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State governments are no longer chasing ``smokestack'' industries. Instead, they are working on ``home-grown'' strategies that encourage modernizing of in-state businesses and help in product development and education of workers. ``They are building their competitiveness capacity,'' says Doug Ross, president of the Corporation for Enterprise Development (CfED).

In its annual Report Card on state development released last week, the CfED found:

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Forty-four states now stimulate applied research through research centers and research grants.

Forty-five states help businesses commercialize new technologies.

Thirty-five states now offer financing options such as seed capital.

Forty-seven states have launched specific education reforms.

Forty-seven states devote their own resources to improving the quality and productivity of their work force.

On a regional basis, the Report Card says the Midwest is still showing satisfactory recovery from its long decline, the Northeast and Pacific regions remain in good economic health, the South is showing guarded improvement, but the Plains and Mountain States are weak.

Among all the states, Mr. Ross says Pennsylvania is the best prototype for the way the state transformed a steel-based industrial base into an advanced manufacturing economy. In education, Ross cited South Carolina as one of the most innovative states. One of the worst states in all categories was Louisiana, which got three ``Fs'' and a ``D.''

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