What Keeps North Carolina on Top?

About the Author

Jonathan Morgan

Jonathan Morgan is a School of Government faculty member.

Jonathan Morgan is a School of Government faculty member.

Industry trade publications consistently rank North Carolina among the top five states with respect to its attractiveness for business locations. For example, North Carolina has been ranked No. 1 in eight of the last nine years by Site Selection magazine in its assessment of overall state business climates. The various business climate rankings are based on multiple criteria including executive surveys, cost factors, labor supply, regulatory environment, tax policies, quality of life and infrastructure.

North Carolina’s apparent status as a preferred destination for business contributes to the perception that the state is a trendsetter in economic development. To be sure, the state benefits from visionary leadership in the public and private sectors that has invested in important long-term projects such as the renowned Research Triangle Park, and the emerging North Carolina Research Campus in Kannapolis, while maintaining strong support for higher education and physical infrastructure improvements. But to what extent is North Carolina the leader and innovator in economic development that many perceive it to be? How much of this is about perception versus reality?

Assuming North Carolina does indeed have a genuine competitive edge, at least four factors should be examined more fully in order to better understand the state’s unique formula for economic development success.

1. People
The N.C. Department of Commerce now markets North Carolina as “The State of Minds”. Such a motto seems especially appropriate given the large numbers of really smart people that tend to cluster in certain parts of the state. For example, the Research Triangle area is known to be among the regions with the most Ph.D.s per capita in the U.S. It is no coincidence that highly educated folks tend to be concentrated near university campuses.

The “State of Minds” theme also reflects what North Carolina aspires to become over time, which is a haven for even more smart creative people with innovative ideas that give rise to new enterprises that will propel the state’s economy forward. A key question is what this actually means in terms of specific economic development strategies. This is an issue that the state’s best and brightest will explore at the 25th Annual Emerging Issues Forum.

2. Place
When I was working at the N.C. Department of Commerce in the late 1990s, the marketing slogan was “North Carolina: A Better Place to Be”. What exactly does this mean? The state has many locational, cultural, recreational, educational, economic, social/civic, and natural/scenic assets that make it an attractive location to live, work, play, and operate a business. But, what is it specifically about the attributes of the state that supports economic development innovation and success? How can the state’s quality of place and unique assets be better leveraged for economic development purposes?

3. Policies and Programs
The state’s customized industrial training program is considered an exemplar of how to utilize community colleges to support economic development. In addition, targeted statutory tax credits (e.g. Article 3J credits) and discretionary grant programs (e.g. JDIG) exist at the state-level to promote private investment and job creation. Generally speaking, it is obvious that these programs help North Carolina compete with other states for jobs and investment. However, it is not clear whether the state is doing anything particularly innovative with its incentive policies and programs beyond merely offering better deals (i.e. more money) to companies relative to other states? Could it be time to augment and enhance existing policies by thinking outside the box a bit, lest the state lose its competitive edge?

4. Institutional Assets
The network of organizations and institutions supporting economic development in North Carolina is remarkable. In addition to its many prominent colleges and universities, North Carolina is home to several distinctive organizations that are at the forefront of promoting innovative economic development policies within the state and throughout the U.S. These include the Southern Growth Policies Board, Institute for Emerging Issues at North Carolina State University, N.C Biotechnology Center, RTI International, MDC, N.C. Rural Economic Development Center, Regional Technology Strategies, N.C. Institute of Minority Economic Development, Golden LEAF Foundation, and a regional office of CFED. To what extent does the state enjoy “knowledge spillovers” from this extensive network of organizations, such that good economic development ideas are always “in the air”, so to speak, just waiting to be implemented?

Which of the above factors makes the most difference for North Carolina? I suspect the real answer is some combination of all of the above, but what do you think?

2 Responses to “What Keeps North Carolina on Top?”

  1. Ben Houck

    For me, place. Place is the one ingredient that just sticks. You can see the mountains and its fall colors and go to the beach in summer without the need to leave the state, so for locavores you never feel like you’re ‘paying for someone else’s’ schools, for example. Small towns like West Jefferson found a way to accept a Lowes Hardware and Wal-Mart AND see its downtown thrive at the same time. And it’s not the incentives nor necessarily the institutional assets. It’s because people care about where they live. It matters where you’re from and with so much changing today, people (I) feel comfort knowing that place (community, identity, experience) will always matter.

    Great post. Thank you!

  2. It comes down to the workforce. Don’t underestimate how quickly we can lose this competitive edge if we don’t keep investing in education. It starts with early education to make college an option for kids, followed by a focus on keeping higher education affordable to grow talent from within and attract smart folks from all over the world. And finally, worker re-education by tailoring our community colleges to train workers for the high paying jobs we want to attract. The ‘incentives’ are a big piece that we need to stay competitive but ultimately our people are the icing on the cake that no other state can buy.

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