This year's survey tells the tale of two economies. The one that's flourishing has top universities, a strong technology base -- and an ocean view
One is prosperous, while the other is still in the throes of a deep recession. One boasts of fine universities and information-intensive businesses, while the other mourns the loss of farms, factories, and oil rigs.
The U.S. economy has become bicoastal. Need proof? Look no further than this year's Report on the States. Of the top 10 states, 8 look out upon an ocean. And the 2 land-locked states, Arizona and Nevada, have a coastal state to thank for their economic growth.
The coastal states are not simply rising on the tide. Their economic growth has strong underpinnings: a decades-long transition from heavy industry to service businesses, and a reliance on the commercialization of technology developed at top research universities.
Look, for example, at Massachusetts (#9), home to about 65 institutions of higher education. A one-square-mile piece of land near Massachusetts Institute of Technology has outperformed each of 13 states in terms of job creation since 1980. And the area's strong economy has spilled over to woodsy New Hampshire (#2). "New Hampshire has attracted people who want low-to-no taxes, yet still want to be near rapid growth," says Ted Lyman, associate director of the Center for Economic Competitiveness at SRI International. Similarly, Maryland (#3) and Virginia (#5) benefit from the service and technolgy growth around the nation's capital. The federal government has also enabled Florida (#6) to blast off. Aided by the space program, the state has added the electronics industry to its healthy base of tourism. It is also enjoying the rewards of entrepreneurship among many of Miami's Cuban immigrants.
California (#8) continues to profit from the engineering prowess of its universities and the spin-off activity among its technology companies. Its growth has helped Nevada (#10), too: Reno and Las Vegas have absorbed some of the expansion from San Francisco and Los Angeles, respectively. California's growth has also given #1 Arizona a big lift. With its cheaper land and labor, Arizona has become a refuge for high-tech companies seeking relief from crowded Silicon Valley.
Georgia (#4), with its impressive universities, Atlanta's expanded airport, and extensive interstate highways, has positioned itself as a regional hub for the entire fast-growing Southeast. As a result, it has been able to nurture small high-tech companies and service businesses that cater to regional distribution offices.
Delaware has reached #7 by a different route -- a concerted effort to round out its manufacturing-based economy, long exemplified by E.I. du Pont de Nemours & Co. By offering special tax incentives, for instance, the second smallest state has added roughly 9,000 banking jobs since 1981. And Delaware has become one of the major processing centers for credit-card operations.
The future doesn't look nearly as bright for states still dependent on oil, agriculture, and heavy industry. The latest to take a hard fall in the rankings is Alaska. After weighing in at #2 last year, its ranking fell further than the mercury on a Juneau night. This year, it tumbled into the 39th slot.