Missouri boasts sixth most diversified economy in U.S.

Everyone has heard the saying, "Variety is the spice of life." We are fortunate in Missouri to have a variety of businesses that result in a diverse economy.

This diversity is crucial to a state's economic success and strength, since it means we are not dependent on any type of industry for our economic health. A recent study released by the Department of Economic Develop-ment proves that our diverse economy will assist our state' s economic recovery.

The study, conducted by the department' s Research and Infor-mation Center, shows that Missouri has the sixth most diversified economy in the United States.

Our state is behind Illinois, Minnesota, Pennsylvania, Arizona and California in diversified economies. States with the most dependent economies were Alaska, Wyoming, Nevada and Delaware, plus the District of Columbia.

These findings are measured in terms of gross state product and are based on data from 1999, the most recent information available. Our researchers took data from the Bureau of Economic Analysis, which is part of the U.S. Department of Commerce. This data is broken into 16 major industry divisions, based on the North American Industry Classification System.

To determine economic diversification, we look at the gross state product in each of the industry divisions and compare those numbers to the gross domestic product.

Using a complex equation, we're able to determine how Missouri compares nationally and to other states. A higher score indicates more deviation from the national benchmark, meaning less diversification and more dependence on particular industries. Missouri' s overall score on the scale is 0.90.

In short, these findings mean that our economy is robust and able to withstand significant changes in any one economic sector fairly well.

A well-diversified economy is better able to withstand changes in the economy, since it is not dependent on type of business. Our score on the scales also shows that Missouri's economy closely reflects the national economy, with national trends being indicative of Missouri trends.

This is certainly good news as we look for signs that our economic recession may be ending and recovery is just around the corner. We should remain cautious, but this is a sign that Missouri industry will remain strong and there will be a full recovery from the current recession.

This study will be most beneficial to industry leaders and decision makers in strategic planning. By breaking the data out among 16 target industries, the results show us areas in which we are strong and ones where we need to improve.

This information is crucial on the state and local level, as economic developers and planners target new industry and business. In order for Missouri businesses to stay competitive, we must be familiar with our strengths and our weaknesses.

According to the data collected, Missouri's economy shows the most diversity in these industries: communications, transportation, non-durable manufacturing, wholesale trade, health services, construction and durable manufacturing.

Some areas that we need to strengthen include agriculture, state and local government, mining and utilities.

This diversification study is another asset to add to our economic development tools. By working with our regional and local partners in promoting Missouri's diverse industry and business, we'll be able to capitalize on our strengths and bring new business and jobs to our state.

(Joseph Driskill is the director of the Missouri Department of Economic Development.)