Rating the states' economies usually amounts to a subjective exercise that produces more controversy than valid findings about such factors as business development and job growth.
The controversy usually stems from attempts by organizations to measure the so-called business climates of states. Few agree on what constitutes a good or unsatisfactory business climate and most of these beauty contests for the states are based on unscientific surveys rather than objective studies of hard evidence.
Inc. magazine probably comes closer than most to presenting an accurate account of the effectiveness of the states' economic policies and business growth, particularly in the area of developing companies.
The Inc. survey may be challenged in some states, especially by those that rank near the bottom. Nonetheless, the magazine's annual report does seem to be a fair measure of states' performance in stimulating economic activity.
The survey, which is based on figures from the Bureau of Labor Statistics, is intended to show a state's gain -- or loss -- in private-sector and civilian public-sector employment, according to the magazine. The results cover a four-year period, from 1983 to 1987.
Maryland, which seldom manages to crack the top 10 on most business climate lists, ranks third in the 1987 Inc. report. Virginia, which has done a little better than Maryland in other surveys, is fifth on the Inc. list.
A state's ranking reflects its economy's relative success in three categories, according to Inc.: job generation, new business creation and young company growth. In measuring the growth of young companies, Inc. studied the development of companies founded in 1979 or later.
Virginia actually gained more jobs than did Maryland (452,100 compared with 314,000), but Maryland outscored Virginia in the percentage of growth, business startups and so-called fast-growth companies listed by the BLS. As a result, Maryland moved up three places from sixth in Inc.'s 1986 survey, while Virginia climbed from 10th.
According to Inc., this year's annual report is a story of two economies -- one prosperous and the other suffering from the loss of farms, factories and oil rigs.
The nation's economy has become "bicoastal," the magazine asserts. This year's report, it adds, shows that eight of the top 10 states are located on the east and west coasts and that Arizona (No. 1) and Nevada (No. 10) owe their economic growth to California, a coastal state.
Inc. attributes the economic growth of the coastal states to what it calls "strong underpinnings": a decades-long transition from heavy industry to service businesses and a reliance on the commercialization of technology developed at top research universities.
Maryland and Virginia, for example, benefit from the service and technology growth around the nation's capital, Inc. points out.
Unquestionably, the proximity of the nation's capital to major population and employment centers in Maryland and Virginia has contributed significantly to economic growth in the two states. But flourishing economies in both states also reflect strong economic growth policies and aggressive economic development programs.
Northern Virginia's booming economy can be traced in large measure to a spillover effect from the District and from a perceived need by some businesses to be near the Pentagon.
Still, Virginia's economy, with few exceptions, has outperformed the national economy over several years.
The latest unemployment figures show, for example, that the August jobless rate for all of Virginia fell to its lowest level in 13 years.
The 4.1 percent unemployment rate reflects, in part, manufacturing gains reported earlier this year in areas such as Richmond-Petersburg , Lynchburg, Danville and Bristol.
The steady climb in the rankings by Maryland and Virginia is less an accident of geography than it is the result of enlightened leadership and development of the proper climate for business growth.
The same holds true in Virginia, where former governor Charles Robb and his predecessor, John Dalton, made economic development cornerstones of their administrations.
Inc.'s ranking of Maryland is, in effect, testimony to the effectiveness of the administration of former governor Harry Hughes.
Unfortunately for Hughes, lingering problems from the state's savings and loan crisis tend to detract from his administration's success in promoting and nurturing growth in the private sector.
Significant increases in job creation, development of new businesses and growth of young companies in Maryland between 1983 and 1987 occurred on Hughes' watch.
Interestingly, Inc.'s recognition of Maryland as the third most effective state in stimulating economic expansion comes at a time when the department charged with continuing that effort appears to be in the throes of a talent drain.
According to recent published reports, vacancies exist in several top positions in the revamped Maryland Department of Economic and Employment Development.
Maintaining continuity in that department and giving it the mandate it held under Hughes is vital if Maryland expects to retain a healthy climate for business growth.