Policymakers in Raleigh are grappling with how best to enhance North Carolina’s prospects for achieving higher levels of economic growth and prosperity. This has resulted in a renewed focus on the state’s competitiveness as a location for jobs and private investment. Much of the current policy discussion centers on the role of taxes in influencing the state’s ability to attract and grow new businesses. One perspective is that lowering tax rates and the overall tax burden that businesses incur will make North Carolina more competitive. A related tactic is to take steps to ease the regulatory burden that North Carolina businesses face. While the relative tax burden and regulatory environment are important factors, particularly for certain types of industries, the state’s ability to successfully compete in the New Economy involves a number of other vital components. A recent report shows how well North Carolina stacks up to other states on several key New Economy success factors. The results suggest that there is much room for improvement in preparing the Old North State to compete in the New Economy.
The Information Technology and Innovation Foundation produces the State New Economy Index every few years as a way to benchmark economic transformation in the 50 states. The composite index is comprised of 26 indicators that are grouped into five broad categories that capture the essential dimensions of the New Economy: knowledge jobs, globalization, economic dynamism, digital economy, and innovation capacity (see Table below). The top ranked states in 2012 (in order) are Massachusetts, Delaware, Washington, California, Maryland, Virginia, Colorado, Utah, Connecticut, and New Jersey.
North Carolina is in the middle of the pack with a ranking of 25th overall based on the 2012 composite index. Previously, the state ranked 24th in 2010, 26th in 2007, 24th in 2002, and 30th 1999. On individual indicators, North Carolina’s highest scores and best rankings relate to the: amount of foreign direct investment, worker productivity in the manufacturing sector, use of information technology in health care, number of fast growing firms, number and value of initial public stock offerings (IPOs), and employment of information technology (IT) professionals outside the IT industry. North Carolina received the lowest scores for the number of individual inventor patents granted, the percentage of households online, residential and business access to broadband, and the use of information technologies in state government (see Table below).
|State New Economy Index||NC Rank|
|Information technology jobs||16|
|Managerial, professional, & technical jobs||28|
|Immigration of knowledge workers||18|
|Manufacturing value added||12|
|High wage traded services||22|
|Export focus of industry||31|
|Foreign direct investment||11|
|Fast growing firms||16|
|Initial public offerings||17|
|Health information technology||15|
|Scientists and engineers||21|
|Source: The 2012 State New Economy Index|