Skip to main content

Best in Class

Trying to list Wyoming’s most important business climate attributes is sort of like trying to name the most scenic vistas in the Cowboy State. The list gets long pretty quickly.

While natural beauty may be in the eye of the beholder, there’s no doubting what sets Wyoming apart when it comes to comparing its business environment against those of the other 49 states.

Wyoming is a state that provides unmatched opportunity, an unparalleled ability to save capital, and an ease of doing business made possible by its small size and its pro-business philosophy.

The latest feather in Wyoming’s cap came in early November 2014, when the Tax Foundation named Wyoming the Best State Business Tax Climate for the fourth year in a row.

With a corporate tax ranking of first, an individual income tax ranking of first, and a sales tax ranking of 13th, Wyoming ranks No. 1 overall and continues to distance itself from its neighboring states. Comparatively, Washington ranks 11th, Oregon ranks 12th, Idaho ranks 19th, Utah ranks ninth, Colorado ranks 20th, Montana ranks sixth, Nebraska ranks 29th, North Dakota ranks 25th, and South Dakota ranks 37th.

The No. 1 Business Tax Climate ranking is a big reason why Wyoming enjoyed a robust 7.6 percent real GDP growth rate last year — a mark that by far surpasses the national average.

“Economic growth has been one of my top priorities,” Wyoming Gov. Matt Mead said when the Tax Foundation released its annual report. “Wyoming has earned its reputation of being the best place for business. We have focused on reduced regulatory burdens and increased policies that promote growth. Accolades like these are indicators that we are getting things right.”

While having a competitive tax rate for businesses is an important part of the equation, Mead notes that it’s not all the state is doing to roll out the welcome mat for expanding companies.

“Tax structure is just one piece of the economic development plan,” he said. “Wyoming is also investing in transportation and Internet infrastructures that are just as important as a favorable tax climate to attract a diversity of businesses. Business diversity strengthens the economy. It provides opportunity for Wyoming workers and assures a high quality of life. We will continue to work hard to keep Wyoming the top stop for business.”

Wyoming is no stranger to favorable business climate rankings. Consider some other recent accolades:

  • No. 2 Best Run State in the Country, according to 24/7 Wall Street (November 2013).
  • Fourth Overall in Economic Performance (Free Enterprise, 2013).
  • 12th Highest Population Growth (US Census Bureau, 2013).
  • Second Best Pro-Business State (Pollina Corporate Real Estate, 2014).
  • Fifth Best State to Make a Living (MoneyRates.com, 2013).
  • Fourth Best Economic Outlook (American Legislative Exchange Council, 2013).
  • Fourth Most Friendly Environment for Small Business and Entrepreneurship (Small Business Policy Index, 2013).

In addition, Cheyenne was named one of America’s Best Cities for Global Trade by Global Trade magazine in November 2014.

“Cheyenne was chosen as one of America’s best cities primarily based on the work Cheyenne LEADS has done for economic development in the city,” said Patrick Dooley, editor of Global Trade. Cheyenne LEADS is the local economic development arm for the city and Laramie County.

“When you consider that there are some 18,000 cities in the US, Cheyenne being named as a top 100 for global trade is pretty exclusive,” said Randy Burns, CEO of Cheyenne LEADS.

The attributes that comprise Wyoming’s business climate are many. In addition to its favorable tax ranking, Wyoming boasts a longstanding track record of fiscal stability, due in large part to its $15-billion excess reserves and permanent funds.

Brandon Marshall, manager of business development and recruitment for the Wyoming Business Council, says, “It is just easier to get things done in Wyoming. We are a small state, and the access to high-level decision-makers here is unmatched anywhere else in the country. If a company wants to have an audience with the governor or members of the state legislature, it is easy to get that done here.”

Marshall adds, “We also have a very pro-business government that supports healthy investment into needed infrastructure. Our Business Ready Community Program provides grants of up to $3 million for community-based infrastructure. We have funded five rail-served parks across the state, and the Governor’s Broadband Initiative has brought high-speed connectivity to communities all over Wyoming.”

The Workforce Development Training Fund in Wyoming is also considered one of the strongest in the country, according to Marshall. “We have seven community colleges in the state, which means that no matter where you may live in Wyoming, you are fairly close to one of them and have great access to worker training programs provided by the state,” he says.

