Indiana Losing Out In The New Economy

A Kaufman Foundation study ranking how states are doing in the "New Economy" suggests Indiana is falling behind the rest of the nation. The so-called "New Economy" refers to "qualitative and quantitative changes that in the last 15 years have transformed the structure, functioning and rules of the economy." In this "New Economy" the key to success lies in the "extent to which knowledge technology and innovation are embedded in products and services" according to the study. Indiana ranks 31st nationally, which is only slightly better than it fared in 1999 and one place ahead of where it stood in 2002.

There are a about a couple dozen different criteria used to establish a state's ranking. Indiana notably performs near the bottom in several categories, including workforce education (43), export focus of manufacturing and services (47), patents (48) and scientists and engineers (37). It is interesting to see which states rank near the top. They include Massachusetts, New Jersey, Maryland, Washington and California in that order. Pulling up the rear are Kentucky, Alabama, Arkansas, Mississippi and West Virginia. The states at the top tend to be socially progressive, while those at the bottom are socially regressive. Unfortunately, Indiana these days is emulating this latter category of states far more than the state's leading the pack in the "New Economy."

It is worth noting that neighboring Illinois fares much better, placing 16th overall. There's an interesting contrast to be made here. Just this week Indiana included in a Senate-passed version of Gov. Daniels' life sciences initiative a prohibition on grants to be used for embryonic stem cell research. Compare that to a proposal Illinois Comptroller Dan Hynes lauded the Illinois Senate for approving this week:

Illinois stands poised to become a national leader in the development of stem cell-based medical cures, thanks to state Senate passage Friday of a bill that responsibly promotes cutting-edge research in the state and creates a vehicle for its long-term funding.

The bill allows for state funding of stem cell research in Illinois and codifies the Illinois Regenerative Medicine Institute, which was established last year under the governor's executive order to distribute grant awards. The bill also creates scientifically and ethically rigorous grant awarding and oversight processes and specifically prohibits cloning. The bill now moves to the House, where it has wide support, and then on to Gov. Rod Blagojevich, who has displayed decisive leadership on behalf of public funding of stem cell research.

I think Gov. Daniels' economic development team would do well to study this report very closely. If they heed the advice given therein, they will blow up their current economic development plan for the state and begin from scratch. There's a lot more to economic development than throwing around taxpayer dollars to lure businesses here without any real end-game for improving the quality of jobs and life here in Indiana.