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Best State In U.S. For Entrepreneurship Is Massachusetts: SEI

Best State In U.S. For Entrepreneurship Is Massachusetts: SEI
10/4/2012 1:13 AM ET

It's official! The best state in the U.S. for entrepreneurship is Massachusetts, according to State Entrepreneurship Index, or SEI, which tracks core economic measures in all 50 states. This is for the second time in a row that the Bay state with a score of 3.01 has bagged the No. 1 spot in the SEI.

The SEI score is calculated based on percent growth in employer establishments; percent growth in employer establishments per person; business formation rate; patents per thousand persons and average income per non-farm proprietor in each state.

Massachusetts followed by North Dakota, whose score is 2.52, California with 2.39, New York whose score is 2.23; Minnesota with 1.79; Oregon with 1.76; New Jersey with 1.68; Texas with 1.61; Illinois with 1.59 and New Hampshire with a score of 1.55 make up the Top 10 American states for entrepreneurship.

North Dakota, which has been ranked the 2nd in the current list, was in the 8th place in 2010, while California, which has come in 3rd was ranked 6th in 2010.

Among the top 5, the state that has moved up the most in the ranking is Minnesota. On the strength of improved establishment growth and a strong business formation rate, Minnesota secured the 5th rank in 2011, up from 24th rank in 2010, the report adds.

Barring Texas, all the states that made it to the top 10 in the State Entrepreneurship Index in 2011 are concentrated in the northern parts of the country. Texas is the only southern state in the top 10 ranking.

Commenting on the rankings, Eric Thompson, University of Nebraska - Lincoln associate professor of economics and director of the Bureau, said, "To reach the top of the rankings, a state had to do very well in at least four of the five categories that made up the Index. This year, those states tend to be clustered in the Northeast and the upper Midwest. That's not to say there is not significant action in other regions of the country, of course, but our data shows this year's entrepreneurial activity has a definite northern flavor."

The state that has experienced a sharp drop in ranking is Louisiana, falling to the 50th place in 2011, with a score of 0.03, from 5th spot in 2010, primarily due to a sharp drop in the number of establishments. Michigan with a score of 0.10; South Carolina with 0.19; Mississippi with 0.29 and Kentucky with 0.30 are among the lowest ranked states finding their place on the Bottom 5 list.

However, several states that had ranked poorly in 2010 saw improvements in their rankings in 2011. For example, Utah, which rose to 23rd rank in 2011 from 44th in 2010, was the biggest climber in the rankings. Nevada moved up slightly to the 43rd rank from 48th rank in 2010; Arizona moved to 39th from 49th; North Carolina jumped to 26th in 2011 from 38th in 2010; Ohio moved to 22nd from 40th, while Wisconsin climbed to 18th from 34th spot.

The annual State Entrepreneurship Index, developed by economists at the University of Nebraska - Lincoln's Bureau of Business Research and Department of Economics, combines detailed data from the Bureau of Labor Statistics, the IRS Statistics of Income Bulletin, the U.S. Census Bureau and the U.S. Statistical Abstract.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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