To hear some folks tell it, North Carolina’s planned remap of its economic development strategy represents a bold – perhaps even foolhardy – leap into the unknown.
They ask: Will privatizing the state’s job recruitment functions allow more nimble pursuit of companies that might relocate here?
Or will it unnecessarily splinter a system that has led Site Selection magazine to rank North Carolina as having the top business climate in the nation for at least 10 of the past 12 years?
Few observers have more knowledge of the state’s economic development incentives system than Brent Lane, a researcher with UNC Chapel Hill’s Frank Hawkins Kenan Institute of Private Enterprise. He helped lead a 2009 study lawmakers requested into the effectiveness of North Carolina’s incentives.
His conclusion: They weren’t working. At least not if the objective was to create new jobs.
So, what does he think of the revamp Gov. Pat McCrory and Commerce Secretary Sharon Decker have in mind?
Beats what we’ve been doing, he told me.
Considering that the state has for years been touting its Site Selection rankings, and considering we won those rankings while racking up some of the worst unemployment rates in the country, he passionately believes our current $1.3 billion annual investment in economic development is money badly spent.
“I am not going to defend the status quo because the status quo has not been successful,” he says.
So what would he change?
For one thing, he wishes officials would stop touting the dollar value of investments tied to corporate relocations. Instead, he says, focus on how many jobs these deals bring.
“We were keeping score the wrong way,” he says of past practices. “As a result, we were blinding ourselves to some fundamental weaknesses in our economy.
“We were so busy applauding ourselves for being No. 1.”
He called film industry incentives a neon-bright case in point, noting the $20 million “Iron Man 3” got from North Carolina. The Motion Picture Association of America says the production produced more than 2,000 jobs. Lane says such jobs usually leave the state when filming ends, and thus make poor investments.
Film incentives are “the vanity plate of economic development,” he says, “but it’s like putting a vanity plate on an old jalopy.”
Instead, he says, the state ought to find ways to funnel permanent jobs into its most distressed communities. For instance, maybe design incentives to attract companies that might rehire former textile industry workers in areas hit hard by textile layoffs.
Also important, he says, are improvements in education, transportation and the tax code, which encourage or discourage growth in every North Carolina business, not just the relative few touched by incentives.
So, while he says some parts of state officials’ plans bring the old “deck chairs on the Titanic” metaphor to mind, Lane likes that leaders have pointed the ship in a new direction, at least.
“I applaud their focus on being more aggressive and more robust in their marketing efforts and in selling the state,” he says. “But changing the structure is a means, not an end.”
Eric Frazier writes about economic development. Got a story tip? Contact him at 704-358-5145, email@example.com or @Ericfraz on Twitter.
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