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Section 2: Indiana’s Economic Climate
The second section of the questionnaire deals with the economic and general business climate of the state. The first question of this section (question #4) simply asks respondents to rate the relative business climates of Indiana versus those of several surrounding states and the United States as a whole (Figure 4).
4. Please rate your impression of the business climate in the following places, compared to Indiana’s:
Note that a response of “4” would indicate that a place is perceived to have a business climate very similar to that of Indiana. Briefly, respondents to this survey perceive Ohio to have a business climate very similar to the business climate of Indiana. Indiana’s business climate is thought to be slightly better than those of Kentucky and Michigan, and slightly worse than those of Illinois and the United States as a whole. The differences between Indiana and the other places, except Ohio, are statistically significant.
The second question of this section, question #5, asks about the areas in which Indiana has a relative advantage or relative disadvantage compared to neighboring states (Figure 5).
5. Compared to neighboring states, would you say that Indiana is at an advantage or disadvantage in the following areas:
From Figure 5, it appears that our respondents view Indiana’s “cost of living” as a strong advantage, and view Indiana’s “education system” as a strong disadvantage. If the scale midpoint of “4” is thought of as being “similar to other states,” there is a statistically significant difference for all the areas except “economic incentives for business” and “infrastructure.” However, the two extremes of “the education system” and “cost of living” are the only areas likely to be of practical significance.
Indiana’s cost of living is thought to be the state’s largest relative advantage compared to other items on the list. In fact, only 5% of the respondents rate this area as being a disadvantage at all (by responding with a “1,” “2,” or “3”). One obvious implication of this advantage is the potential of attracting employees to the state, or paying employees less for a given standard of living. Exactly how Indiana’s executive officers attempt to use this advantage remains an open question. However, both common sense and popular press coverage suggest that Indiana’s education system would be a significant barrier to overcome for attracting employees to the state. Respondents were next asked (question #6) to indicate their personal level of support for several state development initiatives (Figure 6).
6. The State of Indiana has identified the following economic development initiatives for Indiana. Please indicate how much you personally support these areas of focus:
Respondents express at least moderate support for all economic development initiatives presented. Even film, the initiative with the least support, only had 10% of the executives in this survey respond with a “1,” indicating no support at all. The top four initiatives, “information technology,” “life sciences,” “advanced manufacturing,” and “distribution, transportation, and logistics,” all have similar levels of support with average scores ranging from 5.6 to 5.8. In fact, these four, along with “alternative energy sources,” “agriculture,” and “motor sports,” each have “7” (“completely support”) as their modal response category.
Two issues seem noteworthy here. First, support for the seemingly “traditional” industry of “distribution, transportation, and logistics” is as strong as is support for the more “high tech” industries of “information technology,” “life sciences,” and “advanced manufacturing.” There are many possible explanations for this finding which could be the subject of future analysis. Second, support for “alternative energy sources” seems relatively high given the low level of importance placed on “natural resource prices” in question #1 and the lack of interest in pursuing “alternative energy sources” expressed in question #2. Perhaps executives recognize that energy will become an issue in the more distant future compared with the more immediate time frame context of the first two questions.
In a related question, respondents were next asked their expectations regarding the growth or decline of these industries
over the next few years (Figure 7).
7. Please indicate how much you expect the following industries to grow or decline over the next few years.
Not surprisingly, there is a strong relationship between those initiatives which respondents support and the relative growth respondents expect each initiative to exhibit over the next few years. The correlation coefficient for the average responses for these two questions is 0.92, which is considered to be very high.
There are, however, two interesting differences between the two questions. First, “alternative energy sources” moves even higher in question #7 indicating respondents expect this industry to grow strongly. Second, “advanced manufacturing” falls out of the top group of four industries when it comes to expected growth. This means that while executives in our sample support advanced manufacturing initiatives, they do not expect it to grow as quickly as other initiatives they support.
The final question in this section, question #8, asks executives which initiatives should be added as an area of focus for the state of Indiana (Figure 8).
8. Which of the following initiatives, if any, do you think the State of Indiana should add to its focus? (select all that apply)
There seems to be broad support among our respondents for the state to add “health care” to its focus areas for economic development. Somewhat surprising may be the widespread support of executive officers for “mass transit” initiatives as well. “Banking and finance,” “real estate,” and “retail” also received support from significant minorities of survey respondents.
