A reputation for cutting-edge research and an ability to attract corporate headquarters have North Carolina projected among the top three states in the country for economic growth, according to a study released last week by Wells Fargo Securities LLC.
The research team was led by Mark Vitner, a senior economist with expertise on the economies of North Carolina and the Southeast. The study shows that among states with the best regional advantage for employment in high-growth industries, only Florida was listed above North Carolina.
According to an article in the Winston-Salem Journal, researchers identified the high-growth industry sectors as finance and insurance, professional and technical services, accommodation and food services, services other than public administration, health care and social assistance, and local and state government.
The researchers excluded government from the report because of local and state budget crunches in most states.
“Many of the industries that North Carolina has a comparative advantage in are driven by population gains,” Vitner said.
“We essentially need to get the growth motor going again and, once that happens, North Carolina will once again reassert its position as one of the fastest-growing states due to the mix of industries in the state.”
Of the 25 individual industries studied, Florida had a positive regional advantage for 22, while North Carolina and Georgia had 21. The researchers cited in particular North Carolina’s burgeoning technology sector, both in electronics and life sciences/biotechnology, and energy.
“This report is an indication that North Carolina’s economic-development strategies are strong,” said Tim Crowley, a spokesman for the N.C. Commerce Department. “North Carolina is attractive because of our top-ranked business climate, our strong education system and customized training programs, and our skilled and knowledgeable workforce.”
Despite North Carolina and Georgia being hit hard by downturns in construction and manufacturing, the researchers said “the underlying economic advantages that made (them) two of the nation’s fastest-growing states over the past quarter-century remain in place.”
The researchers said North Carolina had an advantage in particular with professional and technical services, accommodation and food services, health care and social assistance, and nondurable-goods production.
They also weighed in on economic incentives, saying that every state must focus on where to best put what is expected to become more limited funding and resources for recruitment and retention projects.
“Incentives geared toward growing industries have the potential to generate benefits over a longer time period than declining industries, which may provide a short-term boost to employment, but shed jobs over a longer time horizon,” said the researchers, adding that states need to evaluate which industries are best suited for their region and which will come regardless of incentives.
“Industries, such as finance and insurance, and professional and technical services, may offer the greatest return on the local economic-development incentives, whether the incentives are purely financial or more focused on developing the local workforce.”
The researchers cautioned that North Carolina and Georgia may have a finite window to run with their advantages in economic recruitment, as they expect Florida will rebound from its housing recession and put more resources into its university system.