Business Climate
Virginia garners high rankings for its business climate, a complex and important component of a state's economic health and potential.
Why is This Important?
Business climate gives an indication of a state's current economic status and its future growth potential. States with positive business climates are likely to attract new businesses and encourage expansion of existing ones, thus promoting economic growth in the state.
How is Virginia Doing?
In 2009, Forbes.com and Forbes Magazine again
placed Virginia first
in the nation as the
best state for business
-- for the fourth
year in a row. Forbes'
index is based on a combination
of business climate,
labor, regulatory environment,
economic climate, growth
prospects, and quality
of life. In this index,
North Carolina ranked
fifth (down from 4th
in 2008), Maryland 12th
(up from 14th), and Tennessee
23rd (down from 17th)
in the nation.
Forbes Magazine 2009 Best States for Business
| State | Ranking |
|---|---|
| Virginia | 1 |
| North Carolina | 5 |
| Maryland | 12 |
| Tennessee | 23 |
In July 2009, CNBC and CNBC.com ranked Virginia as its top state for business, based on 40 measures of competitiveness. Texas ranked second, North Carolina ninth, Tennessee 20th and Maryland 27th in the nation.
CNBC Best States for Business 2009
| State | Ranking |
|---|---|
| Virginia | 1 |
| Texas | 2 |
| North Carolina | 9 |
| Tennessee | 20 |
| Maryland | 27 |
In June 2009 Pollina
Corporate Real Estate
Inc., a U.S. corporate
site relocation expert,
ranked Virginia #1 nationally
for its pro-business
climate. This marks
the third time the company
has recognized Virginia
with its highest ranking. And
US
News and World Report ranked
Virginia among the "Seven
Best States to Start
a Business," citing
a "favorable and
innovative climate" for
entrepreneurs.
What Influences the Business Climate?
Business climate is influenced by a number of factors, including the cost of labor, transportation, and energy; and the tax and regulatory burdens placed on businesses.
Indexes of business climate attempt to capture this multitude of factors in different ways. The Forbes index incorporates a large number of measures that capture specific aspects of the business climate. CNBC ranks all 50 states in 10 broad categories, including cost of doing business, workforce, economy, education, and quality of life. While no index provides a perfect measure, they do give an indication of how businesses view the business climate in Virginia.
What is the State's Role?
States can improve their business climate by:
- finding a balance between pro-business regulation and tax structures
- promoting an educated labor force
- ensuring adequate transportation networks
- raising the quality of life for residents.
Data Definitions and Sources
Forbes Magazine -- Business Costs -- Index based on cost of labor, energy and taxes. Labor - Measures educational attainment, net migration and projected population growth. Regulatory Environment - Measures regulatory and tort climate, incentives, transportation and bond ratings. Economic Climate - Reflects job, income, and gross state product growth as well as unemployment and presence of big companies. Growth Prospects - Reflects projected job, income and gross state product growth as well as business openings/closings and venture capital investments. Quality Of Life - Index of schools, health, crime, cost of living, and poverty rates.
CNBC -- Publicly available data on 40 different measures of competitiveness were used to score all 50 states. States received points based on their rankings in each metric. Then the metrics were divided in 10 broad categories: cost of doing business, workforce, economy, education, quality of life, technology and innovation, transportation, cost of living, business friendliness, and access to capital. (updated annually in July)
Top 10 Pro-Business States Annual Study, Pollina Real Estate. (updated annually in June)
U.S. News and World Report, "Seven Best States to Start a Business."
See the Data Sources and Updates Calendar for a detailed list of the data resources used for indicator measures on Virginia Performs.
