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BHI Report Gives View of States' Competitiveness

June 21, 2002

A study released by the Beacon Hill Institute at Suffolk University in Boston is one of the more recent efforts to examine all aspects of U.S. states and their economies. Entitled State Competitiveness Report 2001, the study defines competitiveness as the ability to ensure and sustain a high level of per capita income and its continued growth.

The BHI report combines more than three dozen variables into nine subindexes: government and fiscal policy, institutions, infrastructure, human resources, technology, finance, openness, domestic competition and environmental policy. Using the nine subindexes, each of which represents an element of competitiveness, the authors made an overall index and ranked the states according to their overall competitiveness.

Among the study's key findings are:

  • Competitiveness helps explain the more than 25 percent of variation in living standards among states.
  • 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. Massachusetts, however, ranks 47th for government and fiscal policy and 41st for environmental policy.
  • Four of the top 10 states are in New England. The Sunbelt states mainly fall in the bottom half of the overall rankings.
  • Technology is important but is not, in and of itself, determinative. Some states, including Maryland, Rhode Island and New York, rank high for technology nevertheless but have a relatively low overall ranking.

State Competitiveness Report 2001 includes several useful tables, presenting results by state for overall competitiveness and for each of the subindexes. The report is available at: http://www.beaconhill.org/