Economic development has always been a moving target. Not surprisingly, there is growing evidence that the shape of economic policy and practice is significantly changing in many American states on the eve of the 21st Century. This article reviews the evolution and transformation of state economic development as well as its multidimentional character. The evolution includes roughly three broad, overlapping phases: a period when states focused on attracting businesses, and a period when states focused on attracting businesses, a period when they focused on developing existing businesses, and a period when states refined and sharpened the strategies they already had in place. This article also offers evidence that a new, fourth phase is emerging in economic development. It is called cluster-based economic analysis and strategy development. This new approach has states addressing new issues, using new analytical tools, and experiencing new kinds of results. Economic Development has always been a moving target. Governments have continually searched for new tools and magical policy formulas to give them greater control of their economic destinies. This article traces the key trends in economic development as they were practiced over the last several decades in U.S. It describes the criticisms that have been leveled at traditional economic development activities and explores a wide variety of proposals that have been-advanced for reforming economic development policy, including the idea of "industry cluster-driven" strategies. This article also documents how states and localities stepped forward in the also documents how states and localities stepped foward in the 1980s, when federal economic policy was hampered by stagnanat budgets and political gridlock. Finally, it reviews practical evidence from the state and regional levels about new directions for economic analysis and strategy development in the 21st century. This shift is part of a broader transformation in how states are both understanding and creating economic success in a global economy