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Vying For The Fast Track


Economic Trends

Vying for the Fast Track

Which of the 50 states will prosper?

With the U.S. about to chalk up its longest expansion in history, virtually every state is enjoying healthy job growth. But the general euphoria conceals some sharp divergences in resources, policies, and performance that suggest some states could fall increasingly behind as others enjoy rising prosperity in the years ahead.

That's the implicit message of the latest annual development report card issued by the Corporation for Enterprise Development (CFED), a Washington-based nonprofit group that assesses individual states' economic strengths. To rate the states, the CFED has created three broad indexes: (1) performance, which includes job growth and job quality, income distribution, and efficient use of natural resources; (2) business vitality, which reflects competitiveness, investment, and startups; and (3) development capacity, which weighs human, financial, technological, and physical resources.

The good news is that eight states made the CFED's honor roll in 1999, the most in this decade with As and Bs in all three areas. In addition to the five in the table above, these include Delaware, Michigan, and New Jersey. Among poor performers, only West Virginia got all Fs.

On a regional basis, the Northeast led the pack, with strong scores in job quality, efficient use of resources, entrepreneurship, and human capital. The industrial Midwest was runner-up, scoring high in business vitality, job quality, income equity, and financial resources.

Meanwhile, the South posted strong growth in net migration and employment, but was held back by high poverty rates and weakness in human resources. The Plains States were mostly average, with some poor marks in competitiveness and economic diversity.

Although the Mountain States contained Colorado and Utah, the nation's top scorers, its other members had average scores at best, and one, New Mexico, was one of the worst ranked states. Similarly, the strong performance of Pacific Region honor-roll members Washington and Oregon was offset by lingering employment problems in California, Alaska, and Hawaii.

Looking ahead, the CFED is especially concerned about the growing concentration of resources for innovation. While the nation's research and development outlays are hitting new highs, venture-capital investments are targeting relatively few states--with California garnering 46% of the total last year and eight states receiving none at all. If this pattern continues, those states left out in the cold could find themselves falling further and further behind.By Gene KoretzReturn to top

TABLE

How States Rate in Economic Development

1999 DEVELOPMENT REPORT CARD

BUSINESS DEVELOPMENT

PERFORMANCE VITALITY CAPACITY

LEADERS:

COLORADO A A A

UTAH A A A

MASSACHUSETTS B A A

MINNESOTA A B A

WASHINGTON A B A

LAGGARDS:

ARKANSAS D D F

LOUISIANA F C F

MISSISSIPPI F D F

NEW MEXICO F D D

WEST VIRGINIA F F F

DATA: CORPORATION FOR ENTERPRISE DEVELOPMENT

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Hope for Kids of Immigrants

They do better than their peers

With immigrants' offspring accounting for one out of 10 children born in the U.S. today, some critics of U.S. immigration policy warn that it may be detrimental to long-term U.S. growth. Unskilled immigrants from Mexico and Latin America who began flooding into the nation several decades ago are not only ill-equipped to function successfully in U.S. labor markets, the argument goes, but their children are likely to assimilate very slowly--perpetuating a cycle of poverty and dependence.

Such ideas aren't new, of course. Similar fears were voiced about the prospects for the offspring of Italian and Jewish immigrants earlier in the century. And they appear to be just as off the mark today as they were then, according to a new National Bureau of Economic Research study by David Card, John DiNardo, and Eugena Estes.

Using survey data, the researchers first compared the relative earnings and educational attainments of the adult children of immigrants in 1970 to their fathers' earnings and educational status in 1940. They then made the same calculations for children of immigrants in the mid-1990s vis-a-vis their fathers' earnings and educational status in 1970.

The results were striking. Despite a big shift in the national origins of immigrants since 1940, the native-born adult children of both groups of immigrants tended to close about 50% to 60% of the gap between average U.S. wages and the earnings of their fathers' ethnic immigrant group a generation earlier.

Even more striking, immigrants' kids actually do better than children of natives. That is, among American children with parents of the same socio-economic class, those born to immigrants tend to attain more education and to enjoy higher earnings in their jobs.By Gene KoretzReturn to top


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