 50 17
Kansas 5.18 23 34 27 12 14 15 23 28 24 25
Kentucky 4.37 38 24 28 31 44 44 32 11 46 2
Louisiana 3.34 48 42 50 46 48 45 36 4 47 24
Maine 5.31 19 31 9 13 18 33 33 29 7 37
Maryland 5.22 20 20 42 35 16 3 9 47 15 29
Massachusetts 6.78 2 47 10 36 1 1 1 13 34 41
Michigan 4.87 26 16 31 27 31 17 31 7 48 31
Minnesota 5.95 9 29 6 7 4 12 7 25 39 10
Mississippi 2.83 50 30 45 50 49 47 42 48 43 19
Missouri 5.10 24 10 38 18 17 28 26 42 25 21
Montana 4.72 31 37 30 10 34 35 43 49 5 32
Nebraska 5.55 15 11 23 15 5 31 12 44 32 7
Nevada 3.65 46 44 32 19 42 49 45 40 6 49
New Hampshire 6.33 7 9 4 4 3 10 13 34 8 46
New Jersey 4.79 29 36 12 40 22 16 8 20 20 43
New Mexico 3.98 42 22 48 41 43 18 49 24 19 36
New York 4.59 34 50 13 48 25 9 4 21 22 45
North Carolina 4.79 28 3 49 37 36 19 17 19 23 28
North Dakota 5.22 21 46 2 14 13 36 19 41 26 16
Ohio 4.69 32 38 17 29 26 24 16 16 49 27
Oklahoma 3.82 44 32 36 45 39 39 40 45 33 8
Oregon 5.72 13 39 15 6 19 22 46 8 9 4
Pennsylvania 4.43 37 43 22 28 32 14 21 38 42 35
Rhode Island 4.91 25 33 33 26 10 6 38 43 17 44
South Carolina 4.21 40 12 39 43 41 41 44 15 29 12
South Dakota 5.37 17 8 21 21 11 29 11 50 31 23
Tennessee 4.72 30 7 37 32 37 40 20 22 27 9
Texas 4.67 33 13 47 38 35 27 25 5 36 22
Utah 5.79 11 15 16 2 6 11 14 26 12 48
Vermont 6.43 5 25 3 22 2 7 39 2 16 39
Virginia 5.62 14 6 20 23 12 20 15 27 28 18
Washington 6.48 4 48 24 17 24 13 29 3 1 1
West Virginia 3.11 49 49 41 39 50 46 37 35 35 14
Wisconsin 5.32 18 14 11 24 15 25 24 31 37 6
Wyoming 6.68 3 2 7 5 20 34 18 10 2 5
 

The study may be obtained here at www.beconhill.org or by calling 617-573-8750 or writing an e-mail to fconte@beaconhill.org.

Format revised on 24-Feb-2005 12:35 PM