||Cities are an important determinant of state economic performance. As a consequence, states that ignore the economic well-being of their cities risk falling behind. Cities whose economies are stagnant, whose residents suffer from poverty and unemployment, whose budgets are in chronic fiscal stress, and who require state aid to sustain basic services are a drag on the entire state economy. Cities whose economies are vibrant, whose residents are productive, whose budgets are fiscally stable, and who do not require massive infusions of state aid are assets to the entire state. Our study examines the relationship between states and their cities and the impact of state activity on cities. To understand how states can help cities - and thereby themselves - succeed, the George Washington Institute of Public Policy and Cleveland State University's Office of Economic Development began a study of state policies that contribute to successful urban performance. As background for this paper, we visited seven states (California, Illinois, Michigan, North Carolina, Oregon, Pennsylvania, and Washington; see Box 1 on p. 5 for selection criteria). As a result of our research in these states, we identified a set of principles that, when they serve as guides to state actions and policies, can help cities prosper and at the same time benefit all state residents.