Beacon Hill Institute. 12th Annual State Competitiveness Report

Transcription

1 Beacon Hill Institute 12th Annual State Competitiveness Report

2 Subindexes, Rank in Overall Govt & Fiscal Human Security InfrStrc Policy Resources Tech Biz Incub. Openness Enviro Plcy Index Rank I R I R I R I R I R I R I R I R Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Page 2 / State Rankings by State 12th Annual BHI State Competitiveness Report

3 From the Project Manager The Beacon Hill Ins tute at Suffolk University is pleased to release its 12 th Annual State Compe veness Report. Published since 2001, the report and the index have increasingly drawn the a en on of policymakers, economists and public officials seeking to iden fy the strengths and weaknesses in their state s ability to promote economic growth. The BHI Index is different from most state business climate indices. It goes beyond tax policy and regulatory analysis which are important barometers but not the complete narra ve. The index builds upon what Michael Porter of the Harvard Business School, a pioneer in the field of compe veness studies, calls the microfounda ons of prosperity. The BHI Index iden fies how well a state performs in its ability to cul vate, for example, a solid base of scien sts and engineers or how well a state is doing in protec ng its environment while holding down u lity costs. It also underscores the importance of human capital sugges ng that the overall health and educa onal a ainment of its workers is as important as fiscal rec tude or natural endowments. The index can also point to whether a state can improve the produc vity of its workers by having local economies open to immigrants and foreign investment. No one walks away without taking a clear picture of condi ons in their state. Our measure offers compelling lessons from perennially successful states such as Massachuse s, North Dakota, Colorado, Minnesota, Utah, and Nebraska. And, it also highlights the disadvantages faced by highly uncompe ve states such as West Virginia, Alabama and Mississippi. The BHI Index has been successful because it serves as a clarion call for policymakers to protect the gains maintained over a decade and to iden fy the weak spots that invite policy changes. This year, our home state, the Commonwealth of Massachuse s, again retained its first place ranking thanks in part to its high concentra on of physicians, venture capital and technology advantages. Despite its overall first place finish, Massachuse s does have areas that suggest a need for improvement. The persistent problems iden fied here and from other studies suggest that high energy and labor costs are weighing the state down along with infrastructure issues. And there are signs that the state s budget is cause for worry. In addi on to Massachuse s, North Dakota, Minnesota, South Dakota, Utah, Colorado, Texas, Washington, Virginia, and Kansas and fill out this year s top ten. Par cularly noteworthy is Texas which pulled ahead to seventh place this year from last year s 15 th place posi on. The index appears to suggest that the Texas s economy is evolving away from dependence on natural resource extrac on and becoming more compe ve in business incuba on and openness as noted by its strong export ability and openness to immigra on. This year s edi on would be impossible without the talented resources available to the Ins tute from its successful internship program and its affilia on with Suffolk University s Graduate Program in Economics. Zi Yang, a first-year PhD candidate, updated the data used in this report. With her a en on to detail, her ability to cross cultural divides and her congenial spirit, Zi added tremendous value to the two-way learning process that underscores our project. This edi on of the Compe veness Report is the product of months of collabora on with students who assisted in various aspects of data collec on, produc on and promo on. While learning the art of number-crunching, factchecking and Microso Excel programming along the way. They also taught the authors a thing or two about social media. The authors would like to thank Suffolk University students Spencer Haddad Koury and Emily Gallagher and interns Andrew Baxter of UMass-Boston and Katherine Lazarski of Tu s University as well as Clay Evans, a graduate of Wheaton College. We believe that the variety of experience each team member brings to the project is an example of human capital put to its best use. The so skills of our team make the hard data easier to understand. We can t say it enough: for compe veness, human capital is essen al for the highly-mo vated en es, whether they are states, metropolitan areas, or research organiza ons - like our own Beacon Hill Ins tute. 12th Annual BHI State Competitiveness Report / Page 3

