Milken Center for Advancing the American Dream & Legatum Institute
Introduction to Open Economies
Open Economies encourage innovation and investment, promote business and commerce, and facilitate inclusive growth. This domain captures the extent to which the economies of each state and county embody these ideals.
ADPI’s Open Economies domain is supported by three pillars:
1. Business Environment assesses access to credit, labor market flexibility, and price distortions for goods and services. It also captures how contestable the markets are and the regulatory barriers affecting how easy it is for businesses to start, compete, and expand.
2. Infrastructure captures the quality of the infrastructure that enables commerce. Businesses require infrastructure that allows for efficient communication, adequate provision of water and electricity, and connects them to transport hubs and economic centers. This leads to more competitive and efficient markets, allowing new products and ideas to be commercialized and transported within the U.S. and overseas, ultimately benefiting consumers through a greater variety of goods at more competitive prices.
3. Economic Quality assesses how well the economy is equipped to generate wealth sustainably with the full engagement of its workforce. A strong economy is dependent on the production of a diverse range of valuable goods and services and high labor force participation.
Here are two insights that illuminate the importance of these pillars on prosperity in local communities:
Youth Employment: An Economic Quality Dichotomy in Two Louisiana Towns
There is a direct relationship between the level of youth employment (ages 16-24 who are actively seeking work) and levels of overall prosperity. The most striking example is in Louisiana’s Claiborne Parish (ranked 26th of out of 64 parishes), which reduced the youth unemployment rate from 28.6 percent in 2012 to 1.6 percent in 2022, outpacing the state-wide decrease in youth unemployment from 18.9 percent to 9.5 percent. This reduction in youth unemployment has contributed to Claiborne Parish's status as the most improved parish in Louisiana.
If a locality does not address youth unemployment, then this can act as a brake on greater prosperity. For instance, Louisiana’s Acadia Parish (ranked 50th of 64 parishes) was one of the least improved parishes in the state over the past decade, which is partly due to youth unemployment increasing from 19% in 2012 to 24% in 2022.
Reliable Access to Broadband: Austin's Rise & San Augustine’s Fall in Texas
Relating to Infrastructure, access to high-speed broadband internet is becoming increasingly important as more businesses and consumers rely on digital networks to access goods and services.
Especially with the rise of remote work/teleworking, high-quality internet access may become an increasingly important factor for people looking to move to affordable areas. For instance, Austin County, Texas (ranked 20th in overall prosperity out of 254 counties) has increased rates of broadband access from 11% in 2012 to 87%, which has played a role in Austin becoming one of the most improved counties in the state. Moreover, according to the American Growth Project, Austin is now the second-fastest growing metro area in the United States.
Conversely, San Augustine County, Texas (ranked 254th out of 254 counties) only 23% of residents with broadband access, which lags far behind Texas’ state-wide access of 85%. San Augustine County’s average download speed is 25 megabits per second (mbps), which is far lower than the Texas-wide average of 103 mbps. The lack of broadband access contributes to San Augustine remaining the least prosperous county in Texas since 2017.
As a U.S. resident, how can you use this data?
With an understanding of the Open Economies domain, you can become informed on which states have the most diversified economies, the best internet connectivity, and the best places to start a business. If you are seeking to understanding the economic conditions of your area and/or other areas, the American Dream Prosperity Index can be a data-driven source to inform your research.
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