Fri, March 29, 2024

Simon says: Georgia ranked first or eighth or 22nd best for business. Who’s right?

Dr. Simon Medcalfe, AU Economics Professor

Area Development Magazine ranked Georgia as the No. 1 state for business for the eighth consecutive year in October 2021. They polled 50 private consulting firms and Georgia received top scores for the cost of doing business, government cooperation, and labor market competitiveness.

CNBC, however, said Virginia was the top state for business with Georgia coming in at eighth. CNBC uses 85 metrics across 10 categories of competitiveness, including access to capital, education, and technology and innovation.

When economists study choices we prefer to see revealed preferences rather than surveys of what people will do. The idea has been around since Paul Samuelson introduced it in 1938. It is often related to consumer behavior, in that the best guide to consumer preferences is revealed in their actual purchasing behavior. This may be very different from what they say they will purchase in marketing research surveys.

eoy CAMPAIGN HEADER

So, applying revealed preference to businesses, we could look at where firms actually locate in response to a variety of factors such as government cooperation, workforce development, and technology and innovation.

The Bureau of Labor Statistics publishes the number of establishments in each state on an annual basis. I, therefore, looked up which states saw the biggest increase in the number of businesses in their state in the last 10 years. That is, what is the revealed preference for location by the state for businesses in the United States?

The state that saw the largest increase was Utah at 35.2%, followed by South Carolina at 31.6%. Georgia is in the middle of the pack, at 22 with a 16.6% increase. Illinois was the only state that lost businesses in the last 10 years. The map of the United States below shows darker colored states representing greater increases in the number of establishments. In general, states in the Southeast and along the Rockies are gaining firms faster than other areas of the country.

These results of revealed preference differ from the surveys or models developed by Area Development Magazine and CNBC and emphasize the need to analyze real decisions of people and firms.

Subscribe to our eNewsletter for the BEST local business news delivered to your Inbox each week day.

* indicates required

Leave a comment

Your email address will not be published. Required fields are marked *

More Posts

Cyber attacks: Not if but when?

Think your company is too small to be hacked? No. So what happens to the integrity of your business when your customer’s info is breached?