4 Table of Contents BHI Alabama Alaska Arizona Arkansas California Colorado Connec cut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachuse s Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Page 4 / BHI State Competitiveness Report

5 A state is competitive if it has in place the policies and conditions that ensure and sustain a high level of per capita income and continued growth. BHI State Competitiveness Report / Page 5

6 About the indexes BHI How does one state create more economic ac vity, and hence more income for its ci zens, than other states? What special characteris cs or a ributes lead to genera ng this higher income? Since 2001, BHI s State Compe veness Report has iden fied the quali es that allow some areas to excel in income genera on, and the quali es that inhibit other areas from a aining the same level of compe veness. This ques on quickly leads to others: How are these quali es measured? What standard should be used to determine whether a state is compe ve or not? Indeed, why is it even interes ng to measure compe veness? How does economic compe veness differ from interstate compe on for workers, firms and capital? This State Compe veness Report uses these ques ons as a star ng point. The indexes are designed to measure the long-term compe veness of an area, and use a similar approach to the one taken in BHI s earlier studies of state compe veness. Defining State Competitiveness Table 1 State Competitiveness Rankings Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Page 6 / BHI State Competitiveness Report

7 Massachuse s retained the top spot this year. North Dakota finished second, followed by Minnesota, South Dakota, Utah, Colorado, Texas, Washington, and Virginia. Excluding Massachuse s all of the New England States fell in rank. The most dras c drop was experienced by Connec cut who fell from 26th in 2011 to 33rd in. Other than Massachuse s (1) and New Hampshire (12) the rest of the New England states finished in the middle pack for a second year: Vermont (19), Rhode Island (23), and Maine (30). The lowest-ranked states were West Virginia (48), Alabama (49), and Mississippi (50). What is Compe veness? We consider a state to be compe ve if it has in place the policies and condi ons that ensure and sustain a high level of per capita income and its con nued growth. To achieve this, a state should be able both to a ract and incubate new businesses and provide an environment that is conducive to the growth of exis ng firms. Compe veness may be thought of as a catch-all term that covers what Michael Porter calls the microeconomic founda ons of prosperity. The states of the United States all face the same macroeconomic condi ons set at the top na onal fiscal, monetary, and trade policy. Where they differ from one another is in their microeconomic policies such as tax and regulatory regimes, their provision and emphasis on educa on, and their a rac veness to business. These policies ma er. As Porter puts it, wealth is actually created at the microeconomic level - in the ability of firms to create valuable goods and services using produc ve methods. 1 It follows that the outcome of compe veness is greater affluence, measured by higher levels of per capita real Gross State Product (GSP) or personal income. Quan fying Compe veness To be useful as a concept, it is essen al to have an opera onal measure of compe veness, a measure that aggregates the key microeconomic variables into a single index. In its influen al annual Global Compe veness Report, the World Economic Forum does this for the countries of the world, but un l BHI s index there has not been an equivalent at the level of the states of the U.S. There are some more specialized rankings of the states, but none meet the criteria for measuring compe veness as defined above, or have an equivalent breadth of coverage. We believe the Ins tute s index meets the challenge. In thinking about how to create an index of compe veness, we begin with the simple economic rela on: Y = f( K, L,Technology) This says that output (Y) depends on the amount of capital (K), labor (L) and technology that is harnessed by the economy. As expected, more inputs lead to more output. But what raises input levels? And why do some states mix the ingredients sound fiscal policies, educated workforce, and openness to trade more successfully than others? To answer these ques ons we need to focus on the quality of the business environment. Using his celebrated diamond, Porter finds it helpful to group the influences into four components: the quality of available inputs, the sophis ca on of local demand, the nature of local suppliers and the extent to which they form clusters, and the rules and ins tu ons that govern the market. 2 These are s ll very broad categories and so, following the Porter-inspired Global Compe veness Report, we actually classify our indicators into eight groups. The breakdown is as follows: Government and fiscal policies. Businesses are more likely to be a racted to areas with moderate tax rates and clear evidence of financial discipline (as evidenced, for instance, by high state and municipal bond ra ngs, and budgetary balance). This sub-index is designed to pick up these effects. 12th Annual BHI State Competitiveness Report / Page 7 Defining State Compe veness

