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 2012
- In 2012 Forbes.com and Forbes Magazine again placed Virginia second in their national rankings for Best State for Business, ranking after Utah for the third consecutive year. Forbes' index is based on a combination of business climate, labor, regulatory environment, economic climate, growth prospects, and quality of life. In this index, North Dakota (3rd) traded spots with North Carolina (now 4th in 2012). Maryland was 16th (up from 19th in 2011), and Tennessee placed at 24 (down from 21 in 2011).
- 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.
- In July 2012, CNBC and CNBC.com ranked Virginia the third best state for business in the nation. Peer state North Carolina came in 4th, Tennessee ranked 16th, and Maryland was rated 31st nationally. CNBC's rankings are now based on 51 indicators in business costs, workforce, quality of life, economy, and infrastructure and transportation, as well as several other categories.
- In its 2012 "Enterprising States" report, the US Chamber of Commerce places Virginia
3rd in its overall Performance category, citing Virginia's #1 spots in Median
and STEM job concentration. Virginia also placed in the top 10 in its Talent Pipeline (workforce) category.
CNBC Best States for Business 2012
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 2012: Policies that Produce (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.