Now there is a way to measure the new economy beyond the anecdotes of everyday life. The "State New Economy Index" report, recently released by the Progressive Policy Institute, shows that the "new economy" is more than the latest innovations in information technology and high-flying Internet companies. It is also a knowledge economy, with a large share of the work force employed in office jobs requiring some level of higher education. It is a global economy - the sum of US imports and exports rose from 11 percent of gross domestic product in 1970 to 25 percent in 1997. This emerging economy is driven by innovation in every arena from traditional manufacturing to health care.

The good news is that Massachusetts is ahead of the other 49 states by a significant margin, a national leader of the high-tech economy. But that's not the only reason this state is the best-prepared state for the "new economy" - there are many other factors driving Massachusetts's success in the post-industrial era.

First, this state has a strong "knowledge economy." Given the large number of students who come to its colleges and universities and stay after they graduate, it is no surprise that Massachusetts has the sixth-most-educated work force in the country. Not coincidentally, it ranks first in the country with the largest share of managers, professionals, and technicians in its work force - 34 percent. Moreover, because of its strong financial service, health care, and high-tech industries, it is second in the share of office jobs in its economy - 26 percent.

Second, the Massachusetts economy is globally oriented. It ranks fifth in the country in the share of jobs in manufacturing companies that depend upon exports - 23 percent - and fourth in the amount of foreign direct investment: More than 5 percent of the state's work force is employed in foreign-owned companies.

Third, in an indicator of entrepreneurial dynamism, Massachusetts ranks ninth in terms of the percentage of our workers - 15.5 percent - employed in "gazelle" companies - companies with compound sales revenue growth of 20 percent or more for four straight years.

Fourth, Massachusetts has an impressive infrastructure for innovation. The state ranks third in the country in industry investment in research and development - nearly 4 percent of gross state product. It ranks fourth in the number of scientists and engineers - collectively, they represent approximately one out of every 100 workers - and first in venture capital activity as a share of gross state product. When you add in the number of high-tech jobs in the state's economy, Massachusetts is the state with the most evolved innovation capacity for the new economy, ahead of California, Colorado, and a pack of other innovative states.

Finally, the strength of Massachusetts's digital economy comes as no surprise: the state ranks eighth in the percentage of citizens who are on line - 39 percent - and third in the number of ".com" domain names registered - 35 for every 100 companies.

Massachusetts is the prototypical "new economy" state because it has been able to reinvent itself - to adapt - faster than other states.

It was forced to reinvent itself in the 1950s and '60s as industries from textiles to metal-working declined. It was to reinvent itself again this decade in the wake of the dramatic decline in defense spending and the collapse of the minicomputer industry. In both cases the Bay State was able to adapt because of its highly educated and flexible workers and institutions that understand and support entrepreneurship.

To maintain and even extend its lead in the new economy, Massachusetts will need to build on its capacity for innovation and adaptiveness. There is always room for improvement.

We must continue to reinvent the public education system. The education reform initiatives of the early '90s were important steps forward, emphasizing a balance between accountability, flexibility, and investment. But there is room for improvement in the use of educational technology; only 15 percent of public school teachers in Massachusetts have received technology training, and only 40 percent of the state's classrooms are wired for Internet access.

As we strengthen elementary and secondary education, it is also critical to protect the crown jewel of Massachusetts's new economy: increasing support for higher education, especially science and engineering programs. Between 1986 and 1998 there was a 37 percent decline in bachelor's degrees in engineering in Massachusetts.

We should also work together to leverage the development of new, industry-led and union-led collaborative approaches to work force development. Economic progress in the new economy demands that we erase the old demarcations and tensions between government, business, and labor. To keep our work force ahead of the economic curve requires a flexible and team-oriented approach to worker training and retraining.

These three challenges can be met in nonbureaucratic ways. Federal, state, and local governments can forge new partnerships with the private sector to find answers for schools and workers. Government doesn't have to control or abandon; it can leverage good corporate citizenship and sound public policy by empowering corporate leadership and relying on charitable and faith-based organizations to help us put a human face on the global economy and keep Massachusetts roaring ahead into the next century.

If Massachusetts builds on these foundation areas and continues to adapt, it will continue to lead the nation in the new economy.

John Kerry is US senator from Massachusetts. Robert Atkinson is director of the Technology & New Economy Project at the Progressive Policy Institute