8 Security. A state will be more a rac ve to business if public officials are trusted, and if crime is low. The security subindex addresses these dimensions of compe veness, with par cular emphasis on the importance of public safety. Infrastructure. How easy is commu ng? Do most households have access to high-speed broadband and telephone service? Is housing affordable? How expensive is energy? These are the elements of compe veness that are included in the infrastructure sub-index for each state. Human resources. A high level of labor force par cipa on, and skilled labor that is readily available and not too expensive, combined with a widespread commitment to educa on, training and health care, make a state a rac ve for business. These factors are captured in the human resources sub-index. Environmental Policy. States that are faced with environmental problems, or that have a heavy-handed policy of environmental regula on, are likely to be less a rac ve to businesses as well as to their workers and managers; we measure this effect with the environmental policy subindex, which among other things reflects the levels of air pollu on and of toxic releases. Decent air quality is a measure that states are pursuing policies that improve the environment, and a racts workers and investors. A complete list of the components of the compe veness indexes is given in Table A1 at the end of this sec on of the report. To generate this report we have used the most recent data available. Defining State Competitiveness Technology. Since the arrival of the industrial revolu on, the development and applica on of technology has been central to economic development. The technology sub-index measures this by taking into account research funding, the number of patents issued the propor on of scien sts and engineers in the labor force and the importance of high tech companies. Business Incuba on. A good idea is not enough; businesses also need to be able to mobilize financing for investment, both internally and from the financial system. A higher rate of business births is a par cularly clear sign of a compe ve environment, and is an important component of the business incuba on sub-index. This year we have added two other variables: an index that tracks the poten al costs of tort liability, and a measure of the educa on-adjusted cost of labor. Openness. Open economies tend to be more compe ve and hence more produc ve, in addi on to specializing more thoroughly in their areas of compara ve advantage. The openness sub-index measures how connected the firms and people in a state are with the rest of the world. It is based on the level of exports, as well as the percent of the popula on born abroad, a key element. The eight categories are coherent, but there is inevitably some degree of arbitrariness in the way in which individual data series are assigned to the sub-indexes. For instance, the amount of air travel could be included in the infrastructure sub-index or the measure of openness; and electricity prices could be included in the infrastructure sub-index or the environmental sub-index. In prac ce, the assignment of a data series is much less important than the fact that it is included at all. A compe veness index is simply a summary measure based on a large number of variables. One difficult, and controversial, part is choosing a weigh ng scheme. Our approach is the simplest and most transparent: within each sub-index, each variable carries equal weight. Then each sub-index is given the same weight when construc ng the overall index. This has been referred to as a democra c weigh ng structure, and is a reasonable ar fact. If two series were very highly correlated, there would be no need to include both of them in the index; at first sight, one might expect some series to move together, such as the level of taxa on and the number of state Page 8 / BHI State Competitiveness Report