Add it all up, and Wyoming makes a convincing case for itself to growing businesses, notes Marshall. “Wyoming is rightly named one of the best-run states in the country,” he adds, “and the companies who have come here and grown here have seen why.”

Features

Best in Class

In April, the European Commission’s special project on European ICT Poles of Excellence (EIPEs) released a new atlas of the top 34 European ICT locations, across 12 countries, out of more than 1,300 European regions qualified for consideration.

Munich, London, Paris, Karlsruhe (Germany) and Cambridgeshire, UK topped the report’s composite rankings, followed by Stockholm, Sweden (home of Ericsson); Darmstadt, in the German state of Hesse; the Finnish region of Uusimaa; Eindhoven and Amsterdam in the Netherlands.

Key ingredients to success included access to top universities and research centers, and funding opportunities.

“This is proof that digital success comes through a willingness to invest, an open mindset for innovation and planning,” said Neelie Kroes, vice president of the European Commission. “Europe needs to build on these values today to be a global leader in technology.”

The report evaluated locations by such yardsticks as employment, venture capital, research/patent and computer science talent. For talent, the UK featured eight out of the top 10 regions. Germany led all competitors in research and patenting. Lisboa in Portugal and Rzeszowski in Poland are the fastest growing regions for ICT employment. And the top three finishers overall – Munich, Paris and London – were also the locations attracting the most venture capital.

“A region’s ICT excellence is linked to research and development activities, to the ability to take knowledge to market (innovation) and to building an intense business activity around this innovation,” said the study. “It seems that ICT thriving regions:

  • are mostly longstanding industrial areas;
  • have high-standard educational institutions and other key innovation players;
  • have long-term policies on research and innovation;
  • have enjoyed historical opportunities (such as being the political national capitals);
  • tend to cluster together (half of the 34 poles of excellence are neighboring regions).

“This effect,” said the report, “is also observed in places like the Silicon Valley (USA), Bangalore (India) or Changzhou (China).”

Germany leads the way among top performers, accounting for 12 of the 34 locations. The United Kingdom comes in second with seven.

The report addresses the EU Strategy to reinforce Europe’s industrial and technology leadership in ICT. Its findings will feed into the EURIPIDIS project, which focuses on ICT innovation policy and on transferring the best research ideas to the market. The EU’s Joint Research Center plans to analyze the technological diversity of ICT activity and its evolution, noting that this “will help identify complementarities between locations.”

The report looked at all 1,303 EU regions in terms of ICT activity and assigned scores according to its relative weight. One hundred and nine locations – including Gdansk and Wroclaw, Poland; and remote locations such as Samos, Greece, and the Shetland Islands – had a score of zero. Other location scores include the manufacturing city of Solihull, UK, at 9; the Loire region of France at 11; and even the generally praised outsourcing location of Sofia, Bulgaria, at just 17. Only 14 percent of the regions scored above 20 points, and many of those were neighbors – half of the top 34 locations were part of such agglomerated regions, lending credence to longstanding cluster formation theories.

But all – even the champions – have their strengths and weaknesses: No. 1 Munich, while leading all EU regions in the networking criteria, places 32nd in the agglomeration indicator of location of ICT R&D centers, 1,264th in turnover growth by ICT firms, and 1,265th in growth in ICT employment.

The EU ICT report analyzed three elements (business activity, R&D and innovation in the ICT sector) on the basis of their intensity, their internationalization and networking. The findings relied on a Composite Indicator bringing together 42 Indicators to evaluate ICT activities. Several data sources and databases were used to elaborate the indicators and measurements: university rankings, citation indexes, information on European research projects’ collaborations, how many global top R&D investor companies in ICT are present in each region, venture capital funding or employment data and companies’ turnover information.

Paris

Paris was among the top three European hubs for IT, according to a recent EU report, in part because of the city’s strong venture capital presence.

Photo by Scott Larsen

All leading regions “have global reach, with intense cross-border activities in ICT R&D, innovation and business and have gained an enviable hub position in a usually very complex web of network connections,” says the report of the leading locations. “Also, the current assets of each region appear to be rooted deep in time, with their current activities and profile resulting from a history [of] several decades as regards their industrial structure, policy decisions, institutional settings, migration and education outcomes, etc.”

