The Digital Economy

In the old economy, virtually all economic transactions involved the transfer of physical goods and paper records, and often face-to-face interactions. In the emerging digital economy, a significant share of both business and government transactions will be conducted through digital electronic means. The U.S. Internet economy was recently estimated to have generated some $300 billion in revenue in 1998—supporting over a million jobs—after growing at a compound annual rate of 174.5 percent over the previous three years.17 But when the digital economy really takes off (i.e., when we are close to ubiquitous Internet penetration and key enabling systems like digital authentication systems and broadband telecommunications are in widespread use), the productivity and income gains will be enormous. In terms of productivity gains and increased standards of living, the digital economy is likely to do as much to foster state economic growth in the 21st century as the Industrial Revolution did in the early and mid-20th century. The digital economy indicators in this section measure four things: 1) the percentage of adults online; 2) commercial (“.com”) Internet domain names per firm; 3) deployment and use of information technology in K-12 public schools; and 4) the use of digital technologies to deliver state government services.

STATES BY RANK
Rank	State	Score
1	Alaska	12.19
2	Washington	11.96
3	Utah	10.77
4	Colorado	9.73
5	California	9.34
6	Maryland	9.21
7	Massachusetts	8.77
8	Virginia	8.76
9	Minnesota	8.62
10	Oregon	8.53
11	Arizona	8.22
12	Florida	8.09
13	Wyoming	7.46
14	Wisconsin	7.22
15	New Hampshire	7.11
16	Hawaii	6.99
17	Vermont	6.90
18	Kansas	6.88
19	Nebraska	6.71
20	Nevada	6.63
21	Delaware	6.41
22	Missouri	6.20
23	Texas	6.13
24	Tennessee	6.01
25	Connecticut	5.87
26	Maine	5.85
27	New Jersey	5.61
28	Indiana	5.41
29	Idaho	5.39
30	New York	5.39
31	South Dakota	5.38
32	Pennsylvania	5.07
33	Michigan	5.01
34	Kentucky	4.95
35	Ohio	4.94
36	Iowa	4.89
37	Rhode Island	4.84
38	South Carolina	4.62
39	North Carolina	4.38
40	Georgia	4.19
41	Montana	4.10
42	New Mexico	3.65
43	North Dakota	3.57
44	Illinois	2.86
45	Alabama	2.40
46	Oklahoma	2.24
47	West Virginia	2.11
48	Mississippi	1.11
49	Arkansas	0.71
50	Louisiana	0.63
	U.S. Average	6

ALPHABETICALLY
State	Rank	Score
Alabama	45	2.40
Alaska	1	12.19
Arizona	11	8.22
Arkansas	49	0.71
California	5	9.34
Colorado	4	9.73
Connecticut	25	5.87
Delaware	21	6.41
Florida	12	8.09
Georgia	40	4.19
Hawaii	16	6.99
Idaho	29	5.39
Illinois	44	2.86
Indiana	28	5.41
Iowa	36	4.89
Kansas	18	6.88
Kentucky	34	4.95
Louisiana	50	0.63
Maine	26	5.85
Maryland	6	9.21
Massachusetts	7	8.77
Michigan	33	5.01
Minnesota	9	8.62
Mississippi	48	1.11
Missouri	22	6.20
Montana	41	4.10
Nebraska	19	6.71
Nevada	20	6.63
New Hampshire	15	7.11
New Jersey	27	5.61
New Mexico	42	3.65
New York	30	5.39
North Carolina	39	4.38
North Dakota	43	3.57
Ohio	35	4.94
Oklahoma	46	2.24
Oregon	10	8.53
Pennsylvania	32	5.07
Rhode Island	37	4.84
South Carolina	38	4.62
South Dakota	31	5.38
Tennessee	24	6.01
Texas	23	6.13
Utah	3	10.77
Vermont	17	6.90
Virginia	8	8.76
Washington	2	11.96
West Virginia	47	2.11
Wisconsin	14	7.22
Wyoming	13	7.46

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The Progressive Policy Institute (PPI)
Technology, Innovation, and New Economy Project
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Phone: (202) 546-0007
www.ppionline.org

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