9 employees. In prac ce, neither these series, nor the others that make up the building blocks of our index, are closely correlated, sugges ng that they are indeed picking up different facets of compe veness. Is the compe veness index useful? Massachuse s (ranked 1 st, with an index of 7.768), real per capita income in Alabama would be over $10,3000 higher than it is currently, an increase of nearly 27%. In short, compe veness really does ma er. Do the indexes of state compe veness explain affluence and growth? If the index is properly constructed, then it should help explain why some areas are affluent and others are not. In our experiment we es mate an equa on with the following general form: Real Personal Income per capita = a + b Compe veness Index We use a measure of personal income per capita for 2010, which is the year that corresponds best to the ming of most of the component series that make up our most recent compe veness index. Since the cost of living varies from state to state we adjust the raw numbers to take account of these differences, using spa al price indexes generated by the Bureau of Economic Analysis. 3 This gives us the following es mated equa on: Real personal income per capita = 30, ,339 Compe veness index p = 0.00 p = 0.00 This equa on has an R 2 of 0.24; the low p-value indicates that Figure 1 the coefficient on the compe veness index is highly sta s cally significant, or in other words, higher values of the index are associated with higher levels of per capita personal income. The data points, and the line fi ed through them, are shown in Figure 1 above. The coefficient on the Index variable, which is on a scale of 0 (not compe ve) to 10 (very compe ve) indicates that every addi onal one point on the compe veness index is associated with $2,339 more in real per capita income. Thus, if Alabama (ranked 49 th with an index of 3.363) could achieve the same compe veness as Pu ng the compe veness index to work What do we learn from this exercise? Naturally it is interes ng to look at the raw rankings (Table 1 on page 6), but this may not be the most important use of the informa on. The detailed data, both in individual variables and the sub-indexes, allow one to iden fy the determinants of compe veness. This is of value to policy makers, who are then in a be er posi on to iden fy what needs to be done, in order of priority, to improve the posi on of their states. The logic behind this is that a higher compe veness indicator index is associated with greater affluence. A reasonable inference is that if one were to improve compe veness, then residents of the state would be be er off. And the greatest upside poten al is for the indicators whose performance is currently weak. For instance, a lowcrime state may have trouble reducing the crime rate further, while for a high-crime state, efforts to reduce crime are likely to be an efficient way to boost compe veness. To illustrate, we could pick a state which performs par cularly well in some areas but ranks very low in some others. That is to say a state that ranks in the middle of our index. Florida ranks 25 th out of 50 states, with a compe veness index of It ranks very well on fiscal policy (1 st / 6.41), but rela vely poorly on human resources (40 th / 4.07), technology (39 th / 4.13) and security (33 rd /4.63). If it were to raise these last three indexes just to the mean value of 5.0, then Florida s ranking would BHI State Competitiveness Report / Page 9 Defining State Competitiveness

10 jump from 25 th to 12 th in the na on, and its personal income would increase by an es mated $29.7 billion annually. What next? Since 2001, when we began compiling these rankings, we have set out to invite the policymakers, ci zens and the media to pore over the detailed results contained here. We have also visited state houses from Massachuse s to Rhode Island and Arizona to Wisconsin, and have hosted discussions with delega ons from the Republic of Georgia, China, and other na ons. Legislatures and planning agencies have sought ways to improve their rankings. Some of the sugges ons such as adjus ng the cost of labor for educa onal a ainment have been incorporated. (Endnotes) 1 Michael Porter, The Current Compe veness Index: Measuring the Microeconomic Founda ons of Prosperity, in World Economic Forum, The Global Compe veness Report 2000, Oxford University Press, New York, For more discussion of compe veness applied to na ons see What is Compe veness? The Compe veness Ins tute, (September 2007): h p:// veness.org/ar cle/ ar cleview/774/1/32/ (accessed November 1, 2008). 2 Michael E. Porter, The Compe ve Advantage of Na ons, Free Press, New York, Be na H. Aten, Eric B. Figueroa, and Troy M. Mar n, Regional Price Pari es for States and Metropolitan Areas, , h p:// es.pdf. Defining State Competitiveness Since then, we have received significant press a en on and fielded very many ques ons about our methodology. Some have compared our rankings to those of other studies that stress economic freedom or low tax criteria. We do agree that economic freedom and sound tax policy are important, and our index of compe veness includes some indicators, such as the share of state tax collec ons in Gross State Product, that measure the weight of government quite well. However, we believe that other factors are also important to compe veness, even if they are not easy to place on a scale of economic freedom or fit into the ideals of low tax regimes; these include such variables as the me that is required to travel to work, the availability of venture capital, the number of patents generated, and the importance to the economy of high-tech firms. For each state, we set out the main compe ve strengths and weaknesses to give individuals a sense of where their home state has been and which direc on it could be taking. The central goal of this report is to engage everyone in thinking about how best to improve long-term economic growth, while expanding and maintaining high levels of personal income. At the state level, even if it is essen al to think global, we s ll have to act local. Page 10 / BHI State Competitiveness Report

