Informing State Economic Development Policy in the New Economy: A Theoretical Foundation and Empirical Examination of State Innovation in the United States


Jeremy L. Hall is an assistant professor of government at the University of Alabama at Birmingham, with primary teaching and research responsibilities in the master of public administration program. His research and teaching focuses on public policy, economic development, government capacity, and public sector performance. His research has been published in the Public Administration Review, Economic Development Quarterly, and Journal of Public Affairs Education.


This study considers recent evidence of state innovation capacity in order to better understand where new economy–type economic development is likely to occur and, by extrapolation, where strategies geared toward such growth are more likely to succeed. The research focuses on data from the National Science Foundation’s State Science and Engineering Profiles, supplemented by data from other sources. Factor analysis was performed on this data set to observe underlying common factors that explain the variability of the original data in fewer dimensions. The resulting factor scores—human capacity and financial capacity—were used to classify states into four categories of new economy resource density: lagging, low, developing, and progressive. The scores for the two resulting factors were then used as independent variables in subsequent regression analyses, demonstrating positive correlations among innovation capacity resources, actual innovations, and overall state economic performance.