The IT Sweepstakes.

• Author: Seninger, Stephen F.
• Position: Information technology sector in Montana - Industry Overview - Statistical Data Included

Montana and Other Western States

Some states and regions are experiencing strong economic growth from information technology, advancing into major players within the IT sweepstakes. Other states have been less active. In this article, we look at how regions within Montana compare for IT development, as well as how our state compares to other western states.

Montana's low per capita income ranking--47th in the nation--is not unusual among western states. Montana's big drop in per capita income rankings over the past 20 years (from 34th in 1980) is mirrored in Wyoming and Alaska, state economies that have been heavily dependent on natural resource industries. Conversely, states like Colorado and Utah--with increased involvement in information technology--have been gainers in national rankings of per capita income (Figure 1).

IT Indicators

Direct measures of IT at the state level are hard to come by-there are a number of indicators that reflect the presence of information technology in state and regional economies. These indicators include research and development (R&D) expenditure rates, initial public offerings (IPOs) by start-up companies trying to access finance capital, business incubator activity, and availability of venture capital.

R&D expenditures have a major influence on long-run economic growth, often leading to significant scientific breakthroughs and innovations. When we compare Montana to other states, we find that our state is ranked 39th for private sector, industry-performed R&D. Our ranking is quite different, however, when we look at the R&D performed by Montana's universities in relation to our Gross State Product. Montana's R&D ranking moves up to 8th among all states in the United States (Figure 2). The strength of university performed R&D is especially important as university-based research institutions are frequently cited as reasons for new businesses to locate in an area.

IPOs are a method for growing companies-particularly in information technology-to raise finance capital for expansion, product development, or acquisitions. Companies that have grown to the stage of having a predictable sales history typically use IPOs. Montana's ranking for the average annual amount of IPO funds raised per $1000 of Gross State Product is low, a pattern also true of Wyoming and Idaho (Figure 3).

Business incubators provide the physical capital facilities for the growth and development of entrepreneurial companies. The presence of...