11 Table A1 Components of Sub indexes for States Sub index Government & Fiscal Policy Security Infrastructure Human Resources Technology Business Incubation Openness Environmental Policy Competitiveness Indicators Index ( objective ) State and local taxes per capita /income per capita( ) Workers compensation premium rates ( ) Bond rating (composite of S&P s and Moody s, scale 1 25) (+) Budget surplus/deficit as % of Gross State Product (+) Average weekly payment to insured unemployed ( ) Full time equivalent state and local government employees per 100 residents ( ) Crime index per 100,000 inhabitants ( ) % Change in crime index, YoY( ) Murders index per 100,000 inhabitants ( ) The BGA Integrity Index (+) Mobile Phones per 1000) (+) High speed lines per 1000 (+) Air passengers per capita (+) Average travel time to work ( ) Electricity Prices per kwh ( ) Average rent of 2 bedroom apartment ( ) % of population without health insurance ( ) % of population aged 25 and over that graduated from high school (+) Unemployment rate, not seasonally adjusted ( ) % of students enrolled in degree granting institutions per 1000 (+) % of adults in the labor force (+) Infant mortality rate in deaths per 1,000 live births ( ) Total active physicians per 100,000 inhabitants (+) % of students at or above proficient in mathematics, Grade 4 public schools (+) Academic Science and Engineering R&D per $1,000 GSP (+) NIH support to institutions in the state, per capita (+) Patents per 100,000 inhabitants (+) Number of S&E graduate students per 100,000 residents (+) S&E degrees awarded per 100,000 residents (+) Individuals in science and engineering occupations as % of the labor force (+) Employment in high tech industry as a % of total employment(+) Deposits in commercial banks and savings institutions, per capita (+) Venture capital investment dollars per worker (+) Employer firm births per 100,000 inhabitants (+) IPO volume, in $ per capita (+) % of labor force that is represented by unions ( ) Minimum wage ( ) Pacific Research Institute s Tort Liability Index ( ) Cost of labor adjusted for educational attainment ( ) Exports per capita, $ (+) Employment in majority owned U.S. Affiliates in State/Total employment in State, (+) (proxy for Foreign Direct Investment) % of population born abroad (+) Toxic release inventory, on site and off site, total (new and original industries), pounds/sq. miles ( ) Greenhouse Gas Emissions (million metric tons of carbon equivalent (MTCE) per 1000 Sq. Miles) ( ) Air quality (% good average days) (+) 12th Annual BHI State Competitiveness Report / Page 11

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13 The states of the United States all face the same macroeconomic conditions set at the top national fiscal, monetary and trade policy. Where they differ from one another is in their microeconomic policies such as tax and regulatory regimes, their provision and emphasis on education, and their attractiveness to business. These policies matter. 12th Annual BHI State Competitiveness Report / Page 13

