NJ Fiscal Folly

Tuesday, May 23, 2006

NJ Economic Development

Although NJ desperately needs to reform fiscal management and state government, we have no future without economic growth. You only have to take a look at a high cost, declining, Rust Belt state like Michigan to see one possible future if NJ can't stimulate growth and diversify the economy.

The National Governors Association Center For Best Practices recently released a study which reviews economic development initiatives in various states over the last year.

Quoting the study's Executive Summary:

"Most of the states’ major new economic development initiatives focused on enhancing state and regional "clusters of innovation" -- fast-growing groups of businesses that share markets, labor, new ideas, and products. To enhance these clusters and exploit the unique advantages of the region’s labor pool, educational resources, and research capacity, most development initiatives emphasized one or more of the following strategies:

-- Promoting research and development by leveraging public funds and encouraging partnerships

-- Building a skilled workforce by providing training and education to meet industry needs

-- Supporting entrepreneurs by providing seed funding and incentives for job creation

-- Developing rural areas by supporting innovations in agriculture and supporting business development

-- Supporting tourism through state funding, campaigns, and training programs

-- Improving business attraction through revitalization activities and quality of life initiatives

-- Marketing the state’s businesses through outreach campaigns and international missions and offices."

Although NJ is not mentioned in the study, we seem to be following much of the standard game plan above.

It should be noted that many other states are also targeting three industries identified in NJ's "High-Tech Recovery Plan": life sciences and biotechnology, nanotechnology, and renewable energy. Economic development is not a zero sum game, but it is competitive, and some states (and countries) will do better than others. For example, NJ's traditional strength in pharmaceuticals has been eroding over the last few years as other locations have gotten stronger.

However, economic development is not an excuse to squander money. The full speed charge into NJ's new stem cell research program already looks like a replay of the political buffoonery and plunder that characterized the spendthrift Schools Construction Corp. Is it really necessary to commit $250 million to three new research facilities at this point? Why not start with one facility in New Brunswick, the logical location, and see how that goes?

NJ is a rich state, with many talented people and other resources critical for growth. However, economic development is not a quick fix, and it is not a substitute for improving NJ fiscal management or reforming state government.

2 Comments:

At 10:28 AM, Blogger WjcW said...

I think the current stem cell research proposals are the equivalent of stock purchases on a credit card. Just as one can argue that historically stocks perform very well, I don't believe anyone would recommend you purchase them with credit. As a state, we shouldn't be gambling with money we don't have currently.

 
At 9:07 AM, Blogger PN said...

I think you can probably make the case for investing in stem cell research, but we don't have to start with a $250 million initial commitment spread out over three locations. At this point, stem cell hype (and political spoils) seems to be far ahead of stem cell science.

I would recommend a much smaller initial investment, something more in the range of $50-75 million at a single location.

NJ Fiscal Folly

 

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