States can improve their economic competitiveness by fostering entrepreneurship in high-impact sectors such as information technology, clean technology, health care, and biotechnology.

National surveys of entrepreneurs indicate that the five critical factors that state government can influence are:

  • Diversity in sources of capital;
  • An enabling culture;
  • Strong local networks;
  • Supportive infrastructure; and
  • Entrepreneur-friendly government.

Governors can promote the growth of small businesses by providing better access to capital, through revolving loans and seed capital funds, as well as by providing technical assistance services that help small businesses connect to scientific expertise and business development centers at universities.