14 How to read the index pages Page 14 / BHI State Competitiveness Report

15 BHI State Competitiveness Report / Page 15

16 ALABAMA Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex State and local taxes per capita /income per capita Budget deficit, % of GSP Average weekly payment to insured unemployed Full-time-equivalent state and local government employees per 100 residents Security subindex Security subindex Crime index, per 100,000 inhabitants Crime index change , % Murder index, per 100,000 inhabitants The BGA Integrity Index Infrastructure subindex Infrastructure subindex Average rent of 2 bedroom apartment High-speed lines per Air passengers per capita Human resources subindex Human resources subindex % of population without health insurance % of population aged 25 and over that graduated from high school Unemployment rate, not seasonally adjusted % of adults who are in the labor force Infant mortality rate, deaths per 1000 live births Rate of active physicians per 100,000 inhabitants % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex Academic Science and Engineering R&D per $1, Patents per 100,000 inhabitants GSP S&E degrees awarded per 100,000 inhabitants Science & Engineering grad. students 100,000 inhabitants Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Minimum wage Total deposits (Commercial banks and Savings institutions) per capita Cost of Labor Adjusted for Educ. Attainment Venture capital per capita Employer firm births per 100,000 inhabitants Openness subindex Openness subindex Employment in majority-owned U.S. Affiliates in % of population born abroad State/Total employment in State Environmental policy subindex Environmental policy subindex Toxic release inventory, pounds per sq. miles Air Quality Index Page 16 / 12th Annual BHI State Competitiveness Report

17 ALASKA Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex State and local taxes per capita /income per capita Workers compensation premium rates Budget deficit, % of GSP Bond rating: composite Average weekly payment to insured unemployed Full-time-equivalent state and local government employees per 100 residents Security subindex Security subindex Crime index change , % The BGA Integrity Index Infrastructure subindex Infrastructure subindex High-speed lines per Mobile Phones per Air passengers per capita Electricity Prices per kwh Average travel time to work Average rent of 2 bedroom apartment Human resources subindex Human resources subindex % of population aged 25 and over that graduated from % of population without health insurance high school % of adults who are in the labor force % of population enrolled in degree-granting institutions % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex Scientists and engineers as % of labor force Academic Science and Engineering R&D per $1,000 GSP NIH support to institutions per capita Patents per 100,000 inhabitants S&E degrees awarded per 100,000 inhabitants Business incubation subindex Business incubation subindex Pacific Research Institute Tort Index Total deposits (Commercial banks and Savings institutions) per capita Venture capital per capita % of labor force that is represented by unions Minimum wage Cost of Labor Adjusted for Educ. Attainment Openness subindex Openness subindex Exports per capita, dollars Employment in majority-owned U.S. Affiliates in State/Total employment in State Environmental policy subindex Environmental policy subindex Carbon emission per 1000 sq. miles Toxic release inventory, pounds per sq. miles Air Quality Index th Annual BHI State Competitiveness Report / Page 17

18 ARIZONA Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex State and local taxes per capita /income per capita Bond rating: composite Workers compensation premium rates Budget deficit, % of GSP Average weekly payment to insured unemployed Full-time-equivalent state and local government employees per 100 residents Security subindex Security subindex The BGA Integrity Index Crime index, per 100,000 inhabitants Murder index, per 100,000 inhabitants Infrastructure subindex Infrastructure subindex Air passengers per capita Mobile Phones per High-speed lines per Average travel time to work Electricity Prices per kwh Average rent of 2 bedroom apartment Human resources subindex Human resources subindex % of population enrolled in degree-granting institutions % of population without health insurance % of population aged 25 and over that graduated from high school Unemployment rate, not seasonally adjusted % of adults who are in the labor force Rate of active physicians per 100,000 inhabitants % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex Patents per 100,000 inhabitants NIH support to institutions per capita S&E degrees awarded per 100,000 inhabitants Science & Engineering grad. students 100,000 inhabitants Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Venture capital per capita Total deposits (Commercial banks and Savings institutions) per capita IPO volume, in $ per capita Minimum wage % of labor force that is represented by unions Pacific Research Institute Tort Index Openness subindex Openness subindex % of population born abroad Exports per capita, dollars Employment in majority-owned U.S. Affiliates in State/Total employment in State Environmental policy subindex Environmental policy subindex Carbon emission per 1000 sq. miles Air Quality Index Page 18 / 12th Annual BHI State Competitiveness Report

