Post on March 16, 2012 by Sarah Ovaska
Yet another study is out praising North Carolina’s business climate, and it’s pointing to the state’s high quality of public education and public infrastructure as reasons for that.
This time the study comes from the highly regarded Council on Foreign Relations, as part of their Renewing America project.
The report “After Manufacturing: Lessons for a New Reality from North Carolina” was released today and authored by Roland Stephen, a senior economist with the Center for Science, Technology and Economic Development at SRI International and a fellow with the Institute for Emerging Issues in North Carolina.
It looks at how, after seeing job losses in manufacturing and textile sectors, North Carolina traditionally invested in public education and its public infrastructure, and avoided much of the pain the exits of those two large industries could have brought on.
From the CFR blog post about the study:
…(T)he state has begun to build the foundations for a prosperous economy with a much smaller manufacturing workforce. In the two decades from 1990 to 2010, North Carolina added 729,000 jobs despite the collapse in manufacturing employment. In comparison, Ohio created just 168,000 jobs in that period and Michigan actually lost 68,000 jobs. Some regions of the state are success stories–Raleigh-Durham has seen robust growth in education and business services employment, while the mountainous region of Asheville has attracted tourism and health-related industries.
What are the lessons? Every state faces its own challenges, and there is no blueprint. As Stephens writes: “What is required is a toolbox for action that meets the needs of these fragile economies–regions struggling to make the most of their particular mix of assets following the decline of manufacturing employment.” Nonetheless, there are policy choices made by North Carolina that should be relevant to other states that are trying to manage a similar transition.
- Invest in infrastructure. North Carolina has an extensive road system, for example, built largely with funding from its gas tax, which is among the highest in the nation.
- Invest in education. The state has increased K-12 spending faster than the national average, and was among the first to back testing to raise standards. And North Carolina has one of the country’s most impressive state university and community college systems, with per pupil spending the 3rd highest in the country.
- Pursue open-ended initiatives and show patience in waiting for payoffs. Rather than trying to attract specific industries, states would be wiser to create a supportive environment for innovation through generic investments with multiple uses. Stephen points out that the Research Triangle was never envisioned as a successful biotech cluster; instead, the idea was to pool talent on the theory that good things would then result.
- Create institutions–regional partnerships, technology centers–that are focused on regional development.