The New Economic Geography of the States

This article explores whether geography still matters in state economic development. The authors consider how distinct state growth is from regional context and what a new economic map of the states would look like; for instance, would the states arrange themselves contiguously or distantly, and would state anomalies emerge—state economies that do not share their neighbors’ economic characteristics? The authors employ exploratory statistical methods that can sift through data on state economic growth to uncover statistical structures. The authors conclude that geography matters but that its effect is limited, and they identify the strong role played by national economic and political forces (such as energy policies and prices and defense expenditures), changing demographic trends (e.g., aging of the U.S. domestic population and household preferences for warm climates), and state policies (e.g., personal income taxes).