19 ARKANSAS Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex Workers compensation premium rates State and local taxes per capita /income per capita Budget deficit, % of GSP Bond rating: composite Full-time-equivalent state and local government employees per 100 residents Security subindex Security subindex The BGA Integrity Index Crime index, per 100,000 inhabitants Crime index change , % Murder index, per 100,000 inhabitants Infrastructure subindex Infrastructure subindex Mobile Phones per High-speed lines per Average travel time to work Air passengers per capita Electricity Prices per kwh Average rent of 2 bedroom apartment Human resources subindex Human resources subindex % of population without health insurance % of population aged 25 and over that graduated from high school % of population enrolled in degree-granting institutions % of adults who are in the labor force Infant mortality rate, deaths per 1000 live births Rate of active physicians per 100,000 inhabitants % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex Academic Science and Engineering R&D per $1,000 GSP NIH support to institutions per capita Patents per 100,000 inhabitants Science & Engineering grad. students 100,000 inhabitants S&E degrees awarded per 100,000 inhabitants Scientists and engineers as % of labor force Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Employer firm births per 100,000 inhabitants Total deposits (Commercial banks and Savings institutions) per capita % of labor force that is represented by unions Venture capital per capita Minimum wage Cost of Labor Adjusted for Educ. Attainment Openness subindex Openness subindex Exports per capita, dollars Employment in majority-owned U.S. Affiliates in State/Total employment in State % of population born abroad Environmental policy subindex Environmental policy subindex Carbon emission per 1000 sq. miles th Annual BHI State Competitiveness Report / Page 19

20 CALIFORNIA Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex Budget deficit, % of GSP State and local taxes per capita /income per capita Full-time-equivalent state and local government Workers compensation premium rates employees per 100 residents Bond rating: composite Security subindex Security subindex Crime index change , % Murder index, per 100,000 inhabitants The BGA Integrity Index Infrastructure subindex Infrastructure subindex Mobile Phones per Average travel time to work High-speed lines per Electricity Prices per kwh Air passengers per capita Average rent of 2 bedroom apartment Human resources subindex Human resources subindex % of population enrolled in degree-granting institutions % of population without health insurance Infant mortality rate, deaths per 1000 live births % of population aged 25 and over that graduated from high school Rate of active physicians per 100,000 inhabitants Unemployment rate, not seasonally adjusted % of adults who are in the labor force % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex NIH support to institutions per capita Patents per 100,000 inhabitants Scientists and engineers as % of labor force Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Total deposits (Commercial banks and Savings % of labor force that is represented by unions institutions) per capita Venture capital per capita Minimum wage IPO volume, in $ per capita Pacific Research Institute Tort Index Cost of Labor Adjusted for Educ. Attainment Openness subindex Openness subindex % of population born abroad Environmental policy subindex Environmental policy subindex Toxic release inventory, pounds per sq. miles Air Quality Index Page 20 / 12th Annual BHI State Competitiveness Report

21 COLORADO Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex State and local taxes per capita /income per capita Bond rating: composite Workers compensation premium rates Average weekly payment to insured unemployed Budget deficit, % of GSP Security subindex Security subindex Crime index, per 100,000 inhabitants Crime index change , % Murder index, per 100,000 inhabitants The BGA Integrity Index Infrastructure subindex Infrastructure subindex Mobile Phones per Average travel time to work High-speed lines per Average rent of 2 bedroom apartment Air passengers per capita Human resources subindex Human resources subindex % of population aged 25 and over that graduated from % of population without health insurance high school % of population enrolled in degree-granting institutions % of adults who are in the labor force Infant mortality rate, deaths per 1000 live births Rate of active physicians per 100,000 inhabitants % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex Academic Science and Engineering R&D per $1, GSP NIH support to institutions per capita Patents per 100,000 inhabitants Science & Engineering grad. students 100, inhabitants S&E degrees awarded per 100,000 inhabitants Scientists and engineers as % of labor force Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Venture capital per capita Total deposits (Commercial banks and Savings institutions) per capita Employer firm births per 100,000 inhabitants Minimum wage IPO volume, in $ per capita Pacific Research Institute Tort Index % of labor force that is represented by unions Cost of Labor Adjusted for Educ. Attainment Openness subindex Openness subindex % of population born abroad Exports per capita, dollars Environmental policy subindex Environmental policy subindex Toxic release inventory, pounds per sq. miles Air Quality Index Carbon emission per 1000 sq. miles th Annual BHI State Competitiveness Report / Page 21

