Virginia garners high rankings for its business climate, a complex and important component of a state's economic health and potential.
Why is This Important?
Business climate gives an indication of a state's current economic status and its future growth potential. States with positive business climates are likely to attract new businesses and encourage expansion of existing ones, thus promoting economic growth in the state.
How is Virginia Doing?
As its many accolades attest, Virginia has long been widely regarded as a topnotch state for business, with a high-quality workforce and a business-friendly environment. Challenges remain, however, particularly in terms of transportation infrastructure in high-growth areas of the state.
Forbes Magazine Best States for Business 2013
- In September 2013, Forbes.com and Forbes Magazine put Virginia back on top for the first time since 2009, although the Commonwealth has ranked among the top two during all eight years of their annual Best States for Business study. Forbes' index is based on a combination of factors for business climate, labor, regulatory environment, economic climate, growth prospects, and quality of life. In this year's index, North Dakota dropped to 2nd place, while peer state North Carolina retained its 4th place ranking. Maryland dipped to 18th (down from 16th in 2012), and Tennessee moved up nearly 10 points to 15th (up from 24 in 2012).
- In July 2013, CNBC and CNBC.com dropped Virginia's rank to to a 5th-place tie with Utah for best state for business in the nation (from 3rd in 2012). Peer state North Carolina came in 12th, Tennessee ranked 13th, and Maryland was rated 40th nationally. CNBC's rankings are based on 51 indicators in business costs, workforce, quality of life, economy, and infrastructure and transportation, as well as several other categories.
- In its 2013 "Enterprising States" report, the US Chamber of Commerce placed Virginia 5th in its overall Performance category, citing Virginia's #1 spot for General Standard of Living, plus its impressive innovation and growth in professional, scientific, and technical services.
- Virginia moved to fifth for best business climate in the U.S., according to a 2012 report by Site Selection magazine. The Top 5 rankings: Peer state North Carolina ranked first, followed by Ohio, Texas, and Georgia.
- In August 2012, Pollina Corporate Real Estate Inc., a U.S. corporate site selection expert, ranked Virginia #2 nationally for its pro-business climate.
CNBC Best States for Business 2013
What Influences the Business Climate?
Business climate is influenced by a number of factors, including the cost of labor, transportation, and energy; and the tax and regulatory burdens placed on businesses.
Indexes of business climate attempt to capture this multitude of factors in different ways. The Forbes index incorporates a large number of measures that capture specific aspects of the business climate. CNBC ranks all 50 states in 10 broad categories, including cost of doing business, workforce, economy, education, and quality of life. While no index provides a perfect measure, they do give an indication of how businesses view the business climate in Virginia.
What is the State's Role?
States can improve their business climate by:
- finding a balance between pro-business regulation and tax structures
- promoting an educated labor force
- ensuring adequate transportation networks
- raising the quality of life for residents.
State rankings are ordered so that #1 is understood to be the best.
Data Definitions and Sources
Forbes Magazine: Business Costs -- Index based on cost of labor, energy and taxes. Labor -- Measures educational attainment, net migration, and projected population growth. Regulatory Environment -- Measures regulatory and tort climate, incentives, transportation, and bond ratings. Economic Climate -- Reflects job, income, and gross state product growth, as well as unemployment and presence of big companies. Growth Prospects -- Reflects projected job, income, and gross state product growth, as well as business openings/closings and venture capital investments. Quality Of Life -- Index of schools, health, crime, cost of living, and poverty rates. (updated annually in November)
CNBC: Publicly available data on over 50 different measures of competitiveness were used to score all 50 states. States received points based on their rankings in each metric. Then the metrics were divided in 10 broad categories: cost of doing business, workforce, quality of life, infrastructure and transportation, economy, education, technology and innovation, business friendliness, access to capital, and cost of living. (updated annually in July)
United States Chamber of Commerce, Enterprising States 2013: Getting Down to Small Business (pdf). The Chamber rates states based on indicators in economic performance, exports, taxes and regulations, innovation and entrepreneurship, workforce, and infrastructure. (updated annually in summer)
2012 Top 10 Pro-Business States Annual Study, Pollina Real Estate. (updated annually in summer)
See the Data Sources and Updates Calendar for a detailed list of the data resources used for indicator measures on Virginia Performs.