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Study Says New Mexico Is Slipping as It Moves From the Old to a New Economy

By Andrew Webb
Copyright 2007 Albuquerque Journal; Journal Staff Writer
    New Mexico continued to slide in a study of states' business environments as they relate to what's called the New Economy. New Mexico appears at No. 33 in the 2007 State New Economy Index, published last week by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation.
    New Mexico was No. 19 in a similar study done in 1999, and No. 25 in 2002. Because a different organization has taken over the study since then, the criteria and scoring have slightly changed.
    Not surprisingly, Massachusetts, New Jersey, Maryland, Washington and California held their historically high positions on the list. West Virginia, Mississippi, South Dakota, Arkansas and Alabama were at the bottom.
    The study aims to quantify the degree to which states' economies are knowledge- and innovation-based, entrepreneurial, and information technology-driven as the nation's economy drifts away from manufacturing and economic development shifts from "smokestack chasing" and toward job creation and retention.
    It measures high-wage job creation, work force education, export, foreign investment, and indicators of entrepreneurial activity, such as patent applications, venture capital investment and industrial investment in research and development.
    "The most distinctive feature of the New Economy is its relentless levels of structural economic change," Carl Schramm, president and CEO of the Ewing Marion Kauffman Foundation, said in a statement. "States that have adapted to these new realities will be in the best position to see strong growth in the standard of living for their residents."
    New Mexico's lowest individual rankings included No. 46 for population using the Internet, No. 49 for Internet-based government services, No. 48 for foreign direct investment, and No. 48 for fastest-growing companies.
    The news wasn't all bad, however. New Mexico dependably got high rankings in areas affected by the presence of two major national laboratories. For instance, it placed No. 2 for per-capita scientists and engineers, No. 8 for jobs in high-tech fields, No. 8 for entrepreneurial activity and No. 16 for venture capital activity. Computer chip giant Intel, which has a major factory here, helped the state hold its No. 13 position for manufacturing for export.
    The study said states toward the bottom of the index tend to depend on natural resource extraction and mass production manufacturing.
    The Kauffman Foundation took special note of New Mexico and North Carolina, which ranked No. 26. Despite considerable research in the Raleigh-Durham metro area, and Albuquerque's national laboratories and "appealing quality of life," the remaining parts of those states "are more rooted in the old economy," the study's authors wrote.
    New Mexico's neighbors fared better. Colorado ranked No. 9, Texas No. 14 and Arizona No. 22.
    The entire report can be downloaded for free at the Kauffman Foundation's Web site, www.kauffman.org.