22 CONNECTICUT Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex Budget deficit, % of GSP State and local taxes per capita /income per capita Full-time-equivalent state and local government Workers compensation premium rates employees per 100 residents Bond rating: composite Average weekly payment to insured unemployed Security subindex Security subindex Crime index, per 100,000 inhabitants Murder index, per 100,000 inhabitants The BGA Integrity Index Infrastructure subindex Infrastructure subindex Mobile Phones per Air passengers per capita High-speed lines per Average travel time to work Electricity Prices per kwh Average rent of 2 bedroom apartment Human resources subindex Human resources subindex % of population without health insurance Unemployment rate, not seasonally adjusted % of population aged 25 and over that graduated from % of population enrolled in degree-granting institutions high school % of adults who are in the labor force Rate of active physicians per 100,000 inhabitants % of students at or above proficient in mathematics, grade 4 - public schools Technology subindex Technology subindex NIH support to institutions per capita Academic Science and Engineering R&D per $1,000 GSP Patents per 100,000 inhabitants Science & Engineering grad. students 100, inhabitants Scientists and engineers as % of labor force Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Total deposits (Commercial banks and Savings Employer firm births per 100,000 inhabitants institutions) per capita Venture capital per capita % of labor force that is represented by unions IPO volume, in $ per capita Minimum wage Pacific Research Institute Tort Index Cost of Labor Adjusted for Educ. Attainment Openness subindex Openness subindex Exports per capita, dollars Employment in majority-owned U.S. Affiliates in State/Total employment in State % of population born abroad Environmental policy subindex Environmental policy subindex Toxic release inventory, pounds per sq. miles Carbon emission per 1000 sq. miles Air Quality Index Page 22 / 12th Annual BHI State Competitiveness Report

23 DELAWARE Index Overall Rank Government and fiscal policy subindex Government and fiscal policy subindex State and local taxes per capita /income per capita Budget deficit, % of GSP Bond rating: composite Average weekly payment to insured unemployed Security subindex Security subindex Crime index change , % Crime index, per 100,000 inhabitants The BGA Integrity Index Infrastructure subindex Infrastructure subindex Mobile Phones per Air passengers per capita High-speed lines per Average travel time to work Electricity Prices per kwh Average rent of 2 bedroom apartment Human resources subindex Human resources subindex % of population without health insurance % of population aged 25 and over that graduated from high school Unemployment rate, not seasonally adjusted Infant mortality rate, deaths per 1000 live births Rate of active physicians per 100,000 inhabitants Technology subindex Technology subindex Patents per 100,000 inhabitants Academic Science and Engineering R&D per $1,000 GSP Science & Engineering grad. students 100, NIH support to institutions per capita inhabitants Scientists and engineers as % of labor force Employment in high-tech industry as % of total employment Business incubation subindex Business incubation subindex Total deposits (Commercial banks and Savings Cost of Labor Adjusted for Educ. Attainment institutions) per capita Employer firm births per 100,000 inhabitants Minimum wage Pacific Research Institute Tort Index Openness subindex Openness subindex Exports per capita, dollars Employment in majority-owned U.S. Affiliates in State/Total employment in State % of population born abroad Environmental policy subindex Environmental policy subindex Toxic release inventory, pounds per sq. miles Carbon emission per 1000 sq. miles Air Quality Index th Annual BHI State Competitiveness Report / Page 23