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Ranking the States on Economic Development

Too often, we hear the simplistic rhetoric that all states have to do to promote jobs and improve the "business environment" is cut taxes and gut business regulations. Luckily, we have an alternative: CFED's annual Development Report Card for the States, which actually highlights the whole variety of tools used by states to invest in the long-term economic strength of their states: skilled workforces, entrepreneurs, high standards of living, technology development, existing businesses, world class infrastructure, and excellent public services.

And instead of a simplistic single measure of the "business environment," CFED's report card ranks states on three main categories: their Performance in delivering decent income and living conditions to their residents, the Business Vitality of their firms in adjusting to changes in the global economy, and the Development Capacity of their state's investments in the future through education, physical infrastructure, and financial, natural and technological resources.

And which states ranked highest? Leading the pack were the two states earning As in all three indicators, Connecticut and Delaware, followed by Colorado, Massachusetts, Minnesota, Utah and Wisconsin, which earned either As or Bs in all areas. What this "Honor Roll" of states share are a broad-based commitment to economic development and the fundamentals of good government.

What the CFED rankings pound home is how impoverished many state debates are around economic development. Too often they focus on trying to lure big businesses with expensive tax breaks instead of focusing on the fundamentals of building an economy where home-grown companies can thrive and innovate. As CFED notes, "Quick-fix solutions are easy to grasp but do not address the fundamental needs of most communities."

To help state leaders, CFED is highlighting "promising practices" that promote healthy economies, including policies to promote Affordable Housing, Business Finance, Education, Entrepreneurship, and Innovation that move beyond quick-fix solutions to concentrate on the building blocks of long-term economic growth and progress for state economies.

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