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Entrepreneurship report ranks Midwestern states mostly near middle
of U.S.

 

by Laura Tomaka ~ October 2011 ~ Stateline Midwest

When it comes to performance on measures of entrepreneurship, middle America tends to fall in the middle of the pack, according to a recently released State Entrepreneurship Index from the University of Nebraska’s Bureau of Business Research.
The index scores states on a number of factors measuring the level of entrepreneurship. It goes beyond simple measures of business startups and includes indicators that reflect sales and innovation among businesses. Those indicators include business-formation rates; percentage growth and per capita growth in business establishments; the number of patents per capita; and gross receipts of sole proprietorship and partnerships per capita.
The study gave Illinois the highest score in the Midwest — seventh among the 50 U.S. states. In contrast, Indiana ranked 44th. Most other Midwestern states had scores slightly above or below average.
The study’s comparison of 2008 and 2010 rankings shows North Dakota and South Dakota making the largest gains in the region. States in the Northeast and Pacific Northwest dominate the top of the list, while states in the South and Southwest performed the worst.
According to Eric Thompson, director of the bureau and associate professor of economics at the university, the best and worst performances were largely affected by the rate of business growth. States at the top saw better-than-average new business growth; those at the bottom were hampered by large numbers of business closures.
Thompson says the states that have traditionally used economic development models that focus on starting new companies have been able to continue to create new, high-income businesses despite the difficult economic conditions because of the existing numbers of investors and concentration of entrepreneurs.
In order to improve the level of entrepreneurship, Thompson advises states to improve education at both the high school and college levels, implement policies that make individual health care more affordable, and reduce the tax and regulatory burden on businesses.

 

Brief written by Laura Tomaka, CSG Midwest staff liaison for the Midwestern Legislative Conference Economic Development Committee. The committee’s co-chairs are Ohio Rep. Ted Celeste and South Dakota Sen. Mike Vehle.