Factors Driving States’ Economic Growth in the United States: Social Contagion and a Punctuated Equilibrium Perspective

Factors Driving States’ Economic Growth in the United States: Social Contagion and a Punctuated Equilibrium Perspective

(Purpose) This study empirically examines factors in states’ economic growth with emphases on agenda setting and decision making across U.S. states over a 41-year period (1980-2020). (Design/methodology/approach) The two-step system generalized method of moments (GMM) was used to analyze overall economic growth. (Findings) States considered neighboring states’ policy processes and responded to these circumstances rather than their own policy processes. Elected officials had less policy priority for economic development, whereas a gubernatorial election year produced incremental economic growth. Balanced budget rules prevented drastic economic downturns; tax and expenditure limitations promoted incremental economic growth. All state partisan compositions led to rapid economic decline, which Democrats sought to manage. States with more conservative citizens witnessed overall economic growth along with positive and general punctuation. An initiative process fostered economic growth through these two forms of punctuation as well, while political institutions contributed to negative punctuation. (Research implications or Originality) It expands on features related to states’ economic growth through the lenses of social contagion, social learning theory, and PET. The results offer practitioners valuable insight into the mechanisms behind such growth.