Digital Lifeline

Among the places
not considered in the study was Ukraine, whose EU membership some countries (Poland, Germany) supported at an emergency summit on Ukraine in March while others – notably France – opposed it.

In late May, the Ukrainian government held a summit of its own in New York City, where the country’s ambassador to the US Olexander Motsyk, among others, announced “a strategic initiative that will secure a brighter economic future by developing stronger and more permanent solutions, including IT cloudsourcing. The vision is to make Ukraine the Silicon Valley of Europe by securing 10-15 percent of the global IT outsourcing industry, estimated at US$288 billion in 2013.”

To do that, the government says its goal, in partnership with leading international companies, is “to train an additional 100,000 IT professionals before 2020, who will all get a job in the national IT industry and generate $10 billion in export revenues.”

According to presentation materials from the event, in 2013 the volume of Ukraine’s e-commerce market expanded by 40 percent, with a significant increase in the number of local IT companies as a new law implementing a tax deduction for IT companies came into force. The biggest investing countries in Ukraine’s IT sector are the US, followed by top EIPE regions UK, Germany and the Netherlands.

Kiev is home to 38 percent of the country’s approximately 230,000 IT personnel, followed by Kharkiv with 19 percent and Lviv with 14 percent. The country’s largest IT employers in 2013 were EPAM Systems (2,850 employees in five cities), Luxoft (2,612), SoftServe (2,400) and GlobalLogic (2,278). The Ukraine government says the country graduates 14,000 IT professionals and technicians annually, and claims its talent base is fourth overall in the world behind the US, India and Russia.

Time for a Checkup

Two weeks after the EU report’s release, the World Economic Forum released a new report that examines the long-term growth of the digital economy and the viability of the infrastructure that supports it.

“Delivering Digital Infrastructure: Advancing the Internet Economy,” produced in collaboration with The Boston Consulting Group, focuses on current threats to digital infrastructure – including fixed- and mobile-Internet infrastructure, telecommunications equipment and devices, and cloud infrastructure – in the US, Europe, and emerging markets.

“The quality, speed and extent of connectivity will be increasingly
important factors in business and economic decisions, including where companies decide to expand or locate new facilities.”

– World Economic Forum, April 2014

A steering committee and working group drawn from leading companies – including AT&T, Baidu, Bharti Airtel, Huawei, Liberty Global, Microsoft, Qualcomm, Salesforce.com, and Telefonica – contributed to the analysis of key industry challenges and helped propose recommendations.

Europe’s “digital health” is in particular need of attention. According to the report, “the lack of a single digital market and greater infrastructure investment will make it difficult for the EU to capitalize fully on the benefits of the Internet economy.”

Internet-based economic activity is expected to reach $4.2 trillion in the G-20 nations by 2016, or more than 5 percent of GDP (not including a whole universe of pursuits not captured in GDP figures).

“The digital economy is growing at 10 percent a year, significantly faster than the economy as a whole,” says the report. “About 2.5 billion people are connected to the Internet today, a third of the world’s population; there are projected to be about 4 billion users by 2020, or more than half the global population. Digital services are still in their youth. They have the potential to revolutionize entire industries – such as health care and education – with enormous social and economic impact. The quality, speed, and extent of connectivity will be increasingly important factors in business and economic decisions, including where companies decide to expand or locate new facilities.”

“Governments especially need to recognize the economic and social benefits of digital connectivity and services,” said Jon Fredrik Baksaas, president and CEO of Telenor Group. “They can help to create environments in which dynamic digital economies can flourish by taking a long-term view and adopting a forward-looking approach to policy and regulation, ensuring incentives for investments.”

Features

Best in Class

By claiming first place in Site Selection’s annual ranking of state competitiveness, Virginia proved that second place merely means there’s room for improvement. The Commonwealth lost no ground and gained what little there was to gain from its runner-up finish in 2010 with a best-in-class finish for economic development success in 2011. Based largely on the magazine’s New Plant database of new and expanded facility announcements, this measure is as forward looking as it is a recognition of business-attraction activity last year (see the methodology box for a full description of index components). It points to a steady supply of new jobs on the horizon from the suburbs of Washington, D.C., to the military/maritime economy of the state’s southeast to the western economy anchored by the Roanoke Valley to the south-central tobacco counties landing major data center projects.

