Last
week the U.S. Chamber of Commerce released their annual analysis of public
policies that are driving economic development around the United States. This study also identified the states that
are “most likely to grow, create jobs and prosper” in the next decade.
The
U.S. Chamber finds that the traditional model of recruiting industry and jobs
by offering incentives is no longer enough.
The most successful states over the past few years shared a number of
commonalities. Part of their success
derives from location and part is through proactive policies that encourage
economic development.
In part, the states with the highest growth in
jobs and gross domestic product are the result of having a state economy that
is heavily invested in agriculture and energy.
The United States is the world leader in food production, exporting $135
billion in agricultural products in 2011.
Last year represented a record year as worldwide demand for food
continues to increase. Having a base
economy anchored by agriculture provides stability and growth that tends to be
recession-proof.
If
agriculture provides a stable base then the energy sector supercharged states’
economies in 2011. The growth of natural
gas and the tapping of new oil formations have turned this country into a net
EXPORTER of petroleum products for the first time since 1950. This surprising turn-around has not only
created lots of jobs, but the jobs are generally high wage positions.
Over
the past few years, Arkansas benefited from a stable agricultural base as well
as an energy sector economy that has helped carry the state through the latest
recession. The state cannot rely on its
natural advantages alone to create jobs and grow our economy. So what are the public policies that are
working in other states?
A
highly trained workforce with a strong background in math, science, technology
and engineering is critical in attracting, retaining and growing jobs. The report finds that even during periods of
high unemployment, like those experienced over the past four years, “thousands
of jobs throughout America cannot be filled because of a growing skills
gap.” Not all of these high-demand jobs
require a four-year degree. Many need
specialized training or a two-year degree so states must support both
types. States also need to support
programs that connect high tech graduates to jobs. These efforts typically
utilize a statewide job bank and partnerships with employers. The good news is that Arkansas scores well in several higher
education rankings - #5 in higher education efficiency, #5 in high school
advance placement and #17 in job placement efficiency, according to the study.
Infrastructure
investment also plays an important role in economic development. The U.S. Chamber finds that “States and
cities must continually upgrade their highways, airports, harbors, utility distribution
systems, railways, water and sewer systems, and communications networks to keep
pace with the requirements of an ever-changing business environment.” Roads must be sufficient to meet the demands
of the business and residents while access to high speed broadband is vital for
businesses to compete. According to the
analysis, Arkansas does not rank high in road quality. However, voters will have an opportunity in
November to authorize a temporary half-cent sales tax to fund new highways in
the state, which would significantly improve our state’s infrastructure. According to the U.S. Chamber, in Arkansas
“[t]ransportation infrastructure improvements are especially critical in
maintaining affordable shipping options for the state’s product-centric industries,
increasing economic competitiveness and long-term job creation.”
Taxes
and regulations are also important aspects of a strong economic climate. They find that a “reasonable tax code and a
sensible, predictable regulatory environment can encourage investment.” Many of the states that have seen tremendous
growth over the past decade have made a concerted effort to review business
regulations and eliminate those that are overly burdensome and streamline governmental
processes especially those related to payment of business taxes.
Finally,
policies that encourage and support innovation and entrepreneurship are
producing a tremendous return on investment for states around the country. In Maryland, the state invested $70 million
to support startup and early-stage companies that emerged from that state’s
research universities. They found that
for each $1 invested by the state, an additional $38 dollars of private funding
was raised to support entrepreneurs in Maryland. Supporting innovation goes hand-in-hand with
supporting higher education’s efforts to increase graduates in science, math,
technology and engineering.
So,
applying the U.S. Chamber's analysis to Arkansas finds that the state enjoys a
solid agricultural base as well as a strong energy sector presence. Both sectors should be support and encouraged to continue to grow and produce jobs. The state should continue to fund higher education
and encourage students to pursue high tech related degrees and
certifications. Additionally, support
for programs that encourage entrepreneurship and fund early stage companies is
important. A review of existing business
regulations may be in order to find rules that unnecessarily waste time and
create added business expense. Finally,
investment in infrastructure is vital to Arkansas’ economy and necessary if the
state hopes to add jobs and compete with our surrounding states.
Download the full report HERE.
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