2007 State Index

The information technology (IT) revolution has transformed our world - creating a New Economy, ending the business cycle, and banishing scarcity and services. Perhaps the most distinctive feature of the New Economy is its relentless levels of structural economic change. The challenges facing states in a few years could be different than the challenges today. But notwithstanding this, the keys to success in the New Economy appear clear: supporting a knowledge infrastructure - world-class education and training; spurring innovation - indirectly through universities and directly by helping companies; and encouraging entrepreneurship. In the past decade, a new practice of economic development focused on these three building blocks has emerged, at least at the level of best practice, if not at the level of widespread practice. The challenge for states will be to adopt and deepen these best practices and continue to generate New Economy policy innovations and drive the kinds of institutional changes needed to implement them. This last challenge is key. Success in the New Economy requires that a whole array of institutions - universities, school boards, firms, local governments, economic development agencies - work in new and often uncomfortable ways. At the end of the day, this is a challenge of leadership. States with leaders who challenge their institutions and businesses and who follow through with bold new policies focused on innovation, learning, and constant adaptation - will be the ones that succeed and prosper.