January Site of the Month:  Development Report Card of the States

For January, we've chosen the latest version of an old favorite, the Development Report Card of the States, as our site of the month.  Now in its 17th annual iteration, the DRC provides a comprehensive and detailed look at the economic performance and structure of every state.  Released by the Corporation for Enterprise Development in November, the 2003 Report Card offers data for each state on variables in three broad areas:  performance, business vitality, and development capacity.  There are clearly constructed sub-indexes within each of these three broad areas.

Each state's record is succinctly summarized in a one-page report card that assigns a letter grade in each of the three main areas of performance--grading is on the curve, with the top ten states getting A's, the next ten B's, and so on.  Each report card offers a brief narrative analysis of the state's position and trend changes from earlier report cards, and also highlights particular strengths and weaknesses.

We especially like the clear structure of the DRC, and the fact that if you don't necessarily agree with the weightings the authors use, you can easily use their built-in customization feature to construct your own index.  Too often authors of such rankings hide the ball, either by not presenting their data, or making it difficult or impossible to understand or change the weightings they attach to different variables.  This report card is transparent, and a good model for how this kind of work should be done.

There are a number of technical changes from earlier versions of the DRC, mostly to cope with changes in the underlying data.  Several data series have been temporarily suspended or revised due to the adoption of the North American Industry Classification System (NAICS).  Take a look at the latest effort in this long-time series of state rankings:

http://drc.cfed.org/

Full disclosure:  EconData.Net co-editor Andrew Reamer has participated in the preparation of the DRC from its beginnings; this article was written by Joe Cortright, who is not affiliated with the DRC publication.

Metropolitan Area Export and Import Competition

Globalization of economic activity continues to be a key topic around the nation.  Local statistics on the extent and impacts of trade at the state and substate level have been sparse, but  a recent report from the Chicago Federal Reserve Bank sheds some more light on this poorly understood subject.  Using data from the International Trade Administration and County Business Patterns, three Chicago Fed economists have estimated the import penetration and export intensity levels of the nation's twenty-five largest metropolitan areas.  

Among their findings:  There is a large variation in the extent to which metropolitan areas are subject to import competition, and to which they appear to be dependent on export markets.  Some metro areas, like San Francisco, Detroit, and Portland, are highly dependent on trade, while others, like Washington (DC), Denver, and Kansas City, are relatively insulated from trade.  The value of exports ranges from as much as 25 percent of Gross Metropolitan Product (in Seattle) to less than 3 percent of GMP (in Denver and Kansas City).

To their credit, the authors--William Testa, Thomas Klier, and Alexei Zelenev--tackle one of the thorniest issues in interpreting metro area trade data--the reliability of the attribution of data to particular metro areas.  While ITA data ostensibly measure the place of manufacture of exports or "Origin of Movement," its long been known that the paperwork from which these data are tabulated, the Shipper's Export Declarations, don't always accurately pinpoint the real place of manufacture.  The authors develop their own complementary set of estimates based on industry-by-industry employment data that suggest that exports in some large shipping centers may be overstated by billions of dollars.

If you work at all with trade issues, and want an insightful review of how to interpret import and export data at the metro area level, be sure to read this timely article:

www.chicagofed.org/publications/economicperspectives/2003/4qeppart2.pdf