A new report released by the Business Research and Economic Development Center (BRED) at Boise State University identifies and analyzes key metrics that provide a depiction of the state of economic growth and development of Idaho compared to the other 47 contiguous states.
Nine metrics were chosen for comparison, including firms, employees, net job creation, mortality and birth rates for establishments, and the Kauffman Index of Entrepreneurial Activity.
The report, put together by BRED director Dr. Brian Greber, is based on data for the period of 2001-2010, mostly provided by the Bureau of Labor Statistics, the U.S. Census Bureau, and the Bureau of Economic Analysis.
Similar to overall population, Idaho ranks low in the number of firms, establishments and employees (38th, 38th and 40th respectively in 2010), but proved to be one of the fastest growing states in each of these three metrics.
In 2008, however, during the peak of the recession, Idaho transitioned from one of the fastest growing to one with the fastest declining.
Between 2001 and 2010, establishment birth rate regularly ranked in the top 10. During that time span, Idaho had an average establishment birth rate of 10.38 percent.
While establishment birth rates in Idaho seem favorable, establishment mortality rates do not. Idaho consistently ranks near the bottom of this measure, especially between 2008 and 2010.
Even more distressing for new business growth in Idaho is that the mortality rate of establishments five years or younger is even higher. In 2010, Idaho ranked last among the states considered, with a mortality rate of 21.13 percent for young firms. This is a dramatic reversal from their earlier success in this measure during 2006, when Idaho was ranked second.
The study therefore suggests that public policy should direct more of the state’s resources towards helping existing businesses succeed rather than enticing out-of-state businesses to relocate.
The report also suggests that Idaho may want to examine the creation and support of organizations that provide mentorship to entrepreneurs, along with implementation of tax policies that help businesses attain second-stage growth.
Read the full BRED “Competitive Benchmarking in Economic Growth and Development” report – Download (pdf)