“For too long, people with disabilities have been relegated to the margins of society,” exclaimed Megan O’Neil, Access to Assets Project Coordinator at the World Institute on Disability (WID). “Asset-building programs give people the support, selfconfidence, and opportunity to become economically self-sufficient and truly integrated into society.”
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About the Authors
DRC Background
History
The Development Report Card for the States (DRC) grew out of our concern that businesses and policymakers were being wrongly swayed by the Grant Thornton index. In the mid-1980s, the Grant Thornton index was the only annual publication that compared state economies. It did so by focusing on policies and practices that lowered costs for businesses and left states, communities, and residents with small, short-term rewards (if any) and few options for growth.
Without question, businesses and the climate in which they operate are part and parcel of a thriving economy. But the Grant Thornton Index purported to identify "good business climates," and made it seem as though "profitable" meant the "cheapest." In 1987, CFED published the first edition of the DRC to put forth an alternative to Grant Thornton's narrow, limited and limiting view of state economies.
Philosophy
The DRC moves well beyond the traditional economic development formula of attracting footloose facilities with business incentives to a more expansive approach to development that invests in the real strengths of state and regional economies: a skilled workforce and a high quality of life, technology development and transfer, entrepreneurs and existing businesses, a world class infrastructure and quality public services. These, along with a stable, adequate, but not excessive tax base, and predictable, professional regulation are the linchpins of a dynamic, globally competitive economy.
The values and vision reflected in economic development matter. America's states should promote the most profitable settings for commerce by putting their people first. Indeed, people are both the catalyst for innovation in our quickly changing market economy as well as the chief beneficiaries of economic growth. People drive the economy. And economic development provides people with opportunities to have richer, fuller lives.
Using its 67 measures, the DRC tries to assess whether the opportunities to obtain a better life are expanding and how those opportunities are distributed across and within states. It does so by presenting a portrait of each state, its structure, operation, and potential.
Structure
The structure of the DRC follows a simple line of reasoning:
- In order to succeed at obtaining a better life, people need money. Income is the most common source of money. Is income sufficient, growing, and keeping up with the cost of living? Most people earn income by working. Are there enough secure, well-paying jobs to go around? Do people have the skills to qualify for them? Jobs are created and offered by businesses. Are businesses growing, keeping pace with global conditions, and doing things to ensure their success? Neither businesses nor people operate in a vacuum. Do they have the resources and amenities that they need and want? What contributes to the quality of life?
The DRC is divided into three indexes.
Performance assesses how well the economy is doing. These measures capture the "return" on public and private investment: employment, income, the distribution of each within the population, stewardship of finite natural resources, and social conditions. They reflect past decisions and describe where the economy has been and where it currently is.
Business Vitality assesses the robustness of businesses. A vibrant business sector is responsive to changes. Individual companies as well as whole industries operate within the global economy and must be able to meet changing market conditions. They do so by adjusting their product lines and methods of production, and they do so within the context of communities which supply workers, finances, infrastructure, and ideas. The speed and ease with which businesses anticipate and react to changes depends on the vision and acumen of their leaders as well as the agility of the labor force and other inputs.
Development Capacity assesses the way current resources are used with an eye to the future. In a world where geographic proximity does not confine the flow of resources, communities must foster the conditions and inputs that firms need to profit as well as the services and amenities that people need to thrive. These include an education system that provides students with skills for 21st century jobs, physical infrastructure, and financial, natural, and technological resources.
Trend Indicators
Starting in 1999, the DRC added graphs tracking the grades of each of the three indexes over a five year period. The response was positive and significant. This year, the report card offers even more depth and historical perspective by providing five-year snapshots of a number of individual measures. Of the existing 67 measures which indicate relative progress between the states, 15 have been carefully selected to assess how the states measure up to their own past performance. These 15 trend indicators gauge the direction and magnitude of the states' economic development efforts in the context of their own political and economic environment. In addition to measuring the absolute or percent change over a five year period, the trend indicators track change from year to year.
Conclusion
The DRC's ultimate litmus test for an agile and inclusive economy is expanding opportunity. With this annual assessment of states, CFED asks: is the state economy delivering a more widely-shared and sustainable standard of living? Do all Americans possess the know-how, connections, and assets to live richer and fuller lives over the course of their working lives? This vision, along with the imperative to respond to larger economic forces, is the animating intention behind CFED's Development Report Card for the States.
Acknowledgements
The 2007 DRC is funded by general support from CFED. No outside sources of funding were employed this year.
Many thanks to the CFED staff who worked on this year's DRC, including Emily Appel, Sam Bishop, Chris Campbell, Kathryn Gwatkin Goulding, Talitha Jordan, Kevin Keeley, Kristin Lawton, Genevieve Melford, Nancy Stark, and Aaron Watts.
Dave Buchholz was the Director of Applied Research and Innovation at CFED before departing in early 2007 to take a position at the Federal Reserve Board of Governors. Mr. Buchholz holds a B.A. from Augustana College, and an M.A. and Ph.D. in political science from Duke University. His academic work focused on economic development tax incentives in the U.S. and on the social impact of neoliberal economic reforms in Latin America.
James NguyenJames Nguyen was a Program Associate with the Applied Research and Innovation team at CFED before departing to attend graduate school at the John F. Kennedy School of Government at Harvard University. His work at CFED focused on state economic development and asset building, where he was responsible for data management and analysis of the Development Report Card for the States and Assets and Opportunity Scorecard. He also supported research on federal asset building budget policies and programs, and program management of the Innovations in Manufactured Housing (I'M HOME) initiative. Mr. Nguyen graduated at the top of his class from California State University, San Marcos with a B.A. in economics and political science. He has studied at UC Berkeley and Duke University, and is a Public Policy and International Affairs (PPIA) Fellow.
Beadsie Woo
Beadsie Woo was Senior Economist for CFED before departing in 2007 to take a position at the Anne E. Casey Foundation. Ms. Woo is co-author of CFED’s Subsidies for Assets: A New Look at the Federal Budget with Dave Buchholz, Development Finance and Regional Economic Development with Andrea Levere and Bill Schweke, and Job Creation Alternatives in North Carolina with William Schweke. Ms. Woo has a bachelor’s in economics from Davidson College, a Master of Public Policy from Harvard University, and a doctorate in economics from the University of North Carolina at Chapel Hill.
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