Preparing an index or report card is often a useful tool for tech-based economic development efforts to assess a geographic area's relative performance across selected statistics or indicators. The outcomes measured, if considered temporally, can help decision makers identify and shift policy and investment priorities for their community, region or state.
Two recent reports apply indices in very different ways, providing examples of how they can be used to promote varied strategies or objectives. The first looks at the Washington D.C. metro region from the perspective of five broad categories of indicators. No recommendations are suggested; the authors hope the report encourages broader awareness of and public engagement toward those areas showing improvement or greater need since the previous year's report was completed.
Measures used for these types of indices, which are both quantitative and qualitative, typically draw from independent data or value-neutral statistics. For instance, a state may look at change in per capita income over a specific period of time. While positive growth — relative to, say, other states, the national average or inflation — may be suggested by the author as good or assumed by the reader to be desirable, the conclusion is not intrinsically present in the data.
The second index discussed below is quite different. Written to advance a specific e-commerce policy agenda, the index ranks states' relative positions across several weighted indicators. The authors readily admit the indicators selected and the scores assigned are subjective, because, as is the case whenever indices are used in this manner, there is a cause-and-effect relationship either assumed or stated between the implementation of certain policies and desired performance. In this particular situation, the prevalence of certain laws and regulations is suggested to be related to a state's preparedness for e-commerce; agreement with the conclusion is assumed because statistical support for the hypothesis is not provided.
Both types of indices have disadvantages or risks. For the first, the risk in not presenting specific recommendations is the report may not lead to any changes in policy, while still achieving the desired concern. To avoid this, the authors must be prepared to help lead the discussion of the issues identified in the report.
The risk in using indicators in the second manner is that the assumptions may be proven invalid, once the statistical analysis is conducted. Other factors, for instance, may be found to be statistically more important for predicting outcomes or behaviors. An example of this contradiction, presented in the August 24, 2001 SSTI Weekly Digest, looked at the Small Business Survival Committee's rankings of the states for the policy climates for small business and entrepreneurship versus independent statistics compiled by the Corporation for Enterprise Development to measure "Entrepreneurial Energy."
The 2001 Potomac Index
The 2001 Potomac Index is the latest effort to educate Washington metropolitan area leaders and citizens on their changing region and to measure critical issues affecting the region's success.
A joint project of the Potomac Conference and a research team led by the Brookings Greater Washington Research Program, the 2001 Index builds on the work of the 2000 Index and is organized around five priorities — innovation, inclusion, education, quality of life, and regional thinking. Several new indicators, some of which reflect the events of September 11, are added to this year's edition. However, most of the indicators are drawn from annual data, and comparative numbers on the last quarter of 2001 are not yet available.
The Greater Washington Region economy is well positioned for future growth, a highly educated population and nonprofit activity, according to the index. Some of the region's economic highlights include: