Utah and the wealth of states: Our success comes down to several key elements.

• Author: Miller, Derek

UTAH IS FREQUENTLY TOUTED as one of the best states for business, and as we take stock of the past year, we can reflect on what makes it so. In 1776, the economist Adam Smith published his seminal work, "The Wealth of Nations," which outlined his view on the nature and causes of national wealth. Key elements of this are present in Utah and guide the success of our state's economic and business health. The state's success during the pandemic and hereafter comes down to several key elements we must continue.

TARGETED INDUSTRY OR CLUSTER STRATEGY

Central to Smith's claim was that self-interest and division of labor in the economy would build mutually beneficial interdependence, leading to stability and prosperity in the market. In today's competitive business environment, intentional private sector efforts can support the invisible hand of the market to work things out--industries need to be cultivated and built up. Industry clusters form a network of relationships that provide an overall competitive advantage for those firms.

In Utah, we support Silicon Slopes as a tech cluster along the Wasatch Front and the buildup of Tech Ridge in St. George. The technology industry has been one of the fastest-growing sectors in Utah since the Great Recession. Other targeted industries expanding the state's economic footprint are aerospace and defense, manufacturing and distribution, life sciences, and financial services. Collectively, these industries create multiple effects around productivity, innovation, partnerships, and entrepreneurship.

A subcategory of this is fostering economic diversification. The Hachman Index measures a state's economic diversity compared to the overall United States. Utah ranks among the top in the nation with a score of 97.1 on the index (100 represents the perfection of national diversity in the broader economy). This economic diversity, built in part upon a cluster strategy, helped provide the state the stability to bounce back quickly during the Great Recession and the pandemic.

TAX AND REGULATORY POLICY

Second is the avoidance of government over-regulation in market activities, as it only acts by coercion--not free market principles like supply and demand and buying and selling through consumers and producers. Unfettered interaction allows an economic system to optimize organically. Of course, guardrails are...