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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 simply asks about the areas in which Indiana has a relative advantage or relative disadvantage compared to neighboring states (see Figure 4). There are no significant differences between results for 2008 versus the results for 2007.
As was the case in 2007, most of the topics covered are grouped around the scale midpoint of "4," indicating that Indiana is perceived to be on par with surrounding states on these issues. Within this grouping of issues, "overall business environment" is above the midpoint by a statistically significant amount, while both "innovation" and "available labor force" are below the midpoint. Even so, the magnitude of these differences is relatively small.
"Cost of living" is perceived to be a strong advantage for Indiana, relative to nearby states. In fact, about half of the respondents rated "cost of living"as a "6"or "7."Only eleven (5.1%) of the 215 executives who responded to this question rated this issue as a "1," "2"or "3,"indicating they perceive "cost of living" to be a disadvantage.
At the other side of the scale is the "education system."Once again, this is rated as a disadvantage for Indiana relative to surrounding states. While 15.4% did rate "education system" above the midpoint, only 4 respondents (1.9%) rate it as a "very strong advantage"(7). Given the response to this question and to other education questions in 2007, the 2008 CEO Survey included additional questions on this topic which are focused on some possible solutions to this low rating. These are discussed in Section 5 in this report.
Respondents were next asked to indicate their personal level of support for several state development initiatives. Figure 5 presents the results of that question. Again, all of the results this year are very close to the results for these same questions in 2007, indicating a high level of stability in these perceptions.
"Life sciences,""information technology," "distribution/transportation/logistics," and "advanced manufacturing" all receive a high level of support. In fact, only 10% or fewer of the respondents rate any of these below the scale midpoint of "4,"while one-third or more "completely support"each of these initiatives.
"Alternative energy sources," "agriculture," "insurance," and "motor sports" also receive support, with 75% or more of our respondents rating each of these at or above the midpoint. "Motor sports" has the largest standard deviation of any of the initiatives presented, indicating that it has the widest "spread" in ratings.
Even "film," the initiative with the least support, seems to have a significant minority (30.8%) rating the issue above the midpoint. Only about one in ten (9.8%) indicate they "do not at all support" this initiative by giving it a "1."
In a related question, respondents were then asked whether they expected these industries to grow or decline over the next few years (see Figure 6). Once again, these results are statistically indistinguishable from the results received in 2007.
As we might expect, there is a strong relationship between a respondent’s rating for an item on this question and the same respondent’s rating for the same item on the previous question. In fact, in ratings for only three of the items do mean ratings differ between Figure 5 and Figure 6: "life sciences," "alternative energy," and "advanced manufacturing." For the first two of these items, the expected growth is significantly higher than is the personal support for the items. On the other hand, mean expected growth for "advanced manufacturing" is significantly lower than is the personal support for that initiative, perhaps indicating that respondents do not expect state initiatives supporting this industry to be as successful as the other initiatives.
The final question in this section asks executives which initiatives should be added as an area of focus for the state of Indiana. Please see Figure 7 for responses to this question.
There seems to be broad support (65.7%) among our respondents for the state to add "health care" as a focus for economic development efforts. As was the case last year, a slight majority (53.7%) also favors adding a "mass transit" initiative as well. Though it may appear that support for health care is falling and support for mass transit is increasing, neither change is statistically significant. And once again, "banking/finance," "real estate," and "retail"received support from significant minorities of survey respondents.
