Georgia up to No. 18 on 'New Economy Index'

Georgia continues to make headway in its transformation from a manufacturing "smokestack" economy to a "new economy" state based on high-tech companies and well-educated white-collar workers. But the state still lags much of the East Coast and other parts of the country, according to a study released Tuesday.

Georgia ranked No. 18 on this year's New Economy Index, created by the nonprofit Kauffman Foundation and the Information Technology and Innovation Foundation.

That was up four spots from a similar study five years ago, and up from No. 25 in a study the groups did in 1999.

Massachusetts, where biotech and computer companies have replaced shoe factories and textile mills, led the list, as it did in the previous two studies.

New Jersey, Maryland, Washington state and California followed it this year.

In ranking the states, researchers considered factors such as the number of managerial, professional and information technology jobs, foreign investments, state exports and the immigration of "knowledge-based" workers.

It also considered overall entrepreneurial activity and corporate initial public offerings, as well as Internet-specific factors for each state, such as the number of Internet domain names, online consumers and "e-government" initiatives.

The study tries to analyze how states are transitioning from an economic development model based on "smokestack chasing," in which success is measured by the number of big company relocations and expansion, to one based on innovation, global trade and highly educated, highly paid workers.

"In order to succeed in the new global economy, states can no longer rely on a strategy of relentlessly driving down costs and providing large incentives to attract... branch plants or offices," Robert Atkinson, president of the Information Technology and Innovation Foundation and primary author of the index, said in a statement.

"Rather ... states must create an environment that fosters innovation and high skills in order to help fast-growing entrepreneurial firms and innovative existing firms expand," he said.

According to the study, the number of industrial manufacturing relocations and major expansions has fallen from about 5,100 annually during the late 1990s to about 3,100 two years ago.

With cheaper land and low-cost labor, Georgia and other Southern states were leaders in attracting manufacturing companies, mainly from the Northeast, during the nation's last major economic transition.

But the transformation into the next economy has been tougher. Georgia and the rest of the Southeast has generally lagged behind other parts of the country in attracting and creating high-tech companies with highly educated employees.

In this year's study, Georgia led the rankings when it came to broadband telecommunications availability, and also ranked relatively high when it came to the overall number of information technology and management workers.

About 21 percent of Georgia workers are in managerial, professional or technical jobs, according to the study, and nearly 4 percent are high-tech workers.

But the state ranked relatively low (No. 24) in overall work force education and the immigration of knowledge workers (No. 32).

Besides Virginia, which ranked No. 8 over all, Georgia was the only Southeastern state in the top 20 of the study.

Florida ranked No. 23 and North Carolina ranked No. 26.

At the bottom of the list were Alabama, Arkansas, South Dakota, Mississippi and West Virginia.

Source: ajc.com