The Virginia Economic Development Partnership and Governor Bob McDonnell have demonstrated that a pro-business, get-the-word-out strategy coupled with a predictable, low-tax business climate result in a competitive edge that is quantifiable. Through another prism, the American Legislative Exchange Council (ALEC)-Laffer State Economic Outlook Ranking 2012, released in April, ranks Virginia third behind Utah and South Dakota. This 15-criteria measure ranks states mainly on their tax policy as a measure of state competitiveness; workers’ comp costs, right-to-work status and quality of the state legal system are among the criteria. The report was co-authored by noted economist Dr. Arthur B. Laffer, Wall Street Journal editorial board member and economist Stephen Moore and ALEC’s Jonathan Williams, director of the public policy group’s Center for Fiscal Reform and the Tax and Fiscal Policy Task Force.

Let’s turn back to Site Selection measures. Virginia ranked fifth in this year’s Governor’s Cup — the measure of total qualified new and expanded facility announcements the previous calendar year — with 273. It placed 10th the previous year with 190 projects, defined as those meeting one or more of these criteria: a minimum capital investment of US$1 million, 50 or more new jobs or 20,000 sq. ft. (1,860 sq. m.) of new construction. And Virginia ranked fourth in Site Selection’s annual Business Climate Ranking for 2011 (see the November 2011 issue), a tie with its 2010 business climate finish. Virginia is clearly competitive.

chart and award

“We’ve worked very hard these past two years to bolster Virginia’s reputation as a place to work and relocate businesses to, and we’ve earned some high spots on various measures of that,” Gov. McDonnell told Site Selection upon arriving in New York to begin a three-day trade mission to that state and to Quebec. “But this Competitiveness Award recognition is terrific, as we have put a lot of money into economic development incentives and grants and are spending a lot of time on the road telling Virginia’s story.”

His state is competitive because it has the fundamentals businesses require, says the governor.

What Investors Want

“They want a reasonable and predictable climate with respect to taxes, regulation and lawsuits, and we’re doing very well in those areas,” says McDonnell. “And we’re a right-to-work state, which I always put at the top of the list. We have world-class universities and a positive attitude in the executive and legislative branches — we’re very bullish on business, particularly small business — I’ve declared 2012 the Year of the Entrepreneur so we can create more small-business opportunities. Perhaps most importantly, we’re taking this story on the road with multiple trade missions around the country and recent missions to Japan, Korea, China, India, France and Israel. We’re working to make the sale.”

Politically, Virginia’s proximity to Washington, D.C., is purely geographical, notes the one-term-limited governor, who in April was reportedly under consideration by the Romney campaign as a possible running mate on the Republican presidential ticket. But that proximity is a definite asset in terms of economic development.

“It doesn’t hurt with respect to people interested in defense contracting, aerospace, biotech and technology, which have ties to the federal government,” he says. “We’re the East Coast hub for technology with more tech workers per capita than any place in America. I’ve established a goal of Virginia being the energy capital of the East Coast. So it’s about branding, but it’s also about a lot of hard work by our economic development people explaining Virginia’s case for being a great place in which to do business.”

The governor says that although “Virginia doesn’t have as rich a series of incentives as other states, when people look at taxes, regulation, litigation and right to work, there is so much of an advantage here they are willing to look at less incentives upfront.”

One tool at his disposal is the often-deal-closing, recently doubled Governor’s Opportunity Fund that helps companies offset relocation and other costs. McDonnell says other recent measures include enhanced coordination between state and local government in economic development efforts; new tax credits in such sectors as film, wineries, technology (angel investor tax credits) and aerospace; and site-preparation credits for manufacturers, among others.

Amazon and Microsoft are among the companies with major new data centers in Virginia. Other corporate newcomers from outside the Commonwealth include Hilton, Northrop Grumman and Green Mountain Coffee Roasters, Inc.

“In the long run,” says the governor, “capital investors want a stable, reliable partner and a great business climate.”

Index Methodology