Last Updated 08 Jul 2021

Massachusetts Business Environment

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This report is about the competitiveness of the state “Massachusetts”. Massachusetts is one of the oldest states of the United States. It is known for its technological advancement, strong economy and reputation of technology state. Beacon Hill Institute defines state competitiveness as “We consider a state to be competitive if it has in place the policies and conditions that ensure and sustain a high level of per capita income and continued growth”. This paper is an effort to understand various strengths and weaknesses of the State and policies that can keep the state competitive.

According to the Beacon Hill Institute’s State Competitiveness Report, 2007 Massachusetts is replaced by Utah in its competitiveness. Massachusetts was at the top place in the year 2005 and 2006. Massachusetts has been strong in the sub-indexes like human services, finance and technology. The report states that the economic polices of the leading technology states including Massachusetts has not improved. The BHI index of State competitiveness includes economic competitiveness that is strictly based on taxation. Productivity and personal incomes are important part of economic development strategy of any state. The strengths and weaknesses of the state are described below:

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It has a stable economy that is growing with steady rate. There is availability of workforce at present. It is technologically advance state. Massachusetts is center of education and advance learning. The education system consists of various educational, technical and professional institutes. These institutes are attracting students from all over the world for technical and bio-science education. The State has strong policies for intellectual rights. The patent right protection is attracting business organizations and researchers to the State. The availability of technically skilled workforce at present adds to the research and development activities. The great institutes of Massachusetts include Boston University and Boston College, Harvard University, MIT and others. The lists of strengths of the State are as follows:

  • Strong economy
  • Image of technology state
  • Availability of skilled workforce for technology, research, design and engineering.
  • Strong policies for intellectual rights, particularly patent rights.
  • Higher education system that includes medical school and colleges, teaching, graduation programs in science and technology
  • High state technology
  • Presence of world class business organizations and facilities for the research and development activities and business operations
  • Its Location: It has a strategic location of the center of New England.
  • Export sector economy

Altogether, the State is able to attract business organization for setting new businesses, attracting funds for research and development activities. This is the strongest strength of the state.

It ranks first on the Human resource sub-index (BHI, 2007). This is based on high proficiency of students of grade 4 in mathematics, less infant mortality rate and availability of nonfederal physicians per 100,000 inhabitants.

Number of population enrolled in degree institutions and with high school certificates are high. Percentages of people without health insurance are less. This indicates availability of a healthy and skilled workforce in the future.

The State has rated well at all the sections of technology sub index. It is spending money for research and development projects. It is supporting various projects and has good intellectual rights policy at place. Percentage of people with science and technology backgrounds are high and wages and salary for the technically skilled workforce is high. It is a moderately secure state with the ranking of 12 among all the states listed(BHI, 2007).

As listed in the image below, Software technology and communication services, Scientific, Technical and management services and the financial services are the high paying job sectors. Among these Scientific, Technical and management services are experiencing growths.


There are certain weaknesses of the State. These have resulted in lowering its position from first competitive state to second position. Effort of the State in improving its infrastructure has been not impressive. Housing is very costly. The international workers get distracted by the costly housing facility.

  • Loss of jobs in manufacturing sector
  • Economy at transition state
  • Decline in the skilled young workforce
  • Budget Deficit
  • Lack of availability of skilled workforce for knowledge intensive industries
  • Growth in the sectors with limited employment opportunity like biosciences and computer hardware and related components.

The State has ranked 34 on the Government and Fiscal Policy index. It is ranked 50th for the average benefit per first payment for unemployed.  It is ranked 42 on Infrastructure Index. The poor ranking was based on the travel time, electricity prices and housing cost. The state has ranked poor for the minimum wage and representation of unions on different workforce. It has poor environmental policy as compared to the other states as it is ranked 42 on the Environmental Policy Sub-index. Local innovation economic environment is hit by not having head offices of the corporate/ (BHI, 2007)

Policies for Maintaining Competitiveness of the State

According to 2006 INDEX of the Massachusetts Innovation Economy states four key issues for the State as a Competitiveness issue. The first is research and development investments and conversion to new technologies, products, and businesses, the second is the availability of capital and the quality of investment opportunities in Massachusetts relative to other LTS, third is the availability of a workforce with the scalability and skills necessary to feed expansion and the last is global market competition and the demands and opportunities of export growth. Each of these concerns is required to be handled for the State to maintain its competitiveness.

The policy makers need to focus on these issues for policy making. Intelligent taxation system that allows individuals and corporate to have a predictable taxation policies, improved infrastructure, government support for the business related activities and government initiatives to prepare future workforce according to the changing needs of the environment will help to sustain the competitiveness of the State. Government needs to control its cost in order to avoid any kind of budgetary crisis in future.


Massachusetts is highly competitive state. As indicated from the available resources that most of the issues concerning to the competitiveness of Massachusetts can be controlled by effective policies.  Government needs to maintain its competitiveness by adopting policies in the favor of business environment.


  1. Beacon Hill Institute (2007), State Competitiveness Report 2007 The Beacon Hill Institute for Public Policy Research, Suffolk University: Boston ISBN 1-886320-32-2
  2. John Adams Innovation Institute (2006), Index of the Massachusetts Innovation Economy, Massachusetts Technology Collaborative
  3. Elizabeth C. McNichol and Iris Lav , 13 STATES FACE TOTAL BUDGET SHORTFALL OF AT LEAST $23 BILLION IN 2009; 11 OTHERS EXPECT BUDGET PROBLEMS, Economy, States’ Past Fiscal Decisions Are Largely To Blame retrieved on 8 May 2008 from
  4. Made in Massachusetts retrieved on 8 May 2008 from
Massachusetts Business Environment essay

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