In the next few paragraphs, we will take a tour of economic development indicator reports. These reports provide insights into how the U.S. economy is evolving in the face of intensifying global competition. They help redraw our mental maps of the challenges and opportunities ahead.
First things first: The US economy is not "flat". Regions are responding differently to the new challenges of global competition. Some business, political and education leaders are more focused on the real drivers of competitive performance. Indicator reports can help us understand these differences. In particular, these reports provide insights into regional competitiveness, where pools of talent and forming, and which regions are moving most clearly focused on innovation.
Now some history: Grant Thorton, an accounting firm based in Chicago, launched the field of indicator reports nearly 30 years ago. The firm began by comparing the business climates of each state. Not surprisingly, the firm defined the term "business climate" with a particular set of clients in mind: manufacturing companies located in the Midwest and looking for lower-cost locations in which to do business.
The Grant Thorton study quickly triggered its critics, who pointed out that economic competitiveness entails more than keeping business costs low. To its critics, the Grant Thornton index threatened to distort the debate with an important audience: state policymakers. The critics feared that state legislators would ignore other investments required to build a prosperous economy.
The Corporation for Enterprise Development (CfED), a progressive think tank based in Washington, DC, organized the most articulate and thoughtful alternative to the Grant Thornton Index. While the Grant Thornton Index has faded into obscurity, CfED's work continues. Each year, the group publishes a report ranking the states on various different dimensions of economic performance. They now call their work "The Asset and Opportunity Scorecard". Their primary focus remains shaping the perceptions of state legislators, as they consider policies to build their state economies.
With the CfED scorecard, each state receives a overall letter grade, as well as grades along five different dimensions that the CF ED considers important. The primary value of the index the companies comes in the underlying data. Leveraging the Internet, CfED makes the data easily accessible to users.
The CfED report has triggered other indicator reports that measure different dimensions of competitiveness. The Beacon Hill Institute at at Suffolk University in Boston publishes a competitiveness index that measures each state based on measures that reflect a more narrow business focus. They group indexes into eight areas: government and fiscal policy, institutions and security, infrastructure, human resources, technology, finance, openness, and environmental policy.
The Milken Institute in California publishes some important state-by-state comparisons on science and technology. Although not published every year, the Institute's State Technology and Science Index provides insights into the strength of each state's infrastructure to support technology-based economic development.
In addition, the Milken Institute publishes a useful comparison of metro areas based on their economic performance. This index provides a useful way to get high level view of the performance of different metro areas.
Over the years, indicator reports have been influenced heavily by the explosion of data now available over the Internet. (To get some sense of the data now available to communities and regions, start by reviewing this site.) In the future, we will see more and more communities and regions assembling their own indicator reports to measure various different dimensions of their economic health.
The Boston Indicator Project represents the leading example. This initiative uses public data to explore different dimensions of the "quality-of-life" in Boston. The Project evaluates Boston along ten different dimensions from education and the environment to technology and civic health. In years ahead, we will see more more communities following Boston's example to provide a very detailed look into a local economy.
But let us return to the national level and see what other trends are emerging in indicator reports. Three are particularly important. The Council on Competitiveness produces the benchmark index report on the country's competitiveness. This report evaluates our current performance against twenty years of national and international data. Using this data as a backdrop, the Council was instrumental in last year's passage of the America Competes Act of 2007.
The Council has long recognized that the competitive performance of regional economies drives our national performance. As a global economy integrates markets across political boundaries, regional economies are emerging. Within these regions, business, education and political leaders are coming together to diagnose their competitive position and design investment strategies to improve their competitiveness. This report provides you an overview.
For example, in the Puget Sound region of Washington, the Prosperity Partnership has designed an index that measures different dimensions of competitiveness within that region. In West Michigan, civic leaders have come together to design what they call "A Common Framework".
They have taken the next step to develop their own regional indicators. Increasingly, we will see these regional indexes emerge as more and more business and civic leaders recognize the importance of collaborating across political boundaries. The factors that drive competitiveness are increasingly regional.
Important demographic shifts are driving indicator reports in a different direction. More and more companies are focused on the importance of talent to their future competitiveness. As result, the business executives are paying more attention to the importance of education as a driver of competitiveness. At secondary school level, the US Chamber of Commerce now issues of scorecard that ranks the states based on their policies to promote educational reform.
At the postsecondary level, the National Center for Public Policy and Higher Education ranks the states according to their support for higher education. Both this higher education index and the US Chamber's effort provide important high-level insights into how well states are developing talent with 21st-century skills.
Finally, indicator reports are moving in another direction: innovation. Massachusetts published the first meaningful indicator report for innovation, and its efforts still provide the high quality benchmark. Each year, the John Adams Innovation Institute publishes a series of indicators that provide a clear insight into the state's continuing support for innovation.
Oregon is another state that does a good job measuring innovation. Business and political leaders in that state have come together to agree on a common set of metrics to measure state innovation performance. The Oregon report organizes metrics along five dimensions: invention, translation, commercialization, economic prosperity and innovative environment.
In Washington State, the Washington Technology Center organizes an indicator report into six key areas: innovation, competitiveness, growth, financial capacity, human potential and quality of life. The index goes on to provide insights into the performance of twelve metro areas within the state.
Regional innovation indexes are also beginning to appear. The Council on Competitiveness encourages business, education and political leaders to measure their regional competitiveness. To provide guidance, the Council has published an useful guide on how to measure regional innovation.
Of course, measuring innovation is tricky. Earlier this year, the U.S. Department of Commerce published an important report from an advisory committee that is looking into how to measure innovation. The advisory committee's report provides a valuable roadmap to improving our understanding and measurement of innovation. In the years ahead, new innovation indicator reports will emerge at the local, regional and state levels.
Collapsing costs, market integration, innovation acceleration, talent shortages, the compression of product life cycles: all of these factors create new complexities and the challenge of building competitive business. Indicator reports do not provide answers, but they can provide insights. Tracking the different dimensions of competitive performance is a tough job, and indicator reports make the task simpler.
These reports are useful for civic leaders actively engaged in the local, regional, state and national collaborations that will shape our country's long-term competitiveness. These reports provide valuable insights into how we are responding to the dramatically new challenges of global competition.
A management maxim tells us that we pay attention to what we measure. Indicator reports provide civic leaders with tools to shape perceptions and promote action. These reports can guide our collaborations toward the long-term investments that we need to strengthen our country's competitiveness.
