WASHINGTON and PROVIDENCE – Rhode Island moved up to 11th place in the 2008 State New Economy Index released today by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF).

The Ocean State received 67.7 of a possible 100 points in the index, based on its focus on creating and keeping high-wage jobs. Its score has risen steadily since the measure’s inception, taking Rhode Island from 29th place in the initial index to 15th last year – when it was honored as one of five states making the greatest strides (READ MORE) – to 11th today.

Meanwhile, Massachusetts – with an overall score of 97 – retained the No. 1 spot it has held since the measure’s inception. Filling out the Top 10 were Washington (with 81.9 points), Maryland (80), Delaware (79.3), New Jersey (77), Connecticut (76.1), Virginia (75.6), California (75), New York (74.4) and Colorado (70.4).

The index ranks each state based on 29 indicators in five categories: knowledge jobs; globalization; economic dynamism; transformation to a digital economy; and technological innovation capacity. The latest release was timed to coincide with Global Entrepreneurship Week, the Kauffman Foundation said.

“The new economy is creating profound, irreversible changes in the U.S. economic structure at a pace we would not have imagined even a decade ago,” said Robert Litan, vice president of Research & Policy at the Kauffman Foundation. “Innovators in the United States – and worldwide – are increasingly investing in resources to compete based on this new reality.”

The trend is strongest in the Northeast, mid-Atlantic, Mountain West and Pacific regions, which contain 14 of this year’s top 20 states, the foundation added. It is weakest in the Midwest, Great Plains and Southwest regions, where 16 of the 20 lowest-ranking states are located.

“Rhode Island’s ranking in the Kauffman / ITIF Index has improved year to year, and the report commends Rhode Island for the investments we have made in R&D and technology,” Gov. Donald L. Carcieri said in a statement.

“This is good news for Rhode Island,” the governor added. “Although we face significant challenges in weathering today’s economic crisis, it is important to recognize and celebrate the progress we have made in building a foundation for a new economy in Rhode Island that will be better-positioned to compete nationally and globally in the years to come.”

This year’s report cited the state’s R&D tax credit of 22.5 percent – the nation’s highest – “as a key investment,” state economic development officials noted today.

Rhode Island was No. 2 for health-IT initiatives, behind only the Bay State. The report credited government leadership and “an organized effort to make the state a leader in e-prescribing.” It also was No. 2 for residential broadband.

It was No.3 for industry research spending, as a percentage of worker earnings. “Rhode Island may score so well [on industry investment in R&D] because a number of defense electronics and biotechnology firms operate there, and the fact that it instituted the nation’s most generous R&D tax credit several years ago,” the Kauffman / ITIF report said. State economic development officials also cited the 22.5-percent credit, calling it a “key investment.” It was No. 4 for non-industry investment in R&D; the report credited the presence of large federal facilities – mainly, Naval Station Newport.

The state also ranked No. 4 for both its digital economy, based in part on government use of IT, and local industry investment in R&D; and No. 5 for its population of scientists and engineers, as a percentage of the total work force, in part because of the presence of the federal laboratories at the Naval Undersea Warfare Center (NUWC) Division Newport. In the agriculture and IT ranking, the state tied for No. 5 with Connecticut, Maine, Massachusetts and Vermont.

The Ocean State was honored as the nation’s “Top Mover” for its increase in inventor patents. And it was ranked among the top five movers in the fastest-growing firms category – a ranking by the percentage of local companies on the Deloitte Technology Fast 500 and Inc. 500 lists – where it moved up 10 points from last year to No. 32.

Rhode Island was 23rd in initial public offerings (IPOs); 19th in “gazelle jobs” at companies with fast revenue growth (7.8 percent); and 17th in foreign direct investment (3.1 percent).

But it lost ground in “innovation capacity,” falling to 12th this year from 8th in 2007. It fell to 15th place in “knowledge economy” jobs, from 13th last year, as it lost high-wage managerial, professional and technical positions. And it plunged to 37th in globalization – based on the production of goods and services for export and the share of the local work force employed by foreign companies – from 13th in early 2007. “States with low rankings tend to have more lower value-added industries that compete directly with lower-wage nations,” as in Arkansas and Mississippi, or have “mostly smaller firms that tend to export less than larger firms (such as Rhode Island),” the report noted.

But the state’s 38th-place ranking in migration of U.S. knowledge workers was balanced by a 23rd-place showing in immigration of knowledge workers from abroad – a category in which “states with strong higher education systems, such as Massachusetts and Rhode Island, rank high,” the report said.

“To succeed in the new economy, states face a new imperative to boost the competitiveness of their economies – not just relative to each other, but to other nations,” said Robert D. Atkinson, the report’s lead author and the president of the ITIF, who served as executive director of the R.I. Economic Policy Council (EPC) from 1996 to 1997. “If they are going to meet the economic challenges of the future, states will need to overhaul their familiar approaches to economic development.”

That transformation is well under way in Rhode Island, according to Saul Kaplan, executive director of the R.I. Economic Development Corporation (EDC), citing initiatives including the R.I. Science and Technology Advisory Council (STAC) and its collaboration-promoting Research Alliance grants.

“Our state’s academic, public and private sectors have never been more committed to accelerating Rhode Island’s economic transformation into a 21st-century knowledge economy,” the EDC chief said, although he added that “in order to strengthen our economy and create new jobs, we must continue to support policies that attract and retain top talent; create an environment that supports innovation; and develop programs that offer all Rhode Islanders access to good jobs.

“It is exciting to see that Rhode Island recognized for its commitment to economic transformation,” Kaplan said.

Additional information – including “The 2008 State New Economy Index: Benchmarking Economic Transformation In the States,” the full report released today by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF) – is available at www.kauffman.org.