In many ways the United States today is experiencing a global transition that mirrors the regional transition the country experienced in the 1960s. Then, parts of the Northeast and Midwest were able to adapt and reinvent their economic bases around higher value-added goods and services. For example, over the course of several decades, the Boston region shifted out of textiles, leather and routine metalworking into higher wage defense, electronics and financial services industries. For a variety of reasons, other regions, like upstate New York and parts of Pennsylvania, could never fully make this shift, and as a result, suffered relatively slow economic growth. As economic transformation once again leads to a dramatic expansion in the effective size of the economy – this time on a global scale – the key question is which path the United States will follow: that of Boston or upstate New York?

The former implies moving aggressively into next-generation industries, including advanced IT, robotics, nanotechnology, biotechnology, and high-level business services, while at the same time maintaining a smaller share of highly efficient and competitive traditional industries. The latter implies sticking with our existing economic base at the risk of slow overall growth and even slower income growth. The path we follow will depend, in part, on the strategies that states and the federal government adopt, and how aggressively they implement them.

THE 2007 STATE NEW ECONOMY INDEX report issued by the Information Technology and Innovation Foundation outlined a progressive, innovation-oriented public policy framework designed to foster success in the new global economy. It discussed the nine key strategies that states can adopt and implement.  They are: (1) Align Incentives behind Innovation Economy Fundamentals (2) Co-Invest in an Innovation Infrastructure (3) Co-Invest in the Skills of the Workforce (4) Cultivate Entrepreneurship (5) Support Industry Clusters (6) Reduce Business Costs without Reducing the Standard of Living (7) Boost Productivity (8) Reorganize Economic Development Efforts (9) Enlist Federal Help. 

States that focus their policy efforts in these areas will be well positioned to experience strong growth, particularly in per capita incomes. And that is the true objective. Developing a vibrant New Economy is not an end in itself; it is the means to advance larger, progressive goals: higher incomes, new economic opportunities, more individual choice and freedom, greater dignity and autonomy for working Americans, and stronger communities.