Economic Dynamism

The old economy was epitomized by large companies facing limited competition in stable, cost-based markets. The New Economy is all about economic dynamism and competition—epitomized by the fast-growing, entrepreneurial companies that are one of its hallmarks. The ability of firms to innovate and get to market faster is becoming a more important determinant of competitive advantage. Likewise, the ability of state economies to rejuvenate themselves through the formation of new, innovative companies is a key to determining their economic vitality. This is reflected in the fact that the number of jobs in “gazelle” firms in 1997 (companies with sales growth of 20 percent or more for four straight years) was the indicator most closely correlated with growth in overall employment in the previous ten years (a correlation of 0.52). It was also closely correlated (0.31) with growth in per-employee gross state product (GSP). The dynamism and competition indicators in this section measure three things: 1) the share of jobs in fast growing gazelle firms; 2) the degree of job churning (which is a product of new business start-ups, and existing business failures); and 3) the value of companies’ IPOs.

STATES BY RANK
Rank	State	Score
1	Nevada	11.0
2	California	9.6
3	Colorado	9.5
4	Arizona	9.3
5	New Mexico	9.2
6	Utah	8.6
7	Oklahoma	8.3
8	Florida	8.0
9	New Jersey	7.9
10	Texas	7.8
11	Virginia	7.6
12	Oregon	7.6
13	Maine	7.4
14	Georgia	7.3
15	Idaho	7.0
16	Massachusetts	6.8
17	Connecticut	6.8
18	Kentucky	6.8
19	New Hampshire	6.7
20	New York	6.7
21	Washington	6.4
22	Illinois	6.4
23	Tennessee	6.2
24	Arkansas	6.1
25	Maryland	6.1
26	Vermont	5.9
27	Wisconsin	5.8
28	Kansas	5.8
29	Missouri	5.7
30	Ohio	5.4
31	Pennsylvania	5.4
32	North Carolina	5.3
33	Alabama	5.1
34	Indiana	5.0
35	Nebraska	4.8
36	Delaware	4.4
37	Mississippi	4.4
38	Louisiana	4.3
39	North Dakota	4.2
40	Minnesota	4.1
41	Michigan	4.0
42	Rhode Island	4.0
43	South Carolina	3.9
44	South Dakota	3.5
45	Hawaii	3.2
46	Wyoming	3.1
47	West Virginia	3.1
48	Alaska	2.8
49	Montana	2.8
50	Iowa	2.7
	U.S. Average	6.0

ALPHABETICALLY
State	Rank	Score
Alabama	33	5.1
Alaska	48	2.8
Arizona	4	9.3
Arkansas	24	6.1
California	2	9.6
Colorado	3	9.5
Connecticut	17	6.8
Delaware	36	4.4
Florida	8	8.0
Georgia	14	7.3
Hawaii	45	3.2
Idaho	15	7.0
Illinois	22	6.4
Indiana	34	5.0
Iowa	50	2.7
Kansas	28	5.8
Kentucky	18	6.8
Louisiana	38	4.3
Maine	13	7.4
Maryland	25	6.1
Massachusetts	16	6.8
Michigan	41	4.0
Minnesota	40	4.1
Mississippi	37	4.4
Missouri	29	5.7
Montana	49	2.8
Nebraska	35	4.8
Nevada	1	11.0
New Hampshire	19	6.7
New Jersey	9	7.9
New Mexico	5	9.2
New York	20	6.7
North Carolina	32	5.3
North Dakota	39	4.2
Ohio	30	5.4
Oklahoma	7	8.3
Oregon	12	7.6
Pennsylvania	31	5.4
Rhode Island	42	4.0
South Carolina	43	3.9
South Dakota	44	3.5
Tennessee	23	6.2
Texas	10	7.8
Utah	6	8.6
Vermont	26	5.9
Virginia	11	7.6
Washington	21	6.4
West Virginia	47	3.1
Wisconsin	27	5.8
Wyoming	46	3.1

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The Progressive Policy Institute (PPI)
Technology, Innovation, and New Economy Project
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