For most of the 1990s, Maryland has trailed far behind Virginia in job creation -- the single most important test of a state's economic vitality, as most analysts see it.

But Maryland fares much better -- outpacing Virginia -- in a new "report card on the states" issued by the Washington-based Progressive Policy Institute, a research arm of centrist Democrats.

The authors, led by Robert D. Atkinson, use 17 benchmarks to measure a state's ability to prosper in what they call a "new economy" dominated by skilled jobs, global trading and entrepreneurial business growth.

Maryland enjoys a strong concentration of skilled workers, professionals, scientists and engineers. It has one of the highest percentages of online households in the country. And it beats the U.S. average in attracting venture capital and generating publicly traded start-up firms. These attributes put it in 11th place among the states, one spot ahead of Virginia in the rankings.

Virginia's strengths are similar: a large Internet audience and educated work force, a high concentration of high-tech jobs in Northern Virginia and an appeal to venture capital investors.

Sizing up Virginia and Maryland may be a staple of the capital's bustling think-tank community. But such comparisons about economic growth may not mean much to the two states' residents, except perhaps for Maryland commuters who wish they weren't driving to Virginia to work, or vice versa.

But the institute hopes it has made a persuasive case to state policymakers who call the shots on education spending, transportation and land use policies, and economic development strategies.

If the report's theories are on target, states at the top of the list such as Maryland and Virginia will enjoy more growth in the future than those rooted in the "old economy" of manufacturing, transportation connections and a large supply of lower-cost labor, the authors say.

Policymakers who subscribe to that argument will want to channel investments in work force training and education at all levels and an expansion of Internet and telecommunications backbones.

They will also need to handle economic development differently, said the report's coauthor, Randolph H. Court.

"The old economic development strategy was about hunting and gathering -- using tax breaks, free land and various incentives to lure companies into your state. It was smokestack chasing," Court said. "The new approach has to be gardening -- promoting growth from within."

Not surprisingly, PPI's prescriptions are in line with its role of trying to pull its party toward the middle on policy issues.

For instance, as advocates for the "new economy" espoused by President Clinton, the report's authors say a high rate of births and deaths among companies -- they call it the "churn rate" -- is a necessary ingredient of a strong, entrepreneurial business climate.

"While such turbulence increases the economic risks faced by workers, companies and even regions, it is also a major driver of economic innovation and growth," they say.

States such as Maryland with a relatively high rate of company births and deaths, derived from Dun & Bradstreet data, may provide a tougher climate for today's workers, but they'll have an edge for future growth, the PPI authors say.

Critics will say there's a simpler measure of a state's economic dynamism -- just count how fast the jobs are growing. The PPI authors claim the kinds of jobs a state creates are more important.

The report is available online at www.dlcppi.org.

Measuring the New Economy

How Maryland and Virginia rank on indicators of a technology-based economy:

Managerial/Professional jobs

Percent of total jobs (rank)

Md. 27.5% (Ninth)

Va. 29.6% (Third)

U.S. average 24.9%

Online Population

Percent of adults with Internet access (rank)

Md. 46%

Va. 40%

U.S. average 31%

Patents

Per 10,000 workers (rank)

Md. 43 (23rd)

Va. 26 (31st)

U.S. average 48

Initial Public Offerings

Value as percentage of state's economic output (rank)

Md. 1% (Sixth)

Va. 0.4% (Third)

U.S. average 24.9%

Sources: Bureau of Labor Statistics, Cyber Dialogue, U.S. Patents and Trademark Office, Hale & Dorr, Progressive Policy Institute