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Is Texas Truly Business Friendly?

Date: 12/07/2005 | Category: Business | Author: Diana Heeb Bivona

Texas has always prided itself on being a business friendly state. If you examine the existing business climate indices, you will normally see Texas ranking comparatively high. For example:

On the State Business Tax Climate Index 4th
Small Business Survival Index 11th
Economic Freedom Index 17th
Competitiveness Index 20th

However, a study released by the Economic Policy Institute (EPI) supports the position that you shouldn’t rely too heavily on business rankings. EPI examined five main ranking indices– the Small Business Survival Index, the State Business Tax Climate Index, the Metro Area and State Competitiveness Report, the Fiscal Policy Report Card on America’s Governors, and the Economic Freedom Index. Interestingly, it was discovered that not one provided a valid measure of state or city growth. The focus of each index appeared to be either on low taxes, spending cuts, or less regulation, regardless of whether it was good for business in the long-term.

One ranking that did draw high rankings was the Corporation for Enterprise Development’s (CFED) Assets and Opportunity Scorecard. This ranking measures human, social, and economic capital for the entire statewide population. It evaluates factors such as education and poverty, which some consider substantive measurements of a state’s business climate. On this particular index, Texas finds itself at the